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Brazil's Petrobras wants a mandate for coprocessed Diesel, says CEO
Magda Chabriard, the CEO of Brazil's Petrobras, said that the company wants the government to require the use coprocessed diesel with vegetable oil. The firm is capable of producing fuels with up to 10% renewable contents. The coprocessed diesel is not included in the recently passed alw which created incentives to decarbonize fuels, including a mandate for a so-called separate green diesel. Chambriard, at an event held in Rio de Janeiro, said that "our coprocessed Diesel still does not have a mandate." Petrobras has taken steps to reduce emissions by using coprocessed diesel. The CEO stressed the importance of collaboration between the oil and agribusiness sectors to reduce emissions. He added that Petrobras is looking to source vegetable oils from agribusiness in order to produce coprocessed Diesel. She said, "We will do this without conflicting with Brazilian agribusiness." Chambriard reaffirmed her support for expanding the oil exploration process to add more reserves. This was in response to a new request by the Brazilian environmental agency Ibama, which requested information on the environmental licensing processes for drilling within the Foz do Amazonas Basin. (Reporting and writing by Rodrigo Viga Gaier, Isabel Teles, and Brendan O'Boyle).
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US stocks fall with European shares, while gold prices rise as trade tensions intensify
Wall Street stocks plunged on Tuesday as renewed trade tensions between Washington, Beijing and a prolonged U.S. Government shutdown dampened investor risk appetite. In early trading, all three major U.S. indexes were in negative territory. The tech-heavy Nasdaq was the most affected by megacap stocks. Crude oil prices dropped and gold prices, a safe haven, jumped above $4100. The International Monetary Fund report, which raised its outlook for global growth as the impact of tariffs and the financial environment has been more benign than anticipated, did not cause as much damage to the market. However it warned that a trade war between two of the largest economies in the world could have a significant effect on output. Oliver Pursche is the senior vice president of Wealthspire Advisors in New York. "We saw some pretty good selling on Friday, and that reminded me that there are still trade disputes and instability in the world. When you combine that with the lack of data released due to the government shutdown, there is a general feeling of unease." On Tuesday, the United States and China started charging port fees tit for tat. Trade wars between China and the United States have roiled the world markets in 2018. The tensions reached boiling point late last week, after China announced stricter controls on its rare earth exports. U.S. president Donald Trump responded by threatening to raise tariffs on Chinese products into triple digits. The unofficial start of the third quarter earnings season was marked by mostly positive quarterly results from high-profile financial companies including JPMorgan Chase. Goldman Sachs. Citigroup. and Wells Fargo. Official economic data are unavailable as the government shutdown continues due to a partisan impasse in Congress. A report by the National Association of Independent Business revealed that small business sentiment was deteriorating, as inflation concerns returned to the forefront. The Dow Jones Industrial Average dropped 59.24, or 0.12%, to 46,008.34. The S&P 500 declined 34.74, or 0.52% to 6,619.98. And the Nasdaq Composite lost 229.87, or 1.1%, to 22,464.74. The European stock market fell to its lowest level since more than two decades as the renewed U.S. China trade tensions sourred investor sentiment. Also, French tire manufacturer Michelin cut their annual forecasts. The MSCI index of global stocks fell by 5.17 points or 0.53% to 975.92. The pan-European STOXX 600 fell by 0.35% while Europe's FTSEurofirst 300 fell by 7.25 points or 0.32%. Emerging market stocks dropped 13.50 points or 1.00% to 1,339.81. MSCI's broadest Asia-Pacific share index outside Japan fell by 1.08% to 694.99. Japan's Nikkei dropped 1,241.48 or 2.58% to 46,847.32. Treasury yields fell but were still off their lows after concerns over trade tensions subsided following the IMF's uplift of its growth forecast. The yield on the benchmark U.S. 10 year notes dropped 0.7 basis points from 4,051% at late Friday to 4.044%. The 30-year bond rate rose by 0.6 basis points from Friday's 4.634% to 4.6397%. The yield on the 2-year bond, which is usually in line with expectations of interest rates for the Federal Reserve (Federal Reserve), fell by 2.1 basis point to 3.502% from 3.522% at late Friday. The oil prices dropped on the back of trade war fears and a report by the International Energy Agency that raised the prospect for increased supplies while dampening the demand. U.S. crude dropped 1.92%, to $58.35 per barrel. Brent was down to $62.04 a barrel on the same day. As trade-driven risks increased, safe-haven currencies like the Swiss Franc and Japanese Yen benefited. The dollar index (which measures the greenback in relation to a basket of currencies, including the yen, the euro and others) fell by 0.11%, while the euro rose by 0.18%, reaching $1.1589. The dollar fell 0.2% against the Japanese yen to 151.97. Bitcoin fell by 3.45%, to $111 804.60. Ethereum fell 7.14% to $4,983.21. Gold has surpassed $4,100 on the back of rising expectations for rate cuts by the U.S. Federal Reserve, and the demand for safe havens resulting from the latest salvos in the Washington-Beijing Trade Spat. Spot gold increased by 0.47%, to $4129.56 per ounce. U.S. Gold Futures rose by 0.32% to $4121.80 per ounce.
