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Brazil's Ultrapar Q2 profits surge as local fuel industry normalizes
The Brazilian energy and logistic conglomerate,?Ultrapar, reported that on Wednesday its second-quarter?net income increased 46% year-over-year?to 1.68 billion reais (323.7 million dollars), boosting its first-half profits by 71% as the ongoing?legalization?of the fuel distribution sector?boosted market recovery. Ultrapar's performance was largely "driven" by its Ipiranga business. This business benefited from the police crackdown against organized crime, and Middle East tensions, which reinforced the advantage for large-scale operators with import capabilities. Alexandre Palhares, Chief Financial Officer at Ultrapar, said that the company's performance was a result of the efforts made by the public authorities to combat illegal activities in the fuel industry. "As a?result of this more normalized?environment, law-abiding actors, including ourselves, but also others, are regaining?market share, recovering volume, and improving?financial?results." A police crackdown on fraud schemes in fuel distribution a year or so ago boosted the shares of major distributors, after it demolished a network of illegal businesses which ran gas stations to compete with firms such as Ultrapar. Since then, more inspections have been conducted to target price gouging. Tax evasion businesses have also been closed, and major distributors are being investigated for their links with PCC. PCC is a criminal ring which used the fuel industry as a means of laundering multi-billion dollar amounts of money. Ipiranga increased imports to combat the global fuel volatility caused by Middle East tensions. This resulted in an 8% increase of its sales volume for the second quarter compared to last year. The unit's revenue net reached 37.5 billion reals, up 24% from the previous year. The CFO said that despite this, Brazil was "one of the least affected countries at the pump," pointing out government actions such as subsidies and tax reductions, along with Petrobras’s strategic pricing policy. Ultrapar's operational?gains?and working capital released at Ipiranga resulted in a record 4.8 bn reais of operating?cash for the quarter, driving leverage to its lowest level since 2008 Ultrapar's financial performance has also allowed for an early dividend distribution. According to the executive, the company has approved 1.085 billion reals in "dividends" for the first six months of the year. This is equivalent to 1.00 reals per share. The program also includes a share purchase of up to 18,000,000 shares. The executive stated that, while Ultrapar does not give any guidance, it expects the fuel distribution sector to operate in a compliant way. Palhares stated that "we are convinced this more fair and compliant competitive atmosphere is here to remain." "I am not in the position to comment on any other effects." ($1 = 5,1907 reais). (Reporting and editing by Chris Reese, Aurora Ellis, and Luciana Magnalhaes)
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Oil prices rise again as global stocks increase
On Wednesday, global equities climbed after mild inflation data reaffirmed bets that the Federal Reserve would hold interest rates at current levels. Oil prices also rose as investors weighed lower demand against a deadlock between the U.S. and Iran. Separate reports of attacks on ships were made by the United States and Yemen’s?Iran aligned?Houthis. Oil prices dropped as investors considered lower demand projections. Data released on Wednesday showed that U.S. consumer price index increased by 0.1% in July. This was in line with the expectations. This small increase may weaken the case for an increase in interest rates by the Federal Reserve. Money markets had a 50% chance that a rate hike would occur before the release of data. The data "relieves a lot of concerns" that the Fed will be forced to raise rates due to the inflation which is being fuelled by higher energy prices, said Robert Pavlik. Senior portfolio manager at Dakota Wealth Management, Fairfield, Connecticut. The data has impacted rate hike bets. U.S. Treasuries gained, boosting yields. Data did not reflect the recent increase in oil prices, which has risen amid tensions between Iran and the U.S. The MSCI index of global stocks rose by 3.90 points or 0.34%. Wall Street saw the Dow Jones Industrial Average fall 21.58 points or 0.04% to 53,770.27. The S&P 500 rose by 20.30 points or 0.26% to 7,748.50. And the Nasdaq Composite grew 143.04 