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Voestalpine reduces profit forecast, hit by the weak automotive market in Europe
The Austrian steelmaker voestalpine reduced its core profit forecast on Wednesday, after the metric fell by almost a third during its third fiscal quarter. This was largely because of weakness in Europe and in particular the automotive and construction industries. The company, which supplies steel primarily to the automotive industry, said that Europe remained its most difficult market in the current year. German automakers, such as Volkswagen, are facing increasing competition from Chinese automakers in China due to the weakening demand and rising costs. Voestalpine, the biggest of the four steel divisions based on revenue, said that the demand for volumes dropped rapidly and dramatically after the profit warnings from car manufacturers. The report noted that the price of steel in Europe has fallen steadily in the first nine-month period of the fiscal year, which runs until March 2025. Speciality Steelmaker reported a 32% decline in earnings before interest taxes, depreciation, and amortization (EBITDA), to 250.3 millions euros ($259.2million) in the third quarterly, slightly below the analysts' median estimate of 258.8million euros. It has lowered its EBITDA forecast for the year to around 1.3bn euros, down from about 1.4bn euros. Voestalpine said that it does not expect any recovery in Europe's automotive, construction, mechanical and consumer goods industries in the fourth quarter. It only sees a restocking of individual segments. It sees mixed prospects for its second-largest market, the United States, Mexico, and Canada. Voestalpine stated that the tariffs announced on steel products have created uncertainty for exports to the USA, but it added that its North American locations should benefit from the good economic momentum. The European Union, Mexico, and Canada all condemned the move by Donald Trump, U.S. president, on Monday. $1 = 0.9656 Euros (Reporting and editing by Milla Nissi in Gdansk)
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Thames Water to be investigated by UK's Ofwat over environmental delays
The British water regulator Ofwat announced that it would investigate Thames Water for delays in hundreds of environmental improvements. It will determine if the struggling utility has breached their obligations, which could lead to fines. The regulator stated that Thames Water committed to deliver 812 schemes for environmental improvements over the period 2020-2025 but informed it recently it was unlikely to deliver them all on time. It announced on Wednesday that it would be opening an enforcement case. If found to be at fault, the company could face a fine of millions of pounds. Thames, the largest water provider in the UK, has a total debt of 18 billion pounds ($22,4 billion). It is currently waiting for the court to grant a debt-lifeline. Otherwise, it will be out of money by the end March. The water industry in Britain is under fire for dumping sewage into rivers and oceans. Profits are allegedly being put before the environment. Lynn Parker, Ofwat's senior director, said: "The customers have paid Thames Water for these important environmental schemes." We take very seriously any indications that water companies may not be meeting their legal obligations. Ofwat said that opening a case does not mean that the company has breached their obligations. It will publish its findings once an investigation is completed. In August last year, Ofwat suggested fining Thames Water for failing to manage their wastewater and treatment facilities following an earlier enforcement case.
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India's palm oils imports fall to a 14-year low, as soyoil prices rise
A leading trade group said that India's palm-oil imports fell in January to the lowest level in 14 years, as refiners switched to soyoil because of its lower price, due to negative margins on palm oil. The lower palm oil imports from India, which is the largest buyer of vegetable oil in the world, will likely weigh on Malaysian palm oil benchmark prices and support U.S. soybean oil futures. Solvent Extractors' Association of India reported that palm oil imports fell 45% in January compared to December, reaching 275,241 metric tonnes, the lowest level since March 2011. According to the SEA, India imported more than 750,000 tonnes of palm oil per month on average in the marketing period that ended October 2024. Palm oil is usually sold at a lower price than soyoil or sunflower oil. However, falling stocks of palm oil have pushed its prices higher, surpassing rival oils whose supplies are plentiful. The industry association reported that imports of sunflower oil rose by 8.9% in January to 288,284 tonnes, while soyoil imports increased 5.6% in January to 444 026 tons, which is the highest level in seven months. The country reported that lower palm oil shipments reduced total vegetable oil imports by 14.8% in January to 1 million tonnes, the lowest level in 11 months. The SEA reported that the drop in imports of vegetable oil over the past few months has lowered the vegetable oil inventories at the beginning of February to 2,18 million tons, the lowest level since April 2022. Rajesh Patel, managing partner of GGN Research and an edible oil trader, says that palm oil imports will likely increase slightly in February, but remain below normal. He predicted that soyoil exports would fall in February, while sunflower oil imports may rise. India imports soyoil, sunflower oil, and palm oil mainly in Indonesia, Malaysia, and Thailand. It also imports soyoil from Argentina, Brazil and Ukraine. (Reporting and editing by Christian Schmollinger, Barbara Lewis and Anushree Mukherjee in Bengaluru.
