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Profits of South Korean petrochemical companies will plunge by 2024 due to persistent oversupply
The South Korean petrochemical firms LG Chem and Lotte Chemical made losses in 2024. This was due to an oversupply that is expected to continue this year. Meanwhile, trade tensions have dampened global economic prospects, said company executives this week. As a result of the high cost of energy in Europe, and years spent building up capacity in China's top market, petrochemical producers have begun to consolidate in Europe and Asia. Lotte Chemical's results, released on Friday, revealed that the company's operating losses for 2024 increased by 157% from last year to 895 billion won (619.62 million dollars). The company's data shows that this is the biggest decline in operating income since 2011. The financial data before 2011 is not public. The basic materials division of the company, which includes petrochemicals and agrochemicals, reduced its operating losses by approximately 52% from the previous quarter, to 175 billion Korean won. LG Chem's earnings report on Monday showed that the operating profit for 2024 fell by 63.75% compared to the previous year, reaching 916.8 trillion won, its lowest level since 2019. The petrochemicals division of the company posted an operating loss in the fourth quarter of 99 billion won. Both companies pointed to a global oversupply as the main problem facing the petrochemicals sector. On a Monday call, Yang Cheol Ho said that the continued market decline was caused by a surplus of products in Northeast Asia due to continued capacity expansion, and China's slow economic recovery. The oversupply will continue for many years, as new plants are still being built in China and the Middle East. On Friday, a senior executive at Lotte Chemical said: "We expect global demand to remain uncertain and overcapacity will continue. This is especially true under Trump 2.0." U.S. president Donald Trump imposed 10% tariffs for all Chinese imports. This prompted retaliatory duty from China. While both companies acknowledged that the recovery of Chinese demand is slow, they were optimistic about the recovery of demand in this sector's largest consumer. A spokesperson for LG Chem said that "very strong measures are being taken" to try and stimulate consumption. He added that this could lead a gradual recovery of the domestic demand for home appliances in China. A spokesperson for Lotte Chemical said that they are waiting on further announcements by Beijing regarding its stimulus plans for March. Beijing added home appliances to its list of products included in its consumer exchange scheme in January in an attempt to revive the struggling consumer sector. According to the Commerce Ministry, the stimulus program boosted consumption growth last year by more than one percentage point. LG Chem aims to achieve revenues of 26 trillion won by 2025, and will likely maintain capital expenditures at around 2 trillion won. Last year, it cut its capex by about 30% compared to 2023. (1 dollar = 1,444.4300 won). (Reporting and editing by Florence Tan, Jane Merriman and Gabriele Ng)
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Oil prices rise as investors consider new US tariffs
The oil prices rose on Monday as investors considered the latest threat from U.S. president Donald Trump to impose tariffs on all steel imports and aluminium, which could slow down global economic growth. Brent crude futures rose 40 cents or 0.5% to $75.06 per barrel at 0133 GMT, while U.S. West Texas intermediate crude was $71.38 per barrel, up by 38 cents or 0.5%. Last week, the market saw its third consecutive decline on worries about a trade war. Trump announced that he would announce 25% tariffs on steel and aluminum imports to the U.S. on Monday, in yet another major step of his trade policy overhaul. The president announced tariffs against Canada, Mexico, and China a week earlier, but then suspended them the following day for the neighbouring countries. Tony Sycamore is an analyst based in Sydney at IG. He said that investors are ignoring the threat of steel and aluminum tariffs for now due to Trump's temporary retreat last week. He said that the market had realised that tariff headlines would likely continue for the next few weeks and months. There is also a chance they may be reduced or increased in the future. Investors may be coming to the realization that it is not a good idea to react negatively to every negative headline. China's retaliatory duties on certain U.S. imports are set to go into effect on Monday. There is no progress yet between Beijing and Washington. Oil and gas traders want Beijing to waive import duties on U.S. crude oil and liquefied gas. Trump claimed on Sunday that U.S. and Russia are making progress in ending the Ukraine War, but he refused to give details of any communications with Russian President Vladimir Putin. The sanctions imposed by the United States on Russian oil traders on January 10 have disrupted Moscow’s supply to its major clients, China and India. Washington increased pressure on Iran as well last week. The U.S. Treasury issued new sanctions against a few individuals, and on tankers which help ship millions of barrels per year of Iranian crude oil to China.