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Italian lobby: China's restrictions on rare earths threaten Europe's automotive industry
The expected new Chinese restrictions on rare earth metals exports may have a significant effect on the European automotive industry, according to the Italian auto parts maker lobby ANFIA, who said Tuesday that reserves of these materials are low. China, despite an agreement signed in July to expedite shipments into Europe, has tightened its control on rare earth exports. Last week it announced new restrictions. The country refines the majority of rare earths in the world, which are vital for industries such as semiconductors, automotive manufacturing, and defence. ANFIA chairman Roberto Vavassori stated that manufacturers were able to maintain their production even when China cut supplies in the previous months. However, reserves of rare-earth metals are now depleted. Vavassori, speaking at the ForumAutoMotive Conference in Milan, said that "the buffer for reserves is no longer there". Rare earths are used in the automotive industry for electric motors, and other vehicle components. Vavassori stated that the rare earth industry is small and worth less than $5 billion worldwide, but it can still slow down the global auto industry. (Reporting and editing by Barbara Lewis; reporting by Giulio P.)
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EU Presses US to Drop Tariffs on Metals Content
Maros SEFCIOVIC, EU Trade Commissioner, said that the European Commission wants the United States' tariffs removed on steel products as Brussels tries to push parts of the EU/U.S. Tariff Agreement into force. The two transatlantic partners have agreed to consider limiting their overcapacity of steel, aluminum and derivatives made from these metals. Tariffs of 50% in the U.S. could be replaced with tariff-free or low tariff quotas. The Commission, the body that oversees the EU's 27 member states trade policy, thinks it has met its end of the bargain by proposing to raise its steel tariffs to 50%, reduce current quotas, and make clearer where the steel comes from. Sefcovic stated that the proposal, which needs to be approved by the EU governments and European Parliament, has "very similar" contours as the U.S. approach to protect domestic steel industries from overcapacity. He said at a press conference held in Denmark after the EU Trade Ministers' meeting that once we protect our markets, we can discuss steel derivatives. I believe we should end the practice of having to calculate the amount of steel in the dishwasher or fridge. He said he proposed this in an email to his U.S. colleagues. Tariffs on steel and aluminum are not limited to the metals themselves. They also apply to a wide range of products that are derived from these metals. The U.S. has added 407 new product categories to their list of derivatives in August. Steel and aluminum content are subject to a tariff of 50%, while the EU is charged a universal rate for non-metal contents. There are many product categories, including wind turbines. Reporting by Philip Blenkinsop, Editing by Mark Potter
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Bowman anticipates two additional interest rate reductions this year
Federal Reserve Governor Michelle Bowman said on Tuesday that she still expects the U.S. Central bank to deliver rate cuts at its two final policy meetings in 2025. Bowman told an audience in Washington that he still expects two more rate cuts by the end of the year. Last month, the Fed cut its benchmark rate by a quarter percentage point. This was its first decrease in borrowing costs since December. The Fed's recent policy announcement showed that a small majority of policymakers believe more rate cuts are appropriate this year in light of the softening of the job market. The next meeting of the U.S. Central Bank will be held on October 28-29. Its final session for the year is scheduled for the second half of December. Rate futures markets positioning reflects expectations for quarter-percentage-point reductions at both meetings. Bowman stated, "I believe that as long as the labor market and the other economic data continue to evolve in the manner I expect them to, we will be on the path of lowering the Federal Funds Rate." Bowman supported the rate cut last month after dissension at the July meeting. In this dissent, she was joined by Fed Governor Christopher Waller who, like Bowman was appointed to the U.S. Central Bank's Board of Governors during President Donald Trump's first term as White House. Bowman and Waller both believe that Trump's tariffs, which he has implemented since regaining power, will not result in persistent inflation. They also say the risks are shifted to the job market.
