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The US-Japan Tariff Deal: Key Facts
On Wednesday, U.S. president Donald Trump and Japanese prime minister Shigeru Ishiba announced that they had reached a deal on trade which will include a 15 percent tariff on U.S. imported goods from Japan. Here's the latest information. THE DEAL In a Truth Social post, Trump stated that the deal included $550 billion in Japanese investments into the United States, and an improved market access to Japan for American products including automobiles and rice. Prime Minister Ishiba announced that Japanese autos, which make up more than a quarter (25%) of the country's total exports to the U.S. will be subject to an additional 15% tariff. This is a reduction from the previous 27.5%. He added that the U.S. had also agreed not to impose any limits on auto imports. Japan will maintain its current tariffs on the importation of agricultural products from the United States. Ishiba said that the country would import more rice but still within the existing tariff free quota. The maximum amount of loans and guarantees the Japanese government and state agencies could provide to encourage Japanese corporate investment into the United States was $550 billion. The "Japan Investment America Initiative", aimed to boost investment in sectors of economic security, including semiconductors. pharmaceuticals, shipbuilding and critical minerals. energy, autos, and AI technologies. Ryosei Aizawa, Japan's chief trade negotiator, met with Trump on Tuesday at the White House in order to seal the agreement. He said that steel and aluminum, which are subject to a 50% separate tariff, were excluded from the deal. Akazawa announced that Tokyo would drop the additional safety tests currently imposed on imported U.S. vehicles and trucks. Trump had complained about these requirements for years, saying they restricted sales of American-made automobiles in Japan. TARIFF DEADLINE Akazawa visited the U.S. for trade negotiations eight times between April and August. He met with officials from the U.S. including Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick, and Treasury Secretary Scott Bessent. The latest visit was made just days before the deadline of August 1, when the Trump Administration announced it would impose 25% tariffs on all Japanese imports. The U.S. represents Japan's largest export market. Economists warned that Trump's new tariffs would push the fourth largest economy in the world into recession. MARKET REACTION After the announcement, Japanese carmaker shares led Nikkei to an all-time high. They closed the day up 3.5%. Toyota Motor Corp.'s shares rose by 14%, while Honda Motor Co. gained more than 11%. (Reporting and editing by Lincoln Feast, Peter Graff, and Tim Kelly)
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Why is Russia so determined to seize the strategically important Ukrainian city of Pokrovsk
Over 100,000 Russian soldiers are advancing in the area to try and encircle Pokrovsk, a strategically important city located in eastern Ukraine. Here are some key facts about Pokrovsk - which Russians refer to by its Soviet era name, Krasnoarmeysk - and the long struggle for its control that began last summer. What is POKROVSK? Pokrovsk, a hub for road and rail in Ukraine's eastern Donetsk Region, had an estimated 60,000 residents before the war. The majority of people have fled. All children have been evacuated. According to Serhii dobriak, head of the military administration in the city, there are less than 1,500 remaining residents. The town is located on a major road that has been used to supply the Ukrainian military with supplies for other eastern outposts. These include the towns of Chasiv Yar in the Donetsk Region, which have been ravaged by intense fighting. Pokrovsk is about six miles west of the only coal mine in Ukraine that produces coking. Ukrainian steelmaker Metinvest announced in mid-January that it had suspended operations at the mine. Pokrovsk is home to a large technical university since 2014. It's the oldest and largest in the region. Shelling has damaged the university, which is now abandoned. Why does Russia want Pokrovsk? Moscow claims to have annexed Ukraine’s eastern Donetsk Region and control over 70% of its territory. Kyiv, as well as most Western countries, reject Russia's seizure and call it illegal. Capturing Pokrovsk (dubbed by Russian media "the gateway to Donetsk") and Kostiantynivka, to its northeast, which Russian forces are trying to envelop would give Moscow a base to drive north to the two largest remaining Ukrainian-controlled Donetsk cities - Kramatorsk, and Sloviansk. The control of Pokrovsk will allow Moscow to disrupt Ukrainian supply routes along the eastern front, and to boost its long-running campaigns to capture Chasiv Yar which is located on higher ground. This could give it more control over a larger area. The capture of this area would give Russia greater options for attacking the Dnipropetrovsk Region in Ukraine to the west. This is not a region that Moscow claims, but it does claim to have a small foothold there. What is the UKRAINE doing to defend Pokrovsk? Oleksandr Sryskyi, Ukraine's top commander, said that his forces are standing firm. In May he said that Ukraine has stalled and even pushed the Russian offensive against Pokrovsk. Officials in Ukraine claim that Russia has bombarded their forces with glide bombs, artillery and drones. They also say they have sent small groups of fighters into the field to gain more ground, rather than sending large infantry groups or armoured vehicles. Syrskyi estimates that Russia has 111,000 troops in the Pokrovsk region. During the defence of the city, President Volodymyr Zelenskiy made several senior personnel changes within the army. Ukraine claims that Moscow has suffered huge losses despite its best efforts to gain a breakthrough. Moscow claims that Ukrainian forces have suffered serious losses. Both sides do not disclose the full number of casualties. EVACUATION Ukrainian authorities have been working hard to convince the remaining residents of the city, mostly sick and elderly people, to evacuate. Dobriak, head of the military administrative, stated on Monday that vehicles were unable to reach certain areas, and people would have to evacuate on foot. He said that it was becoming increasingly difficult to deliver food, and that stores will have to close within the next few days. Anti-drone nets are used to cover one of the main roads, which Ukrainian forces refer to as "the Road of Life", to protect vehicles against Russian drone attacks. What does Pokrovsk look like now? Pokrovsk is a shadow its former self. It has no electricity, gas or heating, and it is without water. On May 21, footage showed severely damaged apartment buildings, streets littered with debris and some elderly people and cyclists. The sound of shellfire could be heard and roads were littered with the remains of wrecked vehicles and shells. Reporting by Andrew Osborn, Moscow; Anastasiia Mlenko, Kyiv. Editing by Peter Graff
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Japan's crude steel production falls for the third consecutive month in June
Japan's crude steel production, which is the world's third largest producer, dropped 4.4% from a year earlier in June. This was the third consecutive month that Japan saw a decline in output. The drop was due to a combination of sluggish demand in Japan and weak exports, amid high shipping volumes from China, its top producer. The Japan Iron and Steel Federation reported that the production, which was not adjusted for season, fell to 6.72 millions metric tons. The production was down by 1.7% compared to May. The decline in construction is due to a combination of factors, including rising costs for materials and labour shortages. The analyst also said that the slowdown in export demand has dampened production. However, the impact of the U.S. tariff increases on steel is minimal, as Japan only exports about 1,000,000 tons to the U.S. annually. China's exports of steel in June dropped 8.5% compared to May, to a new four-month-low of 9.68 millions tons. However, total outbound shipments for the first half of 2018 rose 9.2% on an annual basis to reach 58.15million tons. Steelmakers increased exports to prepare for expected weakness in demand due to U.S. Tariff increases. According to the analyst of the Federation, Japan's first-half steel production fell by 5%, to 40.55 millions tons. This is the lowest output since 2009 when the global financial crises hit the demand. The analyst stated that "while production recovered quickly following the financial crisis of 2009, the current slump is showing no signs and appears to be more serious." The Ministry of Economy, Trade and Industry predicted earlier this month that Japan's crude-steel output would fall by 2.3% from the previous year in the quarter of July to September. Reporting by Yuka Obaashi. (Editing by Jane Merriman.
