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Bloomberg News reports on G7 draft pledges to tackle 'excessive balances' in the global economy
Bloomberg News, citing an unsigned draft of a communique, reported that finance ministers and central banks governors of the Group of Seven nations have pledged to tackle "excessive" imbalances in the global economic system. Bloomberg News reported that the finance leaders stressed the need for a shared understanding of "non-market practices and policies" which undermine international economic stability. According to the report, "the draft communique calls on an analysis of market concentration and international supply chains resilience." The report stated that the leaders agreed on the importance of "level playing fields and taking a broad coordinated approach to deal with the harm caused by people who don't follow the same rules or lack transparency." The draft report did not mention China, but it acknowledged an increase in international low-value packages, or "de minimis", typically coming from Chinese retailers like Temu and Shein. Report: The G7 nations may consider increasing sanctions against Russia if there is no ceasefire in Ukraine. Could not confirm immediately the report. The G7 finance leaders -- from the U.S.A., UK. Canada, France. Germany, Italy, and Japan -- met in Banff. The remarks may have been part of the final communiqué being prepared by officials from G7 countries to summarize three-days of meetings. (Reporting by Anusha Shah in Bengaluru Editing by Rod Nickel)
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Gazprom, the Russian energy giant, has scrapped its dividend due to high interest rates
Gazprom, the state-owned Russian energy giant, announced on Thursday that it had decided not to pay a dividend for 2024's results. This was in accordance with the position of the government and despite last year's return to profitability. The government is not helped by the absence of dividends, since it owns just under half of the share capital. It faces a number challenges, including falling oil and gas revenue, rising inflation, increased military spending, and a budget gap. Gazprom shares fell 4.42% to 130.5 roubles at the Moscow Stock Exchange as of 1335 GMT after the announcement. According to the company's own dividend policy, approved in 2019, 50% of adjusted net profits should be allocated for dividend payout. Gazprom reported last month a net income for 2024 after a loss in 2023 of nearly $7 billion, its first loss since 1999 due to the collapse of gas exports into Europe. Some market watchers have not ruled out a dividend payment. Gazprom, according to a source in the industry, is trying to reduce high debt service costs despite steep interest rates. Since last October, the central bank's main rate is at an all-time high of 21%. Gazprom’s financial report, prepared according to Russian accounting standards reveals that its interest rate on debt will double in 2024 from 238.6 to 482.5 billion Russian roubles. Analysts at PSB said that "high rates will result in Gazprom paying more interest this year. The company will likely focus on reducing its debt load rather than pay dividends." Gazprom only paid an interim dividend once since the beginning of the so-called special military operation by Moscow in Ukraine, in February 2022. This was in the autumn of the same year, due to the high gas prices that were in Europe. Gazprom did not pay any dividends on its results for 2021, the first time they have done so since 1998. This is due to high taxes and spending. (Reporting and editing by Louise Heavens/Andrew Osborn, Oksana Kobieva).
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Solar stocks plunge after Trump's tax plan advances in US House
The shares of U.S. Solar companies dropped sharply after the House of Representatives passed President Donald Trump's tax and spending bill. This could end many green-energy subsides that supported the renewable energy industry. Sunrun shares fell nearly 41% early in the morning, followed by SolarEdge Technologies, Enphase Energy, and Complete Solaria. Maxeon Solar shares fell by 9%. Emeren Group shares dropped by 5.2%. JinkoSolar shares declined 4.7%. First Solar and Canadian Solar both saw their share prices drop 5.4% and 6.4%. Trump's budget plan, which he calls "one beautiful bill", would eliminate funding under the Biden Administration Inflation Reduction Act as well as grants to reduce air pollution or greenhouse gas emissions. The bill would eliminate the 30% federal credit for taxpayers installing solar rooftop systems. This would be a major challenge to the industry. Raymond James analyst Pavel Molchanov said that the new bill speeds up the process of phasing out wind and solar tax incentives. According to the proposed new timeline, solar and wind projects will have to begin construction within 60 calendar days after the bill is enacted. They must also finish construction before the end of 2028. If they do not, then the tax credit will be revoked. The clean energy industry now turns its attention to the Senate where the bill will be sent next before being sent to the President, in hopes that it will reverse some of the proposed changes to the IRA. Molchanov said that the solar and wind industries would lobby hard to have the changes reversed while the bill was in the Senate. Reporting by Vallari Shrivastava, Bengaluru. Editing by Tasim Zaid
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Andy Home: US Aluminium smelters compete with Big Tech to get scarce power.
