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EIA raises US oil production forecast for 2025
The U.S. Energy Information Administration's (EIA) Short-Term Energy Outlook Report, released on Tuesday, said that the U.S. production of oil is expected to be higher than previous estimates. However, it did not change its forecast for growth in demand. The EIA now expects U.S. oil production will average 13,59 million barrels per daily (bpd) by 2025. This is up from the previous estimate of 13,55 million bpd. The agency maintained its estimate of U.S. petroleum and liquid fuel consumption at 20.5 millions bpd by 2025. Donald Trump, the president of the United States, has pledged to maximize U.S. production while energy executives insist on capital discipline as a priority. The agency predicted that Brent crude prices will average $74 by 2025 but fall to $66 by 2026 due to a gradual increase in production and a relatively slow global demand growth. The EIA stated that OPEC+ will cut production to reduce global oil stocks and maintain crude oil prices at current levels until the first quarter 2025. OPEC+ is expected to increase their production of liquid fuels by 100,000 bpd. EIA reported that the group's production will rise by 600,000 barrels per day (bpd) in 2026, as it unwinds voluntary production cuts. However, they will still remain below their target levels to try and limit global oil inventory increases. Through 2026, the U.S.A., Canada Brazil and Guyana will drive output growth outside OPEC+. EIA stated that the global liquid fuels demand will increase by 1.4m bpd by 2025, and by 1m bpd by 2026. India and China are expected to lead this growth. The EIA stated that the growth is expected to continue at a slower pace than before the pandemic. EIA stated that any future tariffs imposed by Trump on Canada or Mexico are not expected to have a significant impact on global oil supplies. The agency also said the new U.S. Sanctions on Russia and tariffs were a source of uncertainty in oil prices. The EIA stated that the closing of two U.S. refining plants will result in a decrease in net U.S. fuel imports to meet domestic demand. Reporting by Arathy S. Somasekhar, Houston; Editing and rewriting by Mark Porter & David Gregorio
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Pentagon's Hegseth sees growth in defense spending despite Musk review
U.S. Secretary of Defense Pete Hegseth stated on Tuesday that he wished to increase the overall U.S. military spending. He also played down any concerns about an audit pending by Elon Musk, which is aimed at identifying billions in waste within the Pentagon. Hegseth, speaking in Germany on his first overseas trip, said that he was already in contact with Musk. He also expressed confidence in efforts to cut costs by billions of dollars and make the Pentagon more effective. Hegseth, speaking of Musk's Department of Government Efficiency, said: "There are plenty of places at the Pentagon where we would like the DOGE to keep a keen eye on things. But we will do this in coordination." We won't do anything that would compromise the operational or tactical capability of America. Hegseth, however, said that he had already been "intimately involved" with key committees of Congress regarding the bolstering of the U.S. Military. Musk's companies like SpaceX also have major contracts with Pentagon, raising significant concerns about conflict of interest. Donald Trump, the U.S. president, has stated that Musk's DOGE will target the Pentagon first. The DOGE will then review U.S. defence spending after it completes cutting spending at the Department of Education. Musk is expected to uncover hundreds of billions in fraud and abuse within the Pentagon, according to Trump. Leaders across the political spectrum criticize the waste and inefficiency of the Defense Department. Democrats and civil servant unions claim that Musk does not have the expertise needed to restructure Pentagon and that their efforts could expose classified programs. Hegseth downplayed concerns about broad cuts to Pentagon agencies like those seen in the U.S. Agency for International Development by saying: "The Defense Department does not U.S. AID." "U.S. AID is having a lot problems... pursuing globalist policies that have no connection with America First. This is not the Defense Department." Hegseth said Musk could target Pentagon efforts related climate change without providing specifics. Hegseth stated, "I look forward to welcoming Elon at the Pentagon in the near future." Look at all the climate programs the Defense Department has pursued. The Defense Department's business is not to solve the problem of global warming. "We're in business to deter and win wars." Mike Waltz, Trump's National Security Advisor, suggested over the weekend that DOGE could have a particular interest in the Pentagon's processes for shipbuilding. The Pentagon budget is close to $1 trillion per annum. In December, the then-President Joe Biden approved $895 billion of defense spending for fiscal year ending on September 30. Hegseth said that defense spending should be increased, but he also acknowledged his concerns about the growing U.S. national debt which he called "a liability for national security." Hegseth stated, "I believe the U.S. should spend more than what the Biden Administration was willing to do. They historically underinvested into the capabilities of our Military." "The president, just as he did in his first term, is committed to investing in America's military." Hegseth stated that the U.S. defence spending should at least not fall below 3% GDP. According to the World Bank, which cites data from the Stockholm International Peace Research Institute (SIPRI), the United States will spend about 3.4% on defense by 2023. (Reporting and editing by Franklin Paul, Marguerita Choy and Idrees Al)