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Nippon Steel refuses to comment about Trump's opposition to US Steel majority stake
Nippon Steel, a Japanese company, declined to comment Monday on the statement by U.S. president Donald Trump that no one could have a majority share in U.S. Steel's acquisition target. Trump made this comment to reporters aboard Air Force One on Sunday. He said that the U.S. would impose 25% additional tariffs to existing duties on all imports of steel and aluminum. Nippon Steel shares fell by more than 2% during early trading, while the Nikkei index declined only 0.3%. Trump stated on Friday that Nippon Steel’s $14.9 billion offer for U.S. Steel will be an investment, not a purchase. Two people with knowledge of the matter say that the Japanese steelmaker has not withdrawn its offer. Nippon has been pursuing U.S. Steel for over a year. Trump condemned the proposal numerous times before making his more temperate remarks in the Oval Office on Friday with Japanese Prime Minister Shigeru ishiba by his side. The investment was not clear. It is unclear what details the transaction will be. But Trump announced on Friday that he will meet with Nippon Steel's head this week, and would "mediate and arbitrate" the dispute. Ishiba told Nippon TV, after returning from the U.S. on Sunday, that there were legal questions about the distinction between investment and acquisition, as well as the extent of stock ownership. He said that such details will likely be discussed between Trump Nippon Steel. Ishiba stated that the key question is whether Americans feel that U.S. Steel remains an American company. Nippon Steel declined on Monday to make a public statement about Ishiba’s remarks or any management meetings with Trump. The bid by Nippon Steel for U.S. Steel forms a central part of the global expansion strategy of the Japanese company. The bid was blocked by the then-U.S. president Joe Biden last month, citing national safety. Together with U.S. Steel the firm filed several lawsuits to challenge Biden's decisions. Takahiro Mori, vice chairman of Nippon Steel, said last week that the Japanese company has no plans to change its acquisition structure. (Reporting and editing by Yuka Obaashi, Lincoln Feast, Christopher Cushing).
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Taiwan's chip industry faces a future in which China is threatening to take its share?
Taiwan's Powerchip Technology hoped that by entering into a deal in 2015 with the city of Hefei, located in eastern China, to establish a new foundry it would gain better access to the lucrative Chinese market. Nexchip has emerged as one of the biggest competitors in the legacy chip market, after Beijing's call for localisation forced Powerchip into giving up its once lucrative business producing integrated circuits used on Chinese flat panel displays. Nexchip is one of the Chinese foundries that are gaining market share quickly in the $56.3 billion market for so-called mature or legacy node chips, made with 28 nanometres and larger technology. This trend prompted the Biden Administration to launch an investigation and alarms the Taiwanese Industry. By lowering prices and expanding their capacity, these Chinese foundries, including Hua Hong, SMIC and UMC, threaten the dominance that Powerchip, UMC, and Vanguard International have held for so long in the market of chips used in automobiles and display panels. Executives in Taiwan stated that Taiwanese companies are forced to either retreat or pursue more sophisticated and specialized processes. Frank Huang, Chairman of Powerchip Investment Holding, and its listed subsidiary Powerchip Manufacturing Semiconductor Corporation, said that "Mature node foundries such as us must transform, otherwise Chinese price cuts would mess us even further." The company was reorganised in 2019. UMC said that the expansion in capacity worldwide had created "severe" challenges for the industry. It was working with Intel on developing more advanced, smaller chip designs and diversifying beyond traditional chipmaking. Executives in Taiwan say that trade tensions between Washington, DC and Beijing could ease a little bit. They said this as they sought to secure their supply chains by sourcing chips from outside China. The U.S. president Donald Trump has, however, said that he intends to impose tariffs of up to 100% on semiconductors manufactured outside the United States. Vanguard International refused to comment. SMIC, Nexchip, and Huahong declined to comment. Cheaper, more aggressive Taiwan chip executives claim that after the U.S. blocked Chinese foundries from developing high-end chips in recent years, they have