or 0.54% to 26,588.49. CoreWeave's positive results after the close of the market on Tuesday gave the AI industry a boost. Other AI infrastructure providers rose as well. The STOXX 600 index fell by 0.16% in Europe. The broadest MSCI index of Asia-Pacific stocks outside Japan, closed up 0.92% to 1,636.51. Emerging markets stocks rose by 0.95%, to 1,681.25. Talks to End the War in Iran Continue The markets were still closely following the talks to end war and reopen Strait of Hormuz for shipping traffic. Both the U.S., and Yemen's Iran aligned Houthis, reported separate attacks against shipping on Tuesday. Iran and the U.S. both have increased their rhetoric over recent days. Iran's top security official stated on Tuesday that the Strait of Hormuz would?remain shut unless the U.S. accepted Iran's terms. Investors have remained calm. Dorian Carrell is the head of Schroders' multi-asset income. We don't think the Strait of Hormuz will be at full capacity. This puts a floor under the oil prices and keeps the energy-driven inflationary force?in the markets for the short-to-medium-term. Brent futures rose 7 cents to $88.98 per barrel, while U.S. crude oil also climbed 7 cents to $83.27 during a volatile session. Forecasters reduced their global demand forecasts, which led to a drop in prices. Markets anticipate a BOJ hike The yield on the benchmark 10-year U.S. NOTES increased by 1.26 basis points, to 4.697%. The markets are pricing in an earlier rate hike?in Japan. This puts pressure on Japan's short-dated bonds. Investors have priced in a nearly 60% chance of an increase of one quarter point at the Bank of Japan meeting of September. The yen fell 0.07%, to 159.39 dollars per yen. This is still a little below the high of last week of 155.20. The dollar index (which measures the greenback versus a basket of currencies including the yen, the euro and others) rose by 0.17%, to 99.97. However, the euro fell 0.14%, to $1.1524. Spot gold increased by 0.92%, to $440712 per ounce. U.S. futures gold settled at $4,467.5 up 0.6%. (Reporting from Samuel Indyk and Rocky Swift in London, Chris Prentice and Sinead carew in New York, with additional reporting from Sinead carew; editing by Edwina gibbs, Stephen Coates and Barbara Lewis.
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Technical selling and pressure from the grain markets are to blame for the fall in LIVESTOCK CME cattle futures.
Market analysts say that the Chicago Mercantile Exchange's live and feeder cattle prices fell?sharply? on Wednesday due to a flurry of technical selling?, the pressure of a rally on the Chicago grain markets, as well as growing concerns about the?stress? in the U.S. econom?y, which could.chill broader consumer demand for more expensive cuts of meat. Analysts said that CME lean-hog futures were mainly higher on spread trading despite the CME August Lean Hog Futures easing. Don Roose said, "There were a number of spreads that were unwound by people who were?long hogs and short cattle" According to the Consumer Price Index published by the federal Labor Department, the U.S. consumer prices barely rose in July, as gasoline costs declined for the second consecutive month. According to the report, grocery store prices dropped 0.1% amid a 1.5% decrease in the price of pork. This is the biggest?decrease?since November 2023. Walmart cut ground beef prices by a staggering 16% last month, the biggest drop since September 2020. However, ground beef prices have increased by 9.0% in the past year. Analysts said that the report was released just days after the government reported that the U.S. economy had unexpectedly shed jobs during July. Department of Agriculture prices for choice cuts of beef increased by $2.47 on Wednesday morning to $373.78 per?hundredweight (cwt). Department of Agriculture set the price of choice cuts of beef at $373.78 a hundredweight (cwt), an increase of $2.47. Select cuts were priced at $350.20 a cwt. This is an increase of 40 cents. CME August Live Cattle Futures ended 2.175 cents lower at 230.575 cents per pound. Most-active October finished 2.525 cents lower at $223.800. CME August feeder beef futures dropped 3.825 cents, to 346.350 cents a pound. On Wednesday afternoon, the USDA set the price of the 'carcass cutout' at $100.15 per hundredweight. This is down $1.33 compared to the previous day. CME lean hog contracts for August settled at 95.67 cents per kilogram, down 0.200 cents. October's contract ended 0.225 cents lower at 83.55cents per kilogram. Reporting by P.J. (Reporting by P.J.