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Analysts say that the EU's Ukraine financing plan could increase central bank gold purchases.
Analysts say that the European Commission's plan to use frozen Russian assets to provide financial assistance to Ukraine has shook some central banks. This could lead to a further increase in gold purchases to be stored outside of Western jurisdictions. The plan of the Commission would allow EU governments use up to 185 Billion Euros ($214 Billion) in Russian sovereign assets that are currently frozen in Europe, without confiscating them. This is a redline for many countries as well as the European Central Bank. China and other developing countries are diversifying their reserves from Western currencies, government debt and gold to avoid the sanctions that caused Russia's $300 billion in foreign currency reserves to be frozen. Ross Norman, a former bullion dealer and veteran gold analyst, said that the EU could mince words all they want. But it would not change reality. "The result is the same: Russia was denied access to their own money. The central banks around the globe are aware of this fact and acting accordingly. "And that is to acquire more gold." Since 2022, central banks will buy more than 1,000 tons of grain per year. Metals Focus, a consultancy, says that central banks have bought more gold than ever before, with net purchases exceeding 1,000 tons per year. This helped to push gold prices up to record highs of over $4,000 per ounce in this month. Metals Focus predicts that 900 net tons will be purchased in the coming year. A report by the ECB in June showed that gold will surpass the euro in 2024 as the second largest reserve asset after the U.S. Dollar, due to stronger purchasing and the price increase of bullion. Central banks' gold holdings are now worth more than U.S. Treasury Bonds. China, which has not publicly stated its reasons for purchasing gold, has been increasing its gold reserves for the past 11 months. Poland also bought gold, but with a different motive, as the war in Ukraine was a threat to its economy. The appeal of gold for central banks is a result of the fact that it is not a liability or debt of anyone. He said that if the EU taps frozen Russian assets to provide financial assistance to Ukraine, central bank purchases of gold will "very likely" accelerate. COUNTRIES REPATRIATING OLD GOLD RESERVES The measures taken against Russia have also led to an increase in countries repatriating their gold reserves from Western hubs. 68% of respondents of a survey by Invesco in 2023 kept gold reserves at home, compared with 50% in 2020. "The EU is only able to use the frozen Russian assets if it has access, i.e. They are stored/booked at banks outside of Russia," Carsten Menke, an analyst with Julius Baer. Menke stated that emerging market central banks may choose to store assets in their own country. In Germany, President Donald Trump’s trade disputes with allies and his criticisms of the Federal Reserve have revived calls for gold return this year. The Bundesbank said that the New York Fed is a reliable partner for gold storage.
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India claims that the Indian-backed oil refinery should start operations in Mongolia in 2028.
India's Foreign Ministry said Tuesday that an Indian-backed refinery in Mongolia will begin operating in 2028. The Mongolian authorities want Indian companies to also explore for oil and natural gas in the country. The announcement came during the visit of Mongolian President Khurelsukh Ukhnaa to India. Mongolia's first refinery will be built using a $1.7 billion Indian credit line. It has the capacity to process 1,5 million metric tonnes of crude oil per year, or 30,000 barrels a day. P. Kumaran is a senior official in the Indian Foreign Ministry. He said that refinery equipment will be manufactured in India, and shipped to Mongolia. It seems to be moving forward. He told reporters that he expected the refinery to be operational by 2028. Kumaran, a Kumaran from India, said that the country is looking to import coal as well. It is a landlocked country sandwiched between Russia and China. Russia and Mongolia offer a discount for Mongolian goods that transit through Russia's railway and ports, Kumaran said. "We're also trying to find out more to see if there is a discount available between Mongolian and Russian," Kumaran added. (Reporting and editing by Barbara Lewis, Alexandra Hudson; Surbhi Mitra in New Delhi)
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Sources say ADNOC will win Covestro $17 billion deal with remedies tweaks.