doubled down on older technology and undercut their rivals' prices because of Beijing's strong funding and their willingness to accept lower margins. In recent years, Chinese companies have dramatically increased their legacy chip production capacities. TrendForce estimates that in 2024 China will have a 34% share of the global manufacturing capacity for mature nodes, while Taiwan will hold a 44% share. By 2027 China is expected to surpass Taiwan, while South Korea, the U.S. and other countries with low-single-digit share are expected to decrease. SEMI, a consultancy, forecasts that 57 of the 97 new factories starting production in 2023-2025 will be located in China. One executive at a Taiwanese semiconductor designer stated that Chinese foundries have become more aggressive since 2023 in their pitching of business. This person and another one who worked at a different Taiwanese designer chip said that Chinese customers, especially those in consumer-oriented sectors like panels, were increasingly asking Taiwanese designers chip to hire Chinese fabs in order to manufacture the chips. Beijing had called on Chinese companies to localise their supply chains. The sensitive nature of the issue prevented both people from being named. They said that Chinese government-related firms, such as China Mobile, China Telecom and China Mobile, also issued stricter requirements for using China-made component. China Mobile and China Telecommunications Corporation as well as the Ministry of Industry and Information Technology of China did not respond when asked for comments. TRUMP EFFECT Galen Zeng is a senior researcher at the global market intelligence firm IDC. He said that Taiwanese foundries and chip designers were likely to specialize their processes and diversify their products away from legacy chips. However, their profitability will still be affected by Chinese competition on a medium-term basis. Huang, Powerchip's Huang, said that they will reduce their focus on display driver chips and sensor chips which are widely used in China, and instead shift to 3D stacking. This technique integrates logic chips and DRAM memory to improve computing performance while reducing power consumption. With a 19% share, the company is Nexchip's 2nd largest shareholder. However, it does not have an active role in management. Huang stated that "for chips used in China we will not be able do the business...We must exit otherwise there is no way for us to survive." Washington's efforts to slow down China's growth in the chip industry, combined with worsening relations between Beijing & other countries, could provide some respite. Huang said that some orders that were originally going to China are now being sent to Taiwan and that this trend is expected to continue. A chip design company executive in Taiwan who spoke under condition of anonymity due to the sensitive nature of the situation said that they have received more orders since 2023 from international clients asking them to manufacture chips outside of China. The executive explained that some customers would tell him they didn't care if we taped out the chips in China. They don't like to see "Made in China" on the packaging.
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Pilbara Minerals, Australia's Pilbara Minerals, expects to swing from a first-half loss
Pilbara Minerals, a company in Australia, said Monday that it expected to make a loss in the first half of this year as one of its processing plants was placed in care and maintainance due to a sharp drop in lithium prices. The price of lithium, which is used in batteries for electric vehicles, has dropped by 86% since its peak in November 2022. This has caused companies to curtail their operations or delay the expansion of their mines. In December, Pilbara put its Ngungaju plant at Pilgangoora (which has a lower capacity but higher cost) into care and Maintenance and concentrated on increasing its Pilgan facility. The average realized sales price of spodumene, which is used to produce lithium, for the six-month period ended December 31 was $688 per ton, more than half the $1,645 earned per tonne in the previous year. Pure-play lithium mining company expects a net loss after tax of A$5 to A$7 millions for the first half. The company reported a underlying profit last year of A$273 millions. It expects a net loss after tax of A$68 to A$71 millions, compared to a profit last year of A$200million. It said that the statutory results included construction costs for its demonstration plant, as well as its share of the net loss from a joint venture with POSCO, reflecting ramp-up phases and lower market prices currently available for lithium hydroxide.
