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Iron ore falls to a two-week low due to weak China factory data
The iron ore futures price fell for the second consecutive session on Thursday, hitting their lowest level in two weeks as a result of weaker than expected July factory activity figures in China's top consumer. The September contract for iron ore on China's Dalian Commodity Exchange closed the daytime trading 2.38% lower, at 779 Yuan ($108.32), the lowest price since July 17. As of 0748 GMT on the Singapore Exchange, benchmark September iron ore fell by 1.83%, to $99.85 per ton. This is its lowest price since July 16. An official survey released on Thursday showed that China's manufacturing activity declined for the fourth consecutive month in July. This suggests a decline in exports due to higher U.S. duties, while domestic demand remains sluggish. Prices for the main steelmaking ingredient slid on Wednesday, as hopes of Beijing announcing more stimuli measures during a Politburo meeting in July that sets the economic course of the rest of the year faded. ANZ analysts wrote in a report that the policy statement from a Chinese leaders' meeting left investors underwhelmed. It included a more aggressive fiscal agenda and moderately lax monetary policies. The readout did not provide details on large-scale stimuli measures," they said. Also, other steelmaking ingredients lost ground. The price of coke and coking coal both fell by 4.93% and 8% respectively. The benchmarks for steel on the Shanghai Futures Exchange have fallen. Rebar fell by 4.19%, while hot-rolled coils dropped by 3.56%. Wire rods also declined 4.46%. Stainless steel lost 1.04%.
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GCL reports that top Chinese polysilicon companies plan to close a third their production capacity and set OPEC style output quotas.
GCL Technology Holdings, which is a Chinese producer of polysilicon (a building block used in solar panels), said that they are in discussions to create a fund of 50 billion yuan (7 billion dollars) to buy and close down about a third production capacity, and to restructure a part of the sector that was losing money. On Thursday, the top polysilicon manufacturer announced that plans are being discussed for the acquisition and closure of at least 1,000,000 metric tons lower-quality polysilicon production capacity. Jun Zhu, GCL's director of investor relations, said: "It's like OPEC for the polysilicon industry. The central committee has to agree on the total supply over a certain timeframe and then allocate production quotas among producers." This plan is a strong signal that the increased rhetoric by the government against overcapacity, which was announced this month, is being translated into action. Chinese industry is struggling with overcapacity, whether it's solar or electric vehicles. Price wars are destroying profits. GCL Chairman Zhu Gongshan stated at an industry conference held in June that the major firms are working to restructure their industry. Local media reported that producers were in discussions to create an acquisitions fund. This is the first time that the size, scope and timeline of the plan are reported. The National Development and Reform Commission, the state planner for planning, did not respond immediately to a comment request. Jun Zhu stated that the proposed closures will leave a capacity of approximately 2,000,000 tons on the market. According to Bernreuter Research figures, China's capacity for production was 3,25 million tons by the end of 2024. This means that the closures proposed would represent 38% of the capacity. In early July, President Xi Jinping called for an "end to disorderly price competition." Three days later, the Industry Ministry pledged to end price wars and retire obsolete production capacity at a meeting of solar industry executives. In anticipation of supply-side reforms, this rhetoric in combination with initiatives by various ministries and provinces has sent industrial commodity prices soaring over the past few weeks. Prices of polysilicon are up by nearly 70%. Jun Zhu stated that the platform would launch in the third quarter of 2025, and it would begin making purchases of both excess capacity and market inventories in the fourth. He said that the fund's central board, which is tasked with "making sure polysilicon price fluctuations are within a range that benefits all stakeholders", will be composed of polysilicon manufacturers, platform creditors and possibly regulators. $1 = 7.15 yuan (Reporting and editing by Colleen Fullick in Beijing)
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UK Drax profits fall as power prices drop, but buybacks are extended
Drax Group announced a 11% decline in its first-half core profit due to lower UK wholesale electricity prices. The ongoing energy market fluctuation continued to affect the British power company. Drax, a company that has converted coal-fired plants to run on biofuels, supplies about 5% (or 5,000 MWh) of Britain's electric power. The adjusted profit, or EBITDA fell to 460 millions pounds ($611million) in the first six months, down from 515million pounds during the same period in last year. The group stated that it did not expect to change its adjusted EBITDA for the entire year, which is 899-910 millions pounds. After a dramatic rise following Russia's invasion, wholesale power prices have dropped in Britain over the last two years. Drax announced that it would extend its existing 300 million pound share-buyback programme for an additional 450 millions pounds over a period of three years. Early trading saw shares jump 6.2% to 720p. Earlier this year, the government extended subsidies - called contracts-for-difference (CfD) - for biomass units that were due to expire in 2027 to 2031. The group expects to conclude a deal with the UK Government later this year, for subsidy of its four biomass units. Drax's North Yorkshire power plant would be able, under this subsidy, to increase production when there's not enough electricity. This could help avoid the need for more gas, or to import power from Europe. Drax could reduce production when there's too much electricity in the UK grid. This would help to balance the system.