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US Treasury Secretary visits Ukraine to discuss rare earth minerals
Donald Trump announced on Twitter that U.S. Treasury secretary Scott Bessent would be traveling to Ukraine in the next few days. This is the latest of a number of U.S. government officials who will be visiting Europe in the near future. Bessent will be the first cabinet level official from Trump's administration who visits Ukraine. He is expected to discuss the potential U.S. accessibility to Ukraine's rare-earth mineral resources. Both Trump and Ukrainian President Volodymyr Zelenskiy have expressed an interest in a deal that would allow the United States to receive rare earths in exchange for continuing support in repelling invasions by Russia. Other U.S. officials who are traveling to Europe will be discussing the Ukraine War with Kyiv, and other European Allies. The group includes Secretary of State Marco Rubio as well as Vice President JDVance, Defense Sec Pete Hegseth, and Keith Kellogg the U.S. Special Envoy for Ukraine. Trump said in a Truth Social posting announcing Bessent’s visit that the U.S. had spent billions of dollars globally, but with little to show for it. Rare earths is a grouping of metals that are used to produce magnets for electric cars, cell phones and missile systems. There are no substitutes and the demand is expected to increase. This week, it was reported that the Trump Administration plans to pressure European allies to purchase more American weapons for Ukraine in advance of possible peace talks with Moscow. (Reporting and editing by Don Durfee and Frances Kerry, Ni Williams and Nissa Williams.)
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Trump's tariffs are expected to have a 10% impact on the value of Spain’s steel and aluminium exports.
According to a Tuesday estimate by the Spanish Chamber of Commerce, the total value of Spanish exports of steel and aluminum to the United States may fall by 10.4% as a result of the new tariffs imposed on metals by President Donald Trump. The lobby stated in a note that "the change in the current trading scheme for aluminum and steel would be detrimental in aggregate terms to the productive fabric," adding that Spain's cast iron and steel total exports to the U.S. will reach 944 million euro ($977 millions) in 2023. The report states that a uniform 25% tariff on all countries and regions exporting goods - which Trump has indicated so far – would not be as damaging for Spain because the relative prices of commodities wouldn't change much. It cautioned, however, that "this wouldn't be the case if tariff increases were discriminatory by country or bloc". The 10.4% value reduction was also its initial estimate. Steel and aluminum tariffs will be in effect from March 12.
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US market watchdog wants to stop lawsuit over climate disclosures
The acting chair of U.S. Securities and Exchange Commission announced on Tuesday that the agency is asking a judge to halt proceedings in a suit over a rule on climate disclosures, which was adopted by his predecessor and quickly stayed after controversy. In a press release, Republican Mark Uyeda, acting SEC chairman, stated that the rule was "deeply flawed" and would cause significant damage to our capital markets and economy. The SEC, under former SEC Chair Gary Gensler (a Democrat whose political party controlled three of the five positions), introduced a requirement that companies disclose a range of climate-related business risks, arguing that the information could prove material to investors. Gensler suspended the rule's entry into effect pending a judicial review after it was sued. Uyeda, in a statement, said that the rule is being challenged by a group of federal appeals courts. Uyeda stated that he asked the court to not take the next step in the process, given that the commission no longer has a Democrat as its chairperson and that Donald Trump ordered a rule-making freeze. The statement read: "I have instructed the Commission staff that they notify the Court and request the Court to not schedule the case to be argued to allow the Commission time to deliberate and determine what the next steps are in these cases." Virginia Furness, Isla Binne and David Evans contributed to the reporting.