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Investor rewards boosted for top US refiners as profits soar
Fuel prices and refinery margins soared in the second quarter, as a result of the disruptions of crude oil supplies via the Strait of Hormuz. Analysts said that the massive profits of refiners and their strong buyback programs were likely to continue in the third quarter. This highlights how U.S. fuel?makers are among the largest financial beneficiaries from the Iran War. International buyers are willing to pay higher prices to secure supplies due to the disruption of global energy shipping caused by the conflict. The attacks on Russian oil refineries have further restricted supplies and increased prices for consumers already under inflationary pressure. Marathon Petroleum, Phillips 66, and Valero Energy, three of the largest independent U.S. oil refiners have earned combined profits in the quarter of $12.6 billion, the highest since Russia invaded Ukraine 2022. Simon Wong, Gabelli Funds Portfolio Manager said that to say they made "a lot of money" is an understatement. According to calculations by? Calculations show that the three refiners returned $6.3 billion to shareholders through stock repurchases and dividends in the second quarter, which is the highest amount for more than two-years. This compares to $2.6 billion in profits returned during the same period last year, which totaled $2.9 Billion. Jason Gabelman is an analyst with TD Cowen. He said, "We believe the buyback program will continue to be pretty robust" for Valero. Gabelman estimates that between the third and end of the year, the two refiners would repurchase around 20% of their current market value. Valero's value is around $90.1 billion, while Marathon is worth about $91.3 billion. Gabelman stated that Phillips 66 is 'expected to repurchase around 10% of its $81.2 billion market value, due to its increased focus on debt reduction and growth investments. Phillips 66 approved a $10 Billion increase in its share repurchase programme by the board of directors. A filing revealed that Valero Energy had authorized a $5 billion share purchase program to be added to its existing $2.5 billion program. HF Sinclair, a smaller rival, increased its quarterly dividends by 5%. Marathon shares, the largest U.S. refiner based on volume, have risen around 110% in value to $342 as of Wednesday. Valero shares, the second largest U.S. refining company by capacity, have risen more than 98%. Phillips 66 shares are up around 75%. This compares to the S&P 500's energy sector, which has seen a 36% increase so far this year. CAUTIOUSLY OPTIMISTIC Fuel supply disruptions that have slashed global inventories, have pushed U.S. gasoline crack spreads and diesel crack spreadings, a measure for refiner profitability to record levels. On?August 10, the ultra-low sulfur futures crack spread reached a new record high of $93.84 a barrel. On July 17, the U.S. gasoline crack spread reached $60 per barrel, its highest level since early 2020. For the first time since more than three decades, the average U.S. 'price at pump' rose above $4 per gallon by the end of march. This was the largest monthly increase in many years. Refining executives are cautiously optimistic as we enter the second half of this year. Typically, the demand for gasoline and heating oil is weaker during the transition from summer driving to winter heating. Rick Hessling said that product margins are still robust but have slowed down from their previous levels in the second and early parts of the third quarters. He made this statement during a conference call with investors held earlier this month. Gary Simmons, Valero Energy's chief operating officer, stated that Valero had benefited from strong jet fuel margins during the second quarter. However, this support has not been present in the third. He said that an arbitrage opportunity had reopened in the jet fuel exports into Europe. The company also expects the jet fuel margins will improve over the rest of the quarter, as refiners switch from winter diesel specifications. Simmons: "I'm sure we'll see the jets get stronger as we progress through the quarter."
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Oil prices drop on forecasts of demand, but global stocks gain
Global equities rose on Wednesday, after mild inflation data confirmed that the Federal Reserve would keep interest rates unchanged. Oil prices fell as investors weighed a drop in demand against an impasse in U.S. - Iran talks. Separate attacks on ships were reported by the United States and?Yemen?s Iran-aligned Houthis. Oil prices dropped as investors considered lower demand projections. Data released on Wednesday showed that U.S. consumer price index increased by 0.1% in July. This was in line with the expectations. This small increase may weaken the case for a Federal Reserve interest rate hike next month. Money markets had a 50% chance that a rate hike would occur before the release of data. Robert Pavlik is a senior portfolio manager with Dakota Wealth Management, Fairfield, Connecticut. He said that the data "relieves a lot of concerns" about the Fed being forced to raise rates due?to higher energy prices, which are fueling inflation. The data has dented bets on rate hikes. U.S. Treasuries gained, resulting in higher yields. Data did