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Trump announces 25% tariffs on steel and aluminum in the latest trade escalation
Donald Trump, the U.S. president, announced on Sunday he would announce new 25% tariffs for all imports of steel and aluminum into the U.S. on Monday. This will be on top of current metals duties. It is another major step in his trade policy overhaul. Speaking to reporters aboard Air Force One, Trump said that he would announce reciprocal tariffs either on Tuesday or on Wednesday. These will take effect almost instantly. Trump, during his first term, imposed tariffs on steel of 25% and aluminum of 10%, but later granted several trade partners duty-free quotes, including Canada and Mexico. The former President Joe Biden extended the quotas of steel and aluminum to Britain, Japan, and the European Union. In recent years, U.S. capacity utilization at U.S. mills has decreased. Karoline Leavitt, a White House spokesperson, said that these new tariffs will be added to the existing duties for steel and aluminum. Trump announced on Friday that he will impose reciprocal duties -- increasing U.S. tariffs to match those of our trading partners -- this week on many countries. He did not name the countries but said that the duties would be applied "so we are treated equally with other countries." (Reporting and writing by Jeff Mason, with additional reporting by David Lawder from Washington; editing by Lisa Shumaker).
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Military sources claim that Sudan will form a new government following the regaining of Khartoum.
Military sources said on Sunday that the formation of a new Sudanese Government is expected after the recapture is complete of Khartoum. This comes a day after Abdel Fattah Al-Burhan, head of Abdel Fatah's army, announced he would create a technocratic government during wartime. In recent weeks, the Sudanese Army, which had been on the back foot in its war against the paramilitary Rapid Support Forces (RSF), has gained ground along several axes in the capital Khartoum, and is closing in on the presidential palace on the Nile. RSF, who had said that it would support a rival civil administration, has now retreated. The army has expanded its air capabilities and has increased the ground ranks with allied militias. "We can call this a caretaker or wartime government. It's a Government that will help complete our remaining military objectives. That is, freeing Sudan of these rebels," Burhan said at a meeting with army-aligned political figures in Port Sudan, the stronghold of the army, on Saturday. RSF controls the majority of western country and is waging a fierce campaign to consolidate its control over the Darfur region, by seizing al-Fashir. Burhan said that a Ramadan truce was not possible unless the RSF halted its campaign. In April 2023, the war broke out over disagreements about the integration between the two forces. They had worked together to remove civilians from power with whom they shared power following the uprising which ousted Omar al-Bashir. More than 12,000,000 people have been displaced and more than half of the population is facing hunger. Burhan announced that the interim constitution of the country would be changed. According to military sources, the changes would remove any references to partnership or RSF. Instead, the authority would fall solely to the army, which would nominate a technocratic Prime Minister who would then nominate a cabinet. Burhan urged civilian Taqadum members to abandon the RSF and said they would be welcome back if this was done. (Reporting and writing by Khalid Abdelaziz; Editing by Ros Russel)
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US Judge temporarily blocks Musk’s DOGE from using payment systems
A federal judge temporarily barred Elon Musk and his government efficiency team, as well as political appointees in the Trump administration from accessing systems that process payments worth trillions of dollars. The judge cited a potential risk of sensitive information being improperly disclosed. The order was issued by U.S. District Court Judge Paul Engelmayer of Manhattan after a coalition of mostly Democratic-led U.S. States filed a suit late Friday claiming Musk's Department of Government Efficiency does not have the legal authority to access U.S. Department of Treasury Systems. The lawsuit claimed that Musk and his team may disrupt federal funding to health clinics and preschools as well as climate initiatives and other programs. It also said that Donald Trump, the Republican president, could use this information to further their political agenda. The state attorneys general also said that DOGE's ability to access the system "poses enormous