In the United States, it's been 45 years since anyone has built a primary aluminum smelter. Alumax opened the Mt Holly plant, in South Carolina, in 1980. The country now had 33 smelters with a combined capacity of nearly five million metric tonnes of aluminium per year. Six is the number today. Two have been completely curtailed. Mt Holly and two other plants are operating below capacity. The annual production has dropped to 700,000 tonnes. Emirates Global Aluminium is hoping to turn the tide in Oklahoma with a new facility. The new plant joins Century Aluminum which received federal funding from the Joe Biden Administration for a "green" low carbon smelter in the Ohio/Mississippi River Basins. Both projects are facing the same problem. The high power prices have killed most of the country's metal smelters, and the lack of affordable power has discouraged anyone from building a smelter since the turn of the century. The fact that tech companies are willing to pay anything for their data centres, which consume a lot of electricity, makes it difficult for any smelter projects to compete with them for power. No power, no metal Since ancient times, aluminium compounds have been used as dye fixers by the Egyptians and for pottery by the Persians. It wasn't until early in the 19th century, however, that someone figured out how to refine it into metal. Even then, it was still a costly curiosity. In 1869, the global production of aluminium was only two tons and it was worth more than gold. Charles Martin Hall, in the United States, and Paul Heroult, in France, independently discovered the solution by using electrolysis to alumina, an intermediate product. Hall-Heroult is the dominant process for producing metals that are ubiquitous in vehicles, buildings and consumer packaging. It also requires a large amount of power. According to the U.S. Aluminum Association, it takes 14,821 Kilowatt-hours to produce a ton aluminium. A modern-size aluminum smelter that has an annual capacity of 750,000 tonnes needs more electricity than a Boston-sized city. It's a huge challenge for primary aluminum producers in the United States, given that the Energy Information Administration has estimated the country to be facing a deficit of energy of 31 million megawatt hours by 2030, and 48 million by the year 2035. ALUMINIUM VERSUS AI Matt Aboud is Senior Vice President for Strategy & Business Development, Century Aluminum. He says that the power to build a U.S. aluminum smelter is now available. He explained the problem at the CRU Aluminium Conference held in London last week. It is that there is no fixed price for a long time, and a smelter would need that to secure its profitability, as well as pay off construction costs which will reach billions of dollars. According to the Aluminum Association, a new U.S. aluminum smelter needs a minimum of a 20-year contract for power at a cost not exceeding $40 per MWh in order to be financially viable. Every smelter is competing with Big Tech. They are both on the hunt for energy in order to power their next-generation artificially intelligent data centres. According to a report released by the Aluminum Association on rebuilding U.S. Supply Chain Resilience, tech companies are "not limited in what they will pay" for reliable 24/7 electricity. Microsoft reportedly paid Constellation Energy $115 per megawatt hour in order to restart Three Mile Island Nuclear Plant in Pennsylvania. It warned that even reactivating idle aluminium lines would be difficult, given the average 2023 power price of $73.42 per megawatt hour in the four U.S. States hosting smelters. "WHERE the wind sweeps down the plain" EGA has not yet signed a deal to provide electricity for its 600,000-ton smelter project in Oklahoma. According to the Memorandum of Understanding, signed by the state governor Kevin Stitt, the final go-ahead depends on an agreement "power solution framework" based on a Special Rate Offer from Public Service Company of Oklahoma. According to the EIA, Oklahoma produces almost three times as much energy as it consumes. In 2023, natural gas will account for around half of the electricity generated in Oklahoma. Wind power will make up another 42%. Oklahoma is actually the third-largest wind power state, after Texas and Iowa. To run an aluminum smelter using intermittent wind power, it would require a large amount of grid storage, so gas would be a part of the energy mix. It's better than coal, but it isn't ideal for an industry that collectively tries to reduce its carbon footprint in order to produce "greener" aluminium. DO NOT CHANGE IT! Even if EGA is able to secure a long-term, viable power deal, it will take until the end of this decade for the project to produce its first hot metal. According to projections by the Aluminum Association, 14 new remelt facilities are expected to be operational in 2020, bringing the U.S. scrap aluminum demand to 6.5 millions tons. Recycling uses much less energy, usually around 5%, than it does to produce new metal. It also has a lower capital cost. The shortage of scrap is the main obstacle to growth in secondary production in the United States. Only 43% of beverage cans are recycled in the country. This equates to 800,000 tonnes of aluminum thrown away every year. Also, it exports large amounts of scrap aluminium. Exports will increase by 17% annually to 2.4 millions tons in 2024. Most of these are destined for China which is hungry for recyclable materials. To reduce import dependence of a metal classified by all U.S. government agencies as critical, capturing more recyclable material and sending less abroad is a complementary approach. This is also more cost-effective and faster than waiting to find out if EGA or Century will win the fight with Big Tech to get enough power for a new primary melter. These are the opinions of the columnist, who is also an author. Mark Potter edited this article
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Bond sales continue as US House passes Trump’s 'big beautiful tax bill'
Bond vigilantes continue to monitor global debt markets, keeping dollar and stock prices subdued as the U.S. House of Representatives passes President Donald Trump's 'big beautiful' tax bill with a single-vote. Wall Street was expected to open slightly higher on Thursday after it fell on Wednesday, when the lackluster sales of long-term U.S. government bonds and Japanese debt highlighted the growing unease over rising government debt. This reinforced the "Sell America' narrative in the minds of investors after Moody's became the last major credit rating agency to strip the U.S. from its coveted Triple-A status last week. The yields on the benchmark German 20-year bond reached their highest level in two months, as global yield curves steepened. Figures showed that the British government borrowed more in April than was expected, and euro zone businesses unexpectedly returned to contraction. The stock markets of London, Paris and Milan were all between 0.75% to 1% lower. The dollar's strength against the Japanese yen was its lowest in two weeks. Bitcoin reached a new high as investors looked for alternatives to U.S. investments. The Committee for a Responsible Federal Budget, a non-partisan organization, estimates that the U.S. Bill, which extends Trump's 2017 tax cuts and boosts military spending as well as other expenditures, will add $3.8 trillion to the U.S. debt of $36 trillion in the next decade. Michael Metcalfe, State Street Global Markets, said: "It is good news that fiscal stimuli are coming because markets were worried about recession risks. But there is also concern about fiscal stability." I think that the dollar is a bellwether here. It shows that the confidence in U.S. policies has been affected if it doesn't respond to higher yields. The 30-year Treasury bond yields - which are a proxy of super-long-term U.S. borrowing costs – reached 5.13% - their highest level since October 2023 - and the yield on 20-year Treasury bonds hit 5.14% - its highest level since November 2023. Japan's bond market has also been under scrutiny, given its high debt-to GDP ratio. The 30-year JGB's yield was hovering at 3,169%, which is not far off the record high of 3.185% hit the previous session. After Wall Street's tumble on Wednesday, stocks in Asia also fell. MSCI's broadest Asia-Pacific share index outside Japan finished 0.6% lower while Japan's Nikkei dropped 0.8% due to the stronger yen. Francesco Pesole is a FX strategist with ING. Pesole said that the theme of "Sell America" is clearly negative for the dollar. TRADE DEAL PROGRESS The oil price dropped by more than 1.5% after a report that the OPEC+ countries are planning to increase production for July. Brent futures in Europe fell $1 or 1.5% to $63.98 per barrel, while U.S. West Texas intermediate crude fell 97 cents or 1.58% to $60.60. Investors are also nervous about the slow progress made to date in trade agreements. The Group of Seven's meeting in Canada was also a focus of attention. Finance ministers there had given a positive spin to discussions to reach a consensus on a communique that would largely cover non-tariff matters. Investors are looking for any hint that currency markets may be included in trade negotiations. But Thai and Japanese officials claimed that currency markets were never discussed. Bitcoin was not concerned about such things. It reached a record high of $111,862.98, which is a 3.3% rise from the Wednesday close. The move comes amid the hope that soon to be finalised U.S. stabilcoin regulations will continue to bring cryptocurrency assets into mainstream. Standard Chartered's Geoff Kendrick stated that "my official Bitcoin forecasts are 120k by the end of Q2, 200k by 2025, and 500k by 2028."
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Profits of Indian jeweller Tribhovandas Bhimji Zaveri fall due to sluggish market demand
Tribhovandas Zaveri, an Indian jeweller, reported its first profit drop in ten months on Thursday. The surge in bullion prices has led to a higher demand for investment gold instead of jewellery. The fourth-quarter net profit of the company fell by 24.7%, to 94.9 millions rupees ($1.10million). The price of gold increased by almost 17% in the first quarter of the year, and 10 grams of 24-carat rose to more than 90,000 rupees (1,052.26 dollars) by the end March. According to a World Gold Council report, India, which is the second largest gold consumer in the world, saw 7% growth in demand for gold investment. The total amount of gold sold in India in the third quarter jumped to 46,7 tons. The report stated that the demand for jewellery fell by 25%, to 71.4 tons, which is the lowest figure since 2009. Tribhovandas Bhimji Zaveri’s total revenue rose by 4.5% last quarter to 5.29 billion rupies, compared with a 9% increase in the same period a year earlier. The cost of raw materials increased by 34%, which pushed up expenses 4.8%. Kalyan Jewellers and Titan, the larger rival of Tribhovandas Bhimji Zaveri, both posted higher profits for the quarter earlier this month. The shares of the company closed 1.4% ahead of results. ($1 = 85.9250 Indian rupees) (Reporting by Meenakshi Maidas in Bengaluru; Editing by Savio D'Souza)
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Iran warns Israel and the US against any attack on their nuclear sites
Abbas Araqchi, the Foreign Minister, said that the United States would be legally responsible in case of an Israeli attack against Iranian nuclear facilities. This was after a CNN report stating that Israel could be involved. Prepare for strikes Iran Iran and the U.S. - Israel's closest allie - will hold their fifth round of talks in Rome on Friday amid a deep disagreement about uranium enrichment in Iran. Washington claims that this could lead to the development of nuclear bombs. Iran denies such intent. CNN, citing intelligence sources on Tuesday, said it was unclear whether Israel had reached a final military decision and that U.S. official disagreed on whether Israel would decide to attack. In a letter to UN Secretary-General Antonio Guterres, Araqchi warned that Iran would respond firmly to any act of adventurism or illegality by Israel's Zionist regime. Araqchi stated that Iran would consider Washington a "participant in such an attack" and Tehran would need to take "special measures" if the threats continued. The International Atomic Energy Agency (IAEA) would then be informed about such actions. Araqchi, the adviser to Iran's Supreme leader, did not mention what measures are being considered. In April, Tehran could suspend its cooperation with IAEA, or transfer enriched materials to secure and unreported locations. In a separate release on Thursday, Iran’s elite Revolutionary Guards warned Israel that it would face a “devastating and definitive response” if they attacked Iran. Alimohammad Naini, the spokesperson for the Guards, said: "They're trying to scare us with war. But they're miscalculating because they don’t realize the massive popular and military backing the Islamic Republic will be able to muster under war conditions." Diplomats claim that a collapse in the U.S. and Iran negotiations, or a new deal on nuclear energy which does not ease Israeli concerns over Iran developing nuclear weapons by enrichment, could lead to Israeli attacks against its regional arch enemy. Ayatollah Ayatollah Khamenei, the Iranian Supreme Leader, said on Tuesday that U.S. demands for Tehran to stop refining its uranium are "excessive" and "outrageous," and expressed doubt about whether negotiations over a new nuclear agreement will succeed. Tehran claims that its nuclear energy program is solely for civil purposes. Iran and Israel exchanged direct fire in April and in October last year, increasing the likelihood of regional conflict.
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Rubio: Oil license expiring in Venezuela on May 27
The U.S. Oil License in Venezuela expires on May 27, said Secretary of State Marco Rubio in a late-night post on his X account. The license of the U.S. company Chevron to operate in Venezuela was due to expire on May 27. Rubio wrote that "the pro-Maduro Biden #Venezuela oil license will expire on Tuesday, May 27 as scheduled." Requests for comments on Rubio’s post were not immediately responded to by the State Department or Treasury Department. Richard Grenell is the envoy of Donald Trump, U.S. president. Two sources said that Jorge Rodriguez, head of Venezuela's ruling party allied legislature and the person responsible for the release of the American who had been detained in Venezuela for several months, met with him in Antigua. Sources said Grenell offered to extend the wind-down phase for a license that allows the U.S. oil giant Chevron to work in the country by 60 days. The license was set to expire May 27. Chevron did not respond immediately to a comment request. The U.S. Treasury Department as well as the State Department would have to approve any 60-day extension.
Portugal wants European regulators to lead Iberia's outage investigation
Portugal's acting energy minister said that it wants the European energy regulators, ACER, to conduct an independent investigation to determine the cause of the massive power outage which brought Spain and Portugal almost to a standstill in the last month.
Maria da Graca Carvalho stated that Prime Minister Luis Montenegro wanted an independent investigation conducted by the European Agency for the Cooperation of Energy Regulators in order to supplement the technical report prepared by the European Network of Transmission System Operators ENTSO-E.
Carvalho, in response to questions, said that "ACER is a suitable entity for coordinating any external evaluation process. It could bring more transparency, impartiality, and confidence to the conclusions."
In a written statement, the minister said that "there is no evidence at this time" to suggest that cyber attacks, human error or sabotage could have been the cause of the outage.
Last week, Spain's Energy Minister said that a sudden loss of electricity generation at a Granada site, followed by outages in Badajoz, Seville and seconds later, caused the unprecedented blackout in Spain and Portugal.
Iberia is behind the EU target of all countries having 15% of their energy systems interconnected with the wider European network by 2030. Iberia's contribution remains at only 3%.
Carvalho stated that Portugal, despite the reasons for the blackout, was considering how to improve the resilience and security in the national electric system. This is a strategic imperative. (Reporting and editing by Andrei Khalip, Jan Harvey, and Sergio Goncalves)
(source: Reuters)