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Aperam: Brussels must act in the event of a steel flood into EU as a result Trump tariffs
Aperam, a French steelmaker, called on Brussels on Tuesday to intervene and curb imports in the event that new 25% tariffs for all steel and aluminum imports to the United States cause companies to ship more goods to the European Union. The comments of the company highlight the concerns among European steelmakers over a possible new flood of cheap steel to the EU, as it happened in 2018, under the first Trump Presidency. ArcelorMittal - the second largest steelmaker in the world, from which Aperam was spun off in 2011 - called last week on the European Union (EU) to tighten up trade protection. Mittal Family remains largest shareholder in both companies, with approximately 40% of each. In 2018, the EU implemented safeguard measures in order to limit the amount tariff-free steel that enters the EU in order to prevent an import surge after U.S. Steel Tariffs were implemented by President Donald Trump, effectively closing the U.S. Market. According to World Trade Organization regulations, safeguards are only valid for eight years. This means they will expire during Trump's second presidential term, which is mid-2026. Stephane Sejourne, Executive Vice-President of the European Commission, said that in December he would examine ways to extend these measures as part a plan to protect this sector during its decarbonisation. Aperam, a manufacturer of stainless steels and specialty alloys, said, "Since 2018 we have managed the impact on the 25% duty. We work closely with our customers to come up with mutually acceptable solutions." Joe Biden, former president of the United States, negotiated duty-free agreements with Britain and other countries. "We also expect that the European Commission will take appropriate measures, as it did in 2018, to protect the interests of domestic steel producers if exports to the U.S. from third-country countries are diverted to the European Market." The bloc announced on Tuesday that it would take "firm and proportionate" countermeasures to the new tariffs. The EU's "Steel and Metals Action Plan", also known as the "Steel and Metals Action Plan", aims to streamline or delay certain Green Deal regulations, while promising to maintain EU climate goals and regulate imports via quotas. The plan will be unveiled in the Spring of 2025. Aperam CEO Tim di Maulo said in a Friday call with analysts that reducing steel imports wasn't the only thing that steelmakers wanted. Any review of safeguards that increased inefficiencies would also be a positive. (Reporting by Alessandro Parodi, editing by Alexandra Hudson)
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Powell's speech: Stocks fall, US yields rise amid tariffs
On Tuesday, the U.S. Treasury yields rose as investors awaited the repercussions of U.S. Tariff announcements. They also digested remarks from Federal Reserve Chairman Jerome Powell. Donald Trump raised the tariffs on imports of steel and aluminum to 25%, up from 10%. He also eliminated product-specific exemptions and country exclusions. Trump said that he would consider an exemption for Australia, and that the measures for steel and aluminum would only come into effect on March 4. This has led some investors to believe that the duties were being used as a negotiation tool. Mexico, Canada, and the European Union condemned the move on Tuesday, the EU saying that the 27-nation block would take "firm, proportionate countermeasures". Investors were watching Powell's comments for any indication that the tariffs could alter the U.S. Central Bank's monetary policies. Adam Turnquist is the chief technical strategist at LPL Financial. He said that Powell will have to clarify his position. He can't just ignore those questions, because the Fed speaker has to have an opinion at least about some of these measures. Powell, in remarks prepared for the Senate Banking Committee hearings, said that the Fed was not in a hurry to reduce its short-term rate due to a "strong economy" overall. Powell also noted that unemployment is low while inflation is above the central banks' 2% target. The Dow Jones Industrial Average dropped 35.11 points or 0.08% to 44,434.21, while the S&P 500 declined 5.56 points or 0.09% to 6,060.98, and the Nasdaq Composite was down 13.62 points or 0.06% to 19,701.77. MSCI's global stock index fell by 0.89 points or 0.10% to 872.90. The pan-European STOXX 600 rose by 0.2% and reached an intraday record. Treasury yields continued to rise after Powell's first statement. The yield on the benchmark U.S. 10 year notes increased 5 basis points to 4.45%. According to CME's FedWatch Tool, the markets have gradually reduced their expectations of rate cuts by the U.S. Central Bank this year. They are largely expecting that the Fed will hold rates at its meetings in March and May, but they also price in a 50% chance for at least a 25 basis point cut in June. The dollar index (which measures the greenback versus a basket currencies) fell by 0.24%, to 108.10; the euro rose 0.34%, at $1.0034. The dollar gained 0.39% against the Japanese yen to 152.58, while the pound rose 0.38% to 1.2412. The oil price rose due to concerns about Russian and Iranian supplies, but the tariff announcement held gains in check. U.S. crude climbed 1.05%, to $73.08 per barrel. Brent rose 1.16% to $76.74 a barrel.