cybersecurity risks, which put huge amounts of funding in danger for States and residents." They requested a temporary restraining orders blocking DOGE's entry. The judge was appointed by former Democratic President Barack Obama. He said that the claims of the states were "particularly strong", and that he should act on their emergency relief request pending another hearing on February 14, before a different judge. The new policy poses a risk of exposing sensitive and confidential data, and it also increases the vulnerability of systems to hacking. His order prohibits access to Treasury Department data and payment systems for political appointees and special government employees, as well as government employees who are delegated from agencies outside of the Treasury Department. The judge ordered that anyone who is prohibited from accessing these systems by his order must immediately destroy any copies or downloads. In a post on social media, Letitia James of the New York Attorney General's Office, a Democrat who is the lead in the case, said that the order prevented Musk, the richest man in the world, from accessing Americans’ private data. James wrote, "I've already said it and I will say it again: No one is above law," on Musk's social networking platform X. Requests for comments were not immediately responded to by the White House or Treasury Department. Musk was appointed by Trump to head DOGE, which is responsible for identifying fraud and waste within the government. Musk's actions have alarmed Democrats and advocacy groups, who claim he has overstepped his authority in attempting to dismantle government agencies that are responsible for crucial programs and fire federal employees en masse. Treasury Secretary Scott Bessent (a Trump appointee) said this week the payment system of the department will not be touched and that any decision to stop payments would come from other agencies. (Reporting from Nate Raymond, Boston. David Evans, Mark Potter and David Evans edited the article.
Major spaces in between EU farming rewards and Green Offer objectives, ECA states
The European Court of Auditors evaluated the EU's reform of agriculture aids and discovered a noticeable space between farming rewards and the EU's. general green targets, the ECA stated in a report on Monday.
European Union farming subsidies under the Typical. Agricultural Policy (CAP) are modified periodically and were so. again in 2021 after the EU Green Offer was revealed to help the. bloc meet its targets to deal with environment change.
A key ECA finding is that the European Commission will not. be able to determine the contribution of farming to its. environment objectives based upon the hodge podge of metrics and incentives. in location in the CAP, worth 378.5 billion euros ($ 423.62 billion). - or just under a third of the EU's total 2021-27 budget plan.
The EU has stated the CAP will be a key tool in tackling. climate change as farming represents 13% of the 27-nation. bloc's greenhouse gas emissions with over half emitted by. livestock.
Our assessment of the Commission's evaluation of how the. ( member state) strategies are aligned with the 2030 Green Offer. targets reveals that the Commission can not-- except for natural. farming-- determine the extent of their contribution, and so. can not inspect whether they line up with targets, the ECA. concluded.
A few of the climate-friendly funding rules were also watered. down in action to farmer protests early this year, it kept in mind.
The EU's ombudsman began a query this month into whether. the Commission breached its own rules by altering CAP financing. terms after a grievance was submitted by environmental activist. group ClientEarth and others. ClientEarth is likewise suing Germany. for not enforcing EU pesticide rules.
However, the ECA discovered the EU's climate objectives have not been. incorporated into CAP legislation and essential outcome indications. are missing out on and differ too significantly to reveal any achievements, provided. that meanings and methods vary among member states.
Our analysis reveals that the achievement of Green Deal. targets mainly depends on actions planned outside the CAP, the. report stated.
Substantial exemptions are also in place this year to assist. placate restive farmers, such as the removal of requirements on. the minimum part of arable land to be left fallow, and choices. to avoid crop rotation with more diversity.
Finally, the Commission did not request member specifies to. consist of targets or quote contributions to the Green Offer. targets from their CAP preparation.
4 member states in our sample cited issues such as a. absence of typical definitions and approaches for making such. quotes, the report showed.
(source: Reuters)