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BMW maintains its guidance despite profit decline and Trump's tariffs
BMW Germany maintained its full-year forecast on Thursday, despite U.S. Tariffs and a drop in quarterly earnings of a third. It argued that its large manufacturing footprint in the country gave it an advantage over its rivals. Volkswagen and Mercedes-Benz, on the other hand, have reduced their outlooks. The European automakers have yet to digest a new 15% auto tariff that was agreed upon between the European Union (EU) and President Donald Trump. Although this is lower than the existing rate of 27,5%, it still represents a significant obstacle for their export-focused business. BMW, which has its largest plant in the United States, and is Germany's leading auto exporter based on value, continues to expect that 2025 earnings will be comparable to the previous year, when it recorded just under 11 billion euro ($12.6 billion). This is despite the fact that it issued its initial forecast before Trump imposed tariffs for auto imports. The company has forecast that its automotive segment will have an EBIT margin of between 5.0-7.0%. In a press release, Walter Mertl, CFO of Mertl & Company said that "our footprint in the U.S. helps us limit the impact on tariffs." He added that "thanks to precise financial controls, based upon calculated forecasts, our year-end targets are on track." BMW said it also assumed that tariff negotiations are ongoing and that its forecast factored in some mitigation measures. The group anticipates that in 2025 the impact of tariffs on its automotive division's profit margin will be around 1,25 percentage points. The impact on the automotive segment was around 1.5 percentage points in the first half of this year. The second quarter saw a 32% drop in pretax profits to 2.6 billion euro, mainly due to currency effects, and a decrease in sales from China. The sales in China dropped by 15.5% in the first half. Analysts had expected a slightly lower quarterly profit result. The EBIT margin of its auto division was 5.4%. This is just a little below the 5.5% analysts had predicted in a poll conducted by the company, but still within its target range for 2025: 5.0% to 70%.
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Sources say that Asia is increasing its imports of US WTI oil as Middle East oil prices increase.
Trade sources say that Asia will increase imports of U.S. West Texas intermediate crude in the fourth-quarter after Middle East oil price increased and opened arbitrage window. They said that the price gap between light-sweet U.S.WTI oil and Middle East crude benchmarks Dubai & Murban has narrowed this month due to strong demand in Asia for high-sulfur oil. WTI's Arbitrage to Asia has been open for the last week for cargoes that arrive in early November. This was stated by June Goh, senior analyst at Sparta Commodities. Sources said that U.S. oil producer Occidental sold WTI crude to Japanese refiner Taiyo Oil. One source said that the cargo was sold for a premium of $3.50 per barrel over October Dubai prices, and would be delivered in October. A Singapore-based trader stated that WTI crude oil could be sold at a price 50-75 cents per barrel less than Murban oil of similar quality to refiners in north Asia, depending on the supplier. Two other traders claim that WTI is 30 cents less expensive than Murban light-sour grade. Sources confirming the benchmark said that Murban's supplies have also been tightened as Abu Dhabi National Oil Co has reduced its exports of its flagship grades by diverting oil to its own domestic refinery. Goh stated that "we anticipate more Asian buyers will secure WTI cargoes, especially as Murban looks expensive while taking the opportunity to diversify their portfolio against AG (Arabian Gulf crude)." She said that the threat of U.S. president Donald Trump to impose secondary duties on countries who buy Russian oil also supports Middle East crude price. Indian refiners are likely to look to purchase oil from Gulf in order to replace Russian supplies. Trump shortened the deadline by which Moscow must make progress in a peace agreement for the Ukraine war or face secondary tariffs of 100 percent on its oil customers within 10 to 12 business days. This reflects his increasing frustration over Russia's actions. China, India and Turkey import the most Russian crude.
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Portugal's EDP profits drop 7% due to no capital gains
Portugal's biggest power utility EDP reported on Thursday a 7% drop in net profit for the first half despite an increase in output. The reason given was lower returns from assets sales. It reported a net profit of 709 million euro ($812 millions) compared to a 775 million euro profit accumulated a year earlier. EDP reported that it had not booked any capital gains on the sale of solar and wind assets in the first six months. This was part of its strategy to dispose of stakes in mature plants in order to finance new ones. In the first half of last year, EDP logged 184 millions euros in these types of gains. It said that excluding capital gains, the recurring net profit grew by 27%. This was due to a robust increase in electricity production, "with a significant contribution from U.S. Operations, and solid performance of electricity network in Iberia, and Brazil". EDP Renovaveis' subsidiary, the fourth largest wind energy producer in the world, reported on Wednesday a 56% drop in net profit, to 93 millions euros. However, its recurring profit tripled from a year earlier, boosted by U.S. operations. EDP reported that total electricity production increased by 12%, to 34.6 Terawatt-hours. This was due to high rainfall in Iberia which filled reservoir volumes up to 87% capacity and natural gas power stations. After the power outage of April 28, Iberia, the production from natural-gas plants has been prioritised in order to strengthen the resilience and reliability of the electrical grid. The average spot price for electricity in the Iberian region rose from 39 euros to 62 euro per megawatt-hour during the first half of this year. The recurring EBITDA, which excludes capital gains, increased by 7%. EDP installed capacity in June was 32.3 GW. This is 3.1 GW more than a year earlier.