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Ukraine gas imports will increase by a third on Wednesday following Russian attacks
Data provided by the operator for gas transmission system revealed that Ukraine will increase its gas imports on Wednesday by a third to 22,6 million cubic meters following Russian missile attacks against Ukrainian gas production plants earlier in the week. Naftogaz, Ukraine's state oil and gas company, said Tuesday that its production facilities had been damaged by a Russian airstrike on the central Poltava area of Ukraine. Operator data indicated that Ukraine would import 8,6 mcm gas from Hungary. 12,2 mcm was imported from Slovakia. 1.8 mcm came from Poland. In recent months, Russia has intensified its attacks against Ukrainian gas production and storage fields and facilities. Previously, it had focused its drone and missile attacks on the Ukrainian electric sector. Ukraine's underground storage facilities for gas are located in western Ukraine, whereas the main production capacity in the east is in frontline Kharkiv Region, as well in Poltava Region. In winter, Ukraine consumes between 110 and 140 mcm per day. This is almost evenly covered by the gas produced and stored in storage facilities. Analysts estimate that gas consumption may reach 150 million cubic meters. Ukraine uses gas primarily to heat its homes and cook. (Reporting and editing by Tomaszjanowski)
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BHP names Ross McEwan as the new chairman to replace Ken MacKenzie
BHP, world's largest listed mining company, announced on Wednesday that Ross McEwan, former CEO of National Australia Bank, will be its new Chairman, replacing Ken MacKenzie who is stepping down on March 31, 2019. McEwan's new position will include overseeing BHP’s selection of the next CEO. He may also be asked to decide whether BHP should revive plans to purchase rival Anglo American following a failed $49 billion bid last year. McEwan is a nonexecutive director of BHP, since April 2024, after spending five years as the CEO of NAB, Australia’s second largest bank and its largest business lender. He was also the head of Royal Bank of Scotland. After a damaging Royal Commission inquiry into poor business practice in 2019, the New Zealand-born NAB CEO was appointed. He was widely credited with revitalizing NAB's reputation with investors through a simplification program. He is currently the director of QinetiQ Group, a defence technology company. McEwan will likely oversee the process to find a successor for BHP CEO Mike Henry, who is about to enter his fifth year in that position. The average tenure of the top job is six years. MacKenzie has been with BHP since 2009 and chair of the company for eight years. He was responsible for BHP's failed bid to acquire Anglo, BHP’s recovery from the Samarco Dam disaster in Brazil, unification of the structure into a single Australian listing and the approval of major investment in Canadian Potash. Andy Forster, of Argo Investments Sydney said: "I think he has done a great job in that time." "He brought a lot of operating discipline, and was really focused on capital allocation and returns." Two other investors, who weren't authorized to speak with the media, believe that MacKenzie stepping down has probably reduced the likelihood of BHP launching another attack on Anglo. MacKenzie said at the annual general meeting of BHP on 30 October that the company had "moved forward" in its pursuit of Anglo. However, the company later retracted this statement when it filed a regulatory filing. (Reporting by Melanie Burton in Melbourne. (Byron Kaye and Rishav chatterjee contributed additional reporting from Sydney and Bengaluru, respectively; editing by Savio D’Souza and Jamie Freed).
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Stocks are upbeat and US yields continue to rise ahead of the inflation test
Investors reacted to the latest U.S. trade war and Federal Reserve Chairman Jerome Powell's message of a gradual path towards rate cuts. The financial markets waited for the U.S. consumer price index to be released later that day, which could provide a clue as to the direction of the monetary policy in the country. Investors were also watching any developments in tariffs. According to reports, advisers of U.S. president Donald Trump are finalising plans to implement reciprocal tariffs on all countries that charge duties on U.S. imported goods. Trump raised the tariffs on imports of steel and aluminum to 25%, up from 10%. He also eliminated product-specific exemptions as well as country exclusions. However, he said that he would consider an exception for Australia. Japan's Industry Minister Yoji Muto stated on Wednesday that the Government has also Requested The United States has exempted Japan. Mexico, Canada, and the European Union condemned the move. The EU said that the bloc of 27 nations would take "firm, proportionate countermeasures". Stock futures indicated a positive opening in Europe despite all the uncertainty. Investors focused on corporate earnings, and the possibility that threatened U.S. duty could be used instead as a negotiation tool, with punitive measures being watered down. The futures of the EUROSTOXX50 index rose by 0.2%, while those of the DAX Index gained 0.27%. FTSE Futures were flat. The benchmark STOXX Index has logged gains of almost 8% this year. Chris Weston is the head of research for Pepperstone. He said: "Solid earnings and a view we may be closer to trough European economic growth offer tailwinds. Funds are switching from U.S. stocks due to frustrations about the U.S. tech/AI trade lacking buzz. Questions have also been raised regarding continued U.S. exceptionalalism." Nasdaq Futures were barely changed while S&P500 futures dropped 0.08%. The broadest MSCI index of Asia-Pacific stocks outside Japan increased by 0.55%. However, gains were limited as traders awaited U.S. inflation data. Shier Lee Lim is the lead FX and macrostrategist for APAC, at Convera. "Tariff developments are notable but have not yet significantly shifted sentiment as markets continue to be anchored by macroeconomic data and central bank guidance." The Shanghai Composite Index and China's CSI300 blue chip index both rose by 0.3%. Hong Kong's Hang Seng Index rose 1.83%. Alibaba shares listed in Hong Kong surged to their highest level in four months after media reports that the company is working with Apple to bring artificial intelligence to iPhone users across China. Japan's Nikkei rose 0.4%. Investors' attention is now focused on the latest consumer price reading, which was released Wednesday. The yield on the benchmark 10-year U.S. notes reached a high of 4.5560% in a week, while that for two-year U.S. notes remained steady at 4.3023%. The markets have slowly reduced expectations of a Fed rate cut this year. They expect the U.S. Central Bank to keep rates unchanged at its meetings in March and May. Powell said on Tuesday: "We're in a good place in this economy". He noted that the Fed is not in a hurry to cut interest rates, but stands ready to do so in the event of further inflation or deterioration in the job market. The