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Source: U.S. Treasury secretary Bessent will visit Ukraine to discuss rare earth minerals
According to a source who is familiar with Bessent's plans, U.S. Treasury Sec. Scott Bessent will visit Ukraine this week to talk about a possible deal involving rare earth minerals. Bessent is the first Cabinet-level official from President Donald Trump's Administration to visit Ukraine. Both Trump and Ukrainian President Volodymyr Zelenskiy have expressed an interest in a deal that would allow the United States to access Ukraine's rare-earth resources in exchange of continued support for the Russian invasion. Source, who asked to remain anonymous as the plans are still classified, didn't provide any additional information on the itinerary. The White House didn't immediately respond to an inquiry for comment. Bloomberg was the first to report Bessent's plans. Rare earths is a grouping of metals that are used to produce magnets for electric cars, cell phones and missile systems. There are no substitutes and the demand is expected to increase. Several other U.S. government officials will be traveling to Europe in the coming week to meet with Kyiv, as well as other European allies to discuss the Ukraine conflict. The list includes Secretary of State Marco Rubio as well as Vice President JDVance, Defense Sec Pete Hegseth, and Keith Kellogg who is the U.S. ambassador for the Ukraine War. This week, it was reported that the Trump Administration plans to pressure European allies to purchase more American weapons for Ukraine in advance of possible peace talks with Moscow. (Reporting and editing by Don Durfee, Frances Kerry and Max Hunder)
Trump tariffs raise US metals prices and industry is set to struggle
The price of industrial metals in America continued to rise on Tuesday. This was due to the impact of President Donald Trump’s 25% tariffs on aluminum and steel, as the industry will be unable source enough material domestically.
The stated goal of new tariffs was to help struggling U.S. Metal Producers, but it will take some time to reopen and build new plants to compensate for the large amount of imports.
Traders are raising the prices of U.S. Metals to reflect what automakers and other industries must pay for foreign metal once the new measures come into effect on March 12th.
Morgan Stanley estimates that net imports will account for 82% of the U.S. demand.
Since Trump's election, the U.S. premium on aluminium over the benchmark global price at the London Metal Exchange is up a quarter to 35 cents a pound.
Analyst Volkmar Baur of Commerzbank said that "Aluminium production would need to be expanded massively in a very short time period to replace even part of the imported aluminum with domestic production."
The American Primary Aluminum Association has praised Trump's tariffs.
Mark Duffy said, "Today's a good day for the U.S. Aluminum Industry."
U.S. data shows that domestic aluminium smelters only produced 670,000 metric tonnes of the metal in 2010, down from 3.7 millions in 2000. Meanwhile, U.S. demand for the metal was 4.3million tons.
Morgan Stanley's Amy Gower said that the U.S. has curtailed production by 470,000 tons, but it could theoretically resume.
According to our estimation, this process would take between 6-12 months depending on the amount of preparation work that has been done.
She added that building new smelters could take even longer.
PerenniAL CEO Brian Hesse said: "I'm not sure anyone in the U.S. would be more supportive of increasing domestic production of aluminum than I am, but we have to do it thoughtfully and over a period of several years."
"You cannot cut off your nose to spite your face", added Hesse. His company distributes aluminium slabs, wire rods and billets used in wheels and window frames.
STEEL, COPPER
U.S. domestic prices of hot-rolled coil steel (a semi-processed material) have increased by almost 40% since last week.
Analyst Andrew Jones of UBS said that if the supply growth was implemented, it would result in materially higher U.S. price.
The negative impact of an escalating war on trade could have a greater impact.
The global industrial metals price fell on Tuesday as a result of widespread fears over a potential trade war that could slow down economic growth and reduce metals demand.
Trump didn't impose copper tariffs on Monday but he had threatened to do so last week.
The expectation that copper was next led to the U.S. futures trading on Comex surpassing the benchmark global price on the London Metal Exchange on Monday, reaching a new record high.
The price of iron ore fell slightly to $725 per ton on Tuesday, down from $930 per ton at Monday's close. However, it remains roughly twice its level as at the end January. (Additional reporting by Tony Munroe, Ernest Schneider, Melanie Burton, Hyunjoo Ji, Amy Lv, and Francesco Guarascio, in Hanoi, Beijing, and Seoul; editing by Kate Mayberry and Veronica Brown)
(source: Reuters)