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Zelenskiy reports that Russian air strikes have killed six-year-old boy in Kyiv.
Ukraine officials reported that Russia launched drone and missile attacks on Kyiv early Thursday morning, killing six people, including a boy aged six and his mother. At least 82 other people were also injured. Volodymyr Zelenskiy, the president of Ukraine, said that Russia had launched over 300 drones as well as eight missiles against residential buildings in Kiev. "Today, the world saw Russia's response once again to our desire for peace in America and Europe. Zelenskiy stated on Telegram that peace is impossible without strength. Vitali Klitschko, Kyiv's mayor, said that nine children had been injured. This was the most number of injuries in one night since Russia began its full-scale attack almost three and half years ago. Yurii Kravchuk (62), was wrapped in a towel and bandaged around the head, standing next to a destroyed building. He was aware of the missile alert, but did not reach a shelter before it ended. "I started to wake up my wife, and then there was a blast... My child ended up in hospital." In the search for survivors, emergency crews cut through concrete blocks and put out fires. Kyiv was rocked by explosions for several hours, and fires lit the night sky. Officials said that schools and hospitals were some of the buildings which suffered damage in 27 different locations across the city. Air force officials reported 21 drone strikes and five direct missiles in 12 different locations. In recent months, Russia has increased airstrikes on Ukrainian cities and towns far from the front lines of the war, despite its denial that it is targeting civilians. Donald Trump, the U.S. president, said on Tuesday the United States will begin imposing tariffs on Russia in "10 days" if Moscow does not make progress towards ending the conflict. Yulia Shvyrydenko, Prime Minister of Ukraine, said that this was Putin's answer to Trump's deadlines. "The world needs to respond with a court and maximum pressure." Zelenskiy uploaded a video showing burning ruins and said that people were still trapped beneath the rubble from a partially-ruined residential structure. Ukrainian air defence units shot down 288 drones and 3 cruise missiles. (Additional reporting and editing by Dan Peleschuk)
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Outokumpu Finland beats earnings expectations in challenging environment
Outokumpu, a Finnish stainless steel manufacturer, reported Thursday a core income that was above the market expectation for the second quarter. It also said that it has increased its target of short-term savings to 60 million euro ($68.6 millions) by 2025. Outokumpu's consensus forecast had analysts expecting 69 million euros. In an earnings report, CEO Kati Ter Horst stated that "we continued to benefit from the strong market positions we have in Europe and the U.S." She did say, however, the quarter was marked with uncertainty and increased geopolitical tensions. This led to an increase in caution among customers. The tariffs imposed by President Donald Trump on U.S. imports will be a challenge for European steelmakers who are already facing a weak demand, high prices and fierce competition from Chinese imports. Trump's tariffs, which were first introduced at 25% and then increased to 50%, divert shipments intended for the U.S. Outokumpu stated that "Asian imports into Europe remain high in comparison to the low demand on the stainless steel market." It said that the company's deliveries of stainless steel rose to 483,000 tonnes during the second quarter but will decline between 5-15% due to seasonality and the market's weakness in the third. (1 euro = $0.8744) (Reporting and editing by Milla Nissi-Prussak, Gdansk)
AEP exceeds profit expectations, anticipates new capital plan of $70 Billion over five years
American Electric Power beat Wall Street expectations for the second quarter profit on Wednesday. The company said it plans to announce in the fall a new five-year capital program of approximately $70 billion, to meet U.S. energy demand growth.
In premarket trading, shares were up 1% to $110.34.
The U.S. Energy Information Administration said in April that U.S. electricity consumption would reach new records in 2025 and '26 due to data centers dedicated for artificial intelligence and cryptocurrency. This encouraged power producers to increase their investments.
The company announced earlier this year that it would consider adding $10 billion to the $54 billion capital plan for the next five years as the demand for data centres increased in the service areas of the U.S. Electric Utility.
The company's quarterly profits were boosted by higher electricity rates. Utility firms can obtain these increases through rate cases, where they appeal for power price hikes based on their investment or expenses in providing services.
According to LSEG data, the Colombus, Ohio, based company reported a profit adjusted of $1.43 for the quarter ending June 30 compared with an average analyst estimate of $1.27.
AEP provides service to 5.6 million customers across 11 states, including Texas and Ohio. It has the largest transmission system of electric power in the U.S.
(Reporting by Tanay Dhumal in Bengaluru; Editing by Shailesh Kuber) The utility has reaffirmed that its adjusted profit for the full year is expected to be in the upper half. (Reporting and editing by Shailesh Kuber in Bengaluru)
(source: Reuters)