Sources with direct knowledge said that the EU is likely to approve ADNOC's 14.7 billion euro ($17 billion) offer for German chemicals firm Covestro. EU regulators are expected to tweak remedies offered earlier in the month. The European Commission is investigating the deal - ADNOC’s largest acquisition to date and one of the biggest foreign takeovers by a Gulf State of a EU company - over concerns that ADNOC could be using state subsidies for the acquisition of the chemicals company. Last week, the EU regulator asked for feedback from competitors and third parties after ADNOC offered a change to its articles of Association to address EU concerns regarding the unlimited state guarantees. The company also committed to retaining Covestro's Intellectual Property in Europe. Sources said that the Commission will likely demand minor changes in the remedies before approving the deal. These types of demands are common after third-party feedback. The Commission declined comment. ADNOC reiterated its previous comments that it would offer a package robust and proportionate of remedies to the Commission, and was confident that this would result in the timely clearance of the transaction. Separately the Commission will resume its investigation into the deal after temporarily stopping the process last week while ADNOC provided requested information. ADNOC responded to all requests for information since then, according to another source. Reporting by FooYun Chee. (Editing by Barbara Lewis, Mark Potter and Foo Yun Chee)
GM will take a $1.6 billion charge when tax credits are blown, muddying EV plans
General Motors announced on Tuesday that it will take a $1.6billion charge in the third-quarter as it reshapes the electric vehicle strategy after the federal incentive was scrapped, which is expected to reduce demand.
GM's disclosure was one of the most clear indications that U.S. carmakers are scrambling in order to adjust their production plans to respond to a slowing EV market.
Auto executives have warned of a sudden drop in battery car sales, which will eventually rebound, after the Trump Administration scrapped a federal tax credit of $7,500 for electric vehicles.
The adoption rate of EVs is expected to slow down.
In a filing GM stated that it expects the "adoption rate of EVs" to slow down following recent policy changes. These include the termination of some consumer tax incentives, and a softer approach on emissions rules.
In a press release, GM said that the charge was a "special item" because it expected EV volumes to be lower than anticipated due to market conditions and a changed regulatory and policy climate.
The automakers are also trying to mitigate the impact of President Donald Trump’s tariffs. These forced GM, for example, to suffer a $1.1billion hit.
previous quarter
The company estimated that trade headwinds would have a negative impact on its bottom line of between $4 and $5 billion in this year. It said it could offset the blow by at least 30%.
In premarket trading, shares of the Detroit-based automaker fell 2.5%. The stock has risen by about 4.5% this year.
Garrett Nelson, a CFRA Research senior equity analyst, said that the charge is not surprising given the recent market development and the fact that GM has made the most aggressive EV push among traditional automakers.
We believe that the U.S. market will benefit from automakers like Toyota and Honda who have invested more in hybrid vehicle technology.
GM and Ford, its crosstown competitor, had both launched a program which would have allowed dealers the opportunity to offer a $7.500 tax credit for EV leases once the federal subsidy ended, but then backed out of those plans.
The automaker warned that it could impose additional charges after reassessing its manufacturing footprint and capacity.
GM's existing portfolio of Chevrolet, GMC, and Cadillac EVs will not be affected by the changes.
Charges include a $1.2 billion non-cash impairment tied to EV capacity adjustments and $400 million for contract-cancellation fees and commercial settlements.
The charges will be included in the non-GAAP third quarter results, which are scheduled to be released early next week. Reporting by Utkarsh Shitti and Shivansh Twary from Bengaluru, Editing by Tasim Zaid
(source: Reuters)