not reflect the recent increase in oil prices, which have "hurtled" higher amid tensions with Iran and the U.S. The MSCI index of global stocks rose by 0.33%, to 1,154.42. Wall Street saw the Dow Jones Industrial Average rise 0.05% to 53.820.52, the S&P 500 add?0.31% at 7,752.45 while the Nasdaq Composite rose 0.64% at 26,613.91. CoreWeave's positive results after the close of the Tuesday market gave the AI industry a boost. Other AI infrastructure providers rose as well. The STOXX 600 index fell by 0.16% in Europe. The broadest MSCI index of Asia-Pacific stocks outside Japan, closed up by 0.92% to 1,636.51 in Asia. Emerging Market Stocks rose by 0.95% to 1,681.25. Talks to End the War in Iran Continue The markets were still closely following the talks to end war and open the Strait of Hormuz for shipping traffic. Both the U.S., and Yemen's Houthis who are aligned with Iran, reported separate attacks against shipping on Tuesday. Meanwhile, both Iran and U.S. rhetoric has increased in recent days. Iran's top security official stated on Tuesday that the Strait of Hormuz will remain closed until the U.S. agrees to Iran's terms. Investors have remained calm. Dorian Carrell is the head of Schroders' multi-asset income. We don't think the Strait of Hormuz will be at full capacity. This puts a floor under the oil prices and keeps an energy-driven inflationary force in the markets for?the short-to-medium-term." After forecasters lowered their projections for global demand in 2026, oil prices dropped after rising $1 earlier during the session. Brent crude futures fell by 0.37%, to $88.58 a barrel. U.S. crude dropped by 0.26%, to $82.98. BOJ HEADING UP? MARKETS PREDICT A BOJ INCREASE The yield on the benchmark U.S. 10 year notes dropped 1.6 basis points, to 4.668%. The markets are increasingly pricing in an early rate increase in Japan. This puts pressure on Japan's short-dated bonds. Investors have priced in a nearly 60% chance of an increase of one quarter point at the Bank of Japan meeting of September. The yen has weakened by 0.07%, to 159.39 dollars per yen. This is still below the highs of last week of 155.20. The dollar index, which measures greenbacks against a basket including the yen, the euro and other currencies, increased by 0.15%, reaching 99.95. However, the euro fell 0.1% to $1.1528. Spot gold increased by 0.88%, to $4405.10 per ounce. (Reporting from Samuel Indyk and Rocky Swift in London, Chris Prentice and Sinead carew in New York, and additional reporting from Sinead carew; editing by Edwina gibbs, Stephen Coates and Barbara Lewis)
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Gold reaches a two-month high as US inflation data dampens bets on rate hikes
Gold rose to a two-month high after the?U.S. The?inflation rate was in line with expectations, which boosted bets on the Federal Reserve keeping rates at current levels. Spot gold increased 0.9% by 1:30 pm EDT (1730 GMT) to $4,406.64 an ounce, and rose above the 100-day average, currently $4,387.22. Bullion rose more than 1% in the morning session to its highest level since June 5. U.S. Gold Futures closed 0.6% higher, at $4,467.5. The Fed's argument to raise interest rates next month could be weakened by the fact that U.S. consumer prices grew slightly in July. It increased by 0.1% in July, which is on par with expectations, after falling 0.4% in June. The CPI data was?encouraging. The CPI data was higher than the previous month but in line with estimates, as well as a "weaker dollar" and technicals, which all helped gold piggyback," Marex analyst Edward Meir stated. According to CME FedWatch, traders now price in a 40% chance that the Fed will raise interest rates at its September meeting. This is down from 46% prior to the inflation data. On July 29, the Fed?left its benchmark policy rate at 3.50%-3.75%, despite three policymakers voting against it, who favored a rate increase instead. Gold that does not yield tends to be less attractive in an environment with higher interest rates. The Producer Price Index (PPI) is due Thursday. Separate attacks by the U.S., Yemen's Iran aligned Houthis and the U.S. on Tuesday were reported as the prospects of ending the Iran War appeared dim. Meir stated that a resumption of hostilities could cause oil to move up again towards $100. In this case, you might see interest rates rise and gold struggle. Silver spot, among other metals rose by 1.3%, to $65.49 an ounce. It had reached its highest level in June 22 during the previous session. Palladium rose 0.5%, to $1367.23, while platinum rose 0.9%, to $1759.50. (Reporting by Sukanya Mitra in Bengaluru; Editing by Leroy Leo and Diti Pujara)
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Investors weigh down lower demand on US-Iran talks and the oil prices are little changed