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Copper reaches a two-week high on the hope of trade deals
The copper price reached its highest level in more than two weeks on March 15, as a U.S. - Japan trade agreement boosted sentiment. However, gains were limited by concerns about excesses and increasing inventories. The London Metal Exchange's three-month copper price was up 0.2% to $9,934 as of 0945 GMT, the highest since July 4. Copper is up about 4% in the last week, and it's approaching its peak of $10 020.50 that was reached on July 2. The global stock markets rose after U.S. president Donald Trump signed a deal on trade with Japan. Investors in metals are focusing on a possible trade deal with China, the world's largest consumer of metals. The meeting between U.S. officials and Chinese officials is scheduled to take place next week in Stockholm. The market was impacted by concerns about an oversupply. Data showed that the copper market had a surplus in the first five month of the year of 272,000 metric tonnes. A large stockpile of goods in the U.S. also weakened support. This was because traders had taken advantage of the higher prices due to the anticipation of tariffs, which were due to be imposed on August 1. Nitesh Sha, commodity strategist with WisdomTree, said: "We may see copper trading ranges once tariffs are implemented or even if they soften." The U.S. is going to use up its copper stockpile before importing any new units. Therefore, demand could be a bit low during that time of inventory depletion. LME inventories have risen 38% since June 27, indicating that copper flows are now being diverted from the U.S. Aluminium fell 0.5%, to $2.641.50 per ton, and zinc dropped 0.1%, to $2.856. Lead rose 0.8%, to $2.026, Nickel increased 0.1%, to $15.545; and Tin was up 0.3%, to $34,000. Click here to see the latest news in metals (Reporting and editing by Eric Onstad)
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The issuance of green bonds has dropped by almost a third as a result of climate change backtracking
New figures reveal that the amount of "green bonds" sold by governments and banks has dropped by nearly a third in this year due to the rollbacks of climate change policies across the United States, Europe and Australia. Data published by Fitch Ratings agency showed overall "labelled" bond issuance, which also includes other types of sustainability-focused bonds, was down 25% year-on-year to $440 billion, with Q2 also the weakest quarter since 2019. The amount of green bonds, where money is raised for climate or environmental projects, dropped by nearly $100 billion or 32 percent in one year. Meanwhile, the share of bonds with environmental, social, and governance labels has decreased to 10.2% from 11.7% of the total global bond issue for 2024. The U.S., under President Donald Trump, is withdrawing from a number of global sustainability initiatives while rolling back environmental standards. The European Union is also working on proposals to loosen corporate reporting requirements for sustainability. This would affect a majority of companies. Fitch stated that the biggest factor impacting the markets was the uncertainty surrounding capital expenditures, which is driven by macro-challenges and geopolitical instabilities. It added that "ongoing uncertainty about ESG-related regulation - amid implementation delay and rollbacks - may prompt issuers wait for regulatory clarification." (Reporting and editing by Ed Osmond, Simon Jessop)
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Trump's Trade War: Major Developments
The tariffs imposed by Donald Trump since his inauguration on January 20, 2017 have sent shockwaves through financial markets, and uncertainty has spread throughout the global economy. This timeline shows the major events: Trump imposes tariffs of 25% on Mexican imports, 10% on Chinese goods and most Canadian imports. He demands that they reduce the flow of illegal immigrants and fentanyl into the U.S. Trump accepts a 30-day suspension of his threat to raise tariffs on Mexico and Canada, in exchange for concessions made on border security and criminal enforcement. The U.S. fails to reach a similar agreement with China. Trump increases tariffs on aluminum and steel to 25%, "without any exceptions or exclusions". March 3 - Trump announces that 25% tariffs will be imposed on imports from Mexico and Canada from March 4, and doubles the fentanyl tariffs for all Chinese imports. March 6 - Trump excludes for one month goods from Canada and Mexico as part of a North American Trade Pact. Trump announces a 25% import tariff on cars and light trucks. Trump announces global duties with a base of 10% on all imports, and much higher duties for some of the United States’ biggest trading partners. Trump suspends most of the country-specific tariffs he had imposed less than 24 hours before, after a financial market upheaval that erased trillions from stock exchanges worldwide. The 10% blanket duty on nearly all U.S. imported goods remains in place. Trump has announced that he will increase the tariffs on Chinese imports from 104% to 125%, which was the level in effect the day before. The extra duty on Chinese goods is now 145% including the previous tariffs. May 9 - Trump announces a limited bilateral agreement with British Prime Minister Keir starmer that keeps British exports at 10% tariffs, but lowers U.S. duty on British auto exports. On May 12, the U.S. & China agreed to temporarily reduce reciprocal tariffs. The U.S. and China agree to temporarily reduce reciprocal tariffs. May 13: The U.S. reduces the "de minimis", or low-value tariff, on China shipments. Duties for items up to $800 are reduced to 54% instead of 120%. Trump announces on May 23 that he will recommend a tariff of 50% on all goods imported from the European Union, starting June 1. Two days later, he backtracks on his threat. He warns Apple that it will face a 25% tax if the phones it sells in the U.S. are manufactured outside the country. May 29: A federal appeals Court temporarily reinstates Trump's most comprehensive tariffs. It suspends an earlier ruling by a lower court to allow the government's case to be heard. Trump signs an executive order activating the increase in steel and aluminum tariffs from 25% to 50% on June 3. Trump warns that he could soon increase auto tariffs. Trump announces a 20% tariff for many Vietnamese exports. Trans-shipments through Vietnam from other countries will be subject to a 40% tax. Trump said on Truth Social, July 6, that countries who align themselves with "Anti-American Policies" of BRICS would be charged an extra 10% tariff. Trump announces on Truth Social that the higher additional duties announced earlier in the year will be implemented with a slight delay, on August 1. In letters to 14 countries, including Japan, South Korea, and Serbia, Trump says the tariffs will range between 25 and 40 percent. Trump announced on July 10 that the U.S. would impose a tariff of 35% on Canadian imports in August, and planned to impose tariffs blankets of 15% or 20 % on most other trading partner. Trump threatens to impose 30% tariffs on imports from Mexico, the EU and Canada from August 1. Trump announces that the U.S. is imposing a tariff of 19% on Indonesian goods under a new deal. Trump signs a deal with Japan on July 22 that reduces the tariff on auto imports from 25% to 15%, and spares Tokyo new levies. (Compiled in Gdansk by Paolo Laudani, Mateusz Rabiega, and Lincoln Feast; edited by Jamie Freed and Matt Scuffham, Milla Nissi Prussak).
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Green hydrogen retreat threatens emissions targets
Around the globe, green hydrogen developers are cancelling their projects and reducing investments. This could lead to a longer-than-targeted reliance on fossil energy. The sector's initial goals have been exposed as being unrealistic due to the challenges it faces. Green hydrogen is prohibitively expensive for industries that are hard to electrify, like steelmaking and long distance transportation. Jun Sasamura is the hydrogen manager for Westwood Global Energy. He said that the gap between European ambitions and actuality shows the magnitude of the industry's reset. He said that only a fifth (or less) of all planned hydrogen projects in the European Union will be operational by the end decade. Westwood Global Energy data show that this translates to approximately 12 GW in production capacity compared to an EU target for 40 GW. He added, "I don't think the EU 2030 target (hydrogen production), will be met in the current state." Expectations Inflation Many companies claim that the high costs of green hydrogen and the lack of demand have made many plans unprofitable. Miguel Stilwell d'Andrade is the chief executive officer of Portuguese energy company EDP. He said: "Green hydrogen had been an inflated expectation which has now turned into a valley or disillusionment." The demand is missing. In Spain and Portugal there are 400 million Euros ($464.2 Million) in subsidies for hydrogen, but we still need someone to purchase the hydrogen. Ana Quelhas is the chief of EDP's Hydrogen and Co-Chair of the European Renewable Hydrogen Coalition. She said that although several projects are in advanced stages, they cannot be moved forward due to a lack buyers. Iban Molina, a company executive from Spain, said that Iberdrola had put on hold plans to expand the capacity of a green hydrogen plant with an electrolyser capability of 20 MW, until it found buyers for more output. In recent years, they are one of more than a dozen major companies who have cut back on spending or shelved certain projects in Europe, Asia and Australia. Westwood Global Energy reports that companies had cancelled or delayed over a fifth (or more) of all European projects at the end of 2017. Emma Woodward, at Aurora Energy Research said: "In the years 2020-2021, we had this vision of hydrogen being used in nearly every sector which hadn't yet been electrified. "I believe we have realised that there are probably other, more commercially viable alternatives in many sectors." We may not need as much hydrogen initially thought. Too Expensive Many governments have supported the development of green hydrogen for many years. This is produced by electrolysis, which splits water using renewable electricity into hydrogen and oxygen. Australia, Britain and Germany, as well as Japan, announced ambitious investment plans that they hoped would lower costs and create a green hydrogen industry that was profitable and would not need any support. Minh Khoi Le is Rystad's director of hydrogen research. Grey hydrogen is twice as costly as natural gas, as an example. This latter product is made from coal and natural gas, and is used in many industries including oil refining, ammonia production and methanol. He added that costs could drop by 30-40% if the equipment prices fall and the supply chain is scaled up. Meanwhile, Woodward of Aurora and Sasamura of Westwood Global Energy said green hydrogen would not be competitive until then. Wood Mackenzie, a consultancy, says that only 6 million metric tonnes per annum of low-carbon hydrogen is operational or being built in the world, including green and blue hydrogen, which are made from gas. The consultancy estimates that 450 mtpa is required to achieve net zero emissions of greenhouse gases by 2050. The EU has pledged to reduce emissions by 55% by 2030 compared to 1990 levels, on the way to its 2050 goal. The market is priced out of reach for buyers The industry expected sectors like steel, oil refinement, cement, and transportation to be the first buyers. However, the demand that was expected has not materialised. Dirostahl is a German die-forging company that makes parts for wind turbines and ships, as well as oil and gas drilling pipes. It is dependent on natural gas fired furnaces and is searching for an alternative. Green hydrogen is too expensive. The fuel is not available for less than 150 euros per megawatt-hour (MWh), while natural gas costs between 30-35 euros/MWh. "It just doesn't work." In practice, it's economic suicide. "We'd be totally uncompetitive", he said. The high price of electrolysers for large-scale production is due to infrastructure bottlenecks, and the increased cost of energy resulting from new rules defining what constitutes "green hydrogen". Some European countries have reduced their ambitions. Italy recently switched 600 million euros of post-pandemic funding from hydrogen to biomethane. In April, France reduced its 2030 target for hydrogen electrolysis by over 30% and Portugal cut its electrolysis ambitions by 45%. Last year, the Dutch government made drastic cuts in the funds allocated for the development of green hydrogen and batteries. Instead, the climate fund was redirected to the construction of two nuclear power plants. In Australia, several players have scaled back their projects or pulled out despite the government's support of more than A$8 Billion ($5.2 Billion). Even projects that are moving forward face delays. Rystad analysts estimate that 99 percent of the A$100 billion projects announced in the next five-year period have not progressed beyond the concept stage or approval. DIFFICULTIES IN INFRASTRUCTURE Hydrogen is also difficult to store, as it requires tanks with high pressure and extremely low temperatures. It can also leak. This makes transporting hydrogen through the old gas pipelines, while waiting for new infrastructure, a risky proposition. Spain hopes to build 2,600 km (1.615 miles) of hydrogen network, and connect it with another project. The trans-European link H2Med - from Iberian to Northwest Europe. Arturo Gonzalo is the CEO of Spanish gas grid operator Enagas. He said that while the Spanish network will be operational by 2030, delays of up to two years may occur for other European infrastructure. He said: "Infrastructure does not happen when the market is already booming; it's something that must be done for the market to burgeon." ($1 = 0.8617 euros) ($1 = 1.5340 Australian dollars)
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Sources: France's EDF will cut jobs and withdraw from certain overseas projects
Two sources with knowledge of the matter said that EDF, a French energy company, plans to reduce its overseas headcount and cancel bids for some nuclear projects in order to focus on a major building programme in France under the new CEO Bernard Fontana. France, the world's leading nuclear power producer and Europe's biggest nuclear energy provider, is pulling back in a time when global calls are being made for nuclear expansion. This opens up new opportunities to other players, as high costs and design problems hurt its ability compete internationally. Fontana took over EDF in April after the government became frustrated by the slow progress of the French nuclear fleet. The new CEO told a parliamentary committee hearing about his nomination that he will focus on the development of domestic nuclear projects, rather than on its international business. This company employs hundreds and has built reactors previously in China, Finland, and Britain. Sources said that he has made changes in the past few weeks to his overseas business, including a pullback from certain bids for building reactors outside Europe. A source familiar with plans said that the company would focus on nuclear tenders in the Netherlands and Sweden, where there is a greater chance of it winning. The person who spoke to me said that it will also reduce the priority of projects in Poland and India as well as Canada and other countries outside Europe. Another industry source with knowledge of the situation said that reducing its international footprint would allow it to reduce costs and redirect staff to more important projects. EDF has said that no decision has been taken. An official from the office of Prime Minister Francoise Bayrou said that "the new French nuclear program is the group's top priority." Recent international projects by EDF have been plagued with long delays and cost increases. It lost out last year to South Korea's KHNP for the bid of two new reactors. Fontana plans to reduce the number of employees on its international sales team. According to one source, there are plans for about 60 job cuts, including 10 managers. EDF stated that the group will continue to pursue its international activities, while also remaining mindful of the profitability and commitments it has made. A spokesperson for EDF said that Europe has always been the company's top priority. It is now focusing on improving its European supply chain. The official from the French government said: "It is important that these international projects strengthen the French nuclear industry." According to a report in the media last year, President Emmanuel Macron announced early 2022 plans for six new French nuclear reactors. The reactors would replace aged plants and ensure future energy supplies. However, the company is heavily indebted after costly repairs to its nuclear facility in recent years. EDF has sold its UK reactor project Sizewell C to investors who want to share the risk of the long construction time and have more capital for other projects. EDF also wants to sell off some of its renewable assets in North America, Brazil and South America. One source said that the company's subsidiaries Framatome, Arabelle and AP 1000, which manufacture reactor parts, would continue to bid for international projects such as AP 1000, in Poland.
Ampol lowers half-year earnings forecast due to supply chain impact
Ampol Ltd, Australia's largest fuel retailer, forecast lower half-year earnings on Wednesday as the sea-freight situation impacted its supply chains. It also reported a 1,1% decline in its Lytton Refinery's second-quarter margins.
The company anticipates that first-half earnings will be A$400m ($262.04m) on a replacement costs basis, compared to A$502.1m a year ago.
The company's second-quarter refinery margin in Queensland at its Lytton Refinery, one of its key assets, dropped to $8.71 a barrel, from $8.81 a barrel last year.
The Queensland refinery has suffered from a number of operational disruptions, including planned maintenance, and loss of production due to Cyclone Alfred. This, combined with the weak margins of Singapore's refining industry, has impacted the refinery's margins and output.
The refinery margin, which is the difference between crude oil prices and refined petroleum product prices, increased in the second half of the year.
The Sydney-based company reported a second-quarter sales volume of 6.304 million liters, down 4.7% compared to a year ago.
The second-quarter output of the Lytton refinery was 1,406 ML. This compares to 1,420ML recorded a year ago.
The company will report its financial results for the first half of the year on August 18. (1 Australian dollar = 1.5265 dollars) (Reporting and editing by Adwitiya Shrivastava in Bengaluru, Sherin Sunny)
(source: Reuters)