After forecasters reduced their projections of global oil demand for 2026, the price of crude oil remained stable in volatile trading on Wednesday. Meanwhile, attacks on Middle East ships continued, and talks to end Iran's war reached an impasse. Brent futures fell 3 cents to $88.88 per barrel at 12:10 pm. ET (1610 GMT). U.S. West Texas Intermediate Crude rose?11 Cents, or 0.12%, to $83.31. In its monthly report on the oil market, the Organisation of the Petroleum Exporting Countries (OPEC) lowered its forecast for world oil demand growth to 580,000 barrels a day by 2026. The International Energy Agency, another rival forecaster, has lowered its demand projections for 2026 and expects to see a 1.6-million bpd decline this year. The Paris-based agency predicts a 4.3m bpd decline in supply for this year and a deficit of around 1.27m bpd by 2026. Anas Alhajji said in a recent note that the demand for energy has dropped significantly. He warned, however, the demand figures included inventory changes, and could therefore differ from actual consumption. The Energy Information Administration reported on Wednesday that U.S. crude oil stocks rose unexpectedly last week, and had their biggest weekly gain since the start of 2023. Analysts say the build in inventories last week is mainly due to unusually low crude exports, and an increase in imports. TWO SHIPS ATTACKED MIDDLE EST? Prices rose after a senior Iranian official said that there had been 'no discussion between the U.S. and Iran to extend the ceasefire agreement because the deal, according to Tehran, did not have a start date. On Tuesday, the U.S. reported that the Houthis of Yemen and Iran-aligned Houthis of Yemen had launched separate attacks against shipping in the Strait of Hormuz as well as the Bab el-Mandeb Strait. These are two vital export routes for Middle Eastern gas and oil in addition to the Suez Canal. The number of vessels that transited Hormuz on Tuesday fell to a low of just eight, a week-low. 125-140 vessels used to pass through this vital waterway every day before the war. (Additional reporting by Shadia Naralla, Robert Harvey Sam Li and Colleen Waye. Jan Harvey, Mark Potter, and Chris Reese edited the article.
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BofA will take 49.9% of Jio Credit in India for $1.9 billion
In a deal worth 182.68 billion rupees (about $1.92 billion), Bank of America will take up to 49.9% stake in Jio Financial Services' non-bank lending division. The U.S. lender is expanding its presence in India’s rapidly growing financial sector. Bank of America and Jio Credit announced on Wednesday a preferred allocation of equity shares, warrants, and other securities. BofA initially holds a stake of 26.5% in the transaction. This could increase to 49.9% if warrants are exercised. As part of this deal, Jio Credit will sell shares and warrants up to 66.13 Billion Rupees. BofA CEO Brian Moynihan stated that by combining Jio Financial Services’ scale, local expertise, and customer base with Bank of America's global presence,?digital experiences, and nearly 250 years of banking leadership, they can expand access to financial products and services, and support India's economic growth. A BofA spokesperson said that the deal is subject to approval by regulators and is not an expansion of retail banking in India. This is the latest large investment by foreign companies in India's Financial Services, following the investment of Japan's MUFG in Shriram Finance as well as the acquisition by Dubai-based bank Emirates NBD of a 60% stake at lender RBL Bank. Jio Credit is one of India's fastest growing NBFCs. Its assets under management reached $3 billion at the end of June, just two years after it began operations. Jio Financial is a listed company in 2023, after a demerger from Mukesh Ambani’s Reliance Industries. It operates businesses like digital lending, payment, insurance brokerage, and asset management services. Through its joint ventures with BlackRock, the company provides asset and wealth management services. The company has also formed a joint venture with Germany's Allianz for general and health insurance.
Sources say Braskem is looking at restructuring out of court as soon as this month.
Two people familiar with the matter said that Braskem is in advanced discussions for a possible 'out-of court restructuring. This could be filed this month.
The company has over $10 billion of debt in Brazil, Europe and America. Sources said that the restructuring proposal may come before the August 24 deadline, when Braskem’s 60-day protection ends.
Sources said that Braskem (which private equity firm, IG4 Capital, recently purchased from engineering group Novonor) has been experiencing a prolonged down cycle in the petrochemical industry. It is estimated to take three to five year to resolve Braskem's issues. Braskem has been weakened in its cash position by the depressed petrochemical prices and a disaster at one of its salt mines located in northeastern Brazil.
The company refused to comment. Sources said that Braskem had been discussing alternative options with its creditors, such as bondholders and the banks, in order to avoid a long restructuring process. However, they have yet to reach a deal. Sources said that creditors rejected Braskem’s offer of repaying principal after a 5-year grace period with a 2-1/2 year grace period for interest.
Sources said that if the current restructuring discussions continue, Braskem will have a 90-day period of negotiation to come to a comprehensive agreement. This would allow time for both parties to reach an agreement, while protecting it from creditors' claims.
One source said that Braskem is also exploring options to restructure its Mexican subsidiary’s $2 billion debt. This could include a possible U.S. Chapter 11 filing, which would be timed with the Brazilian proceedings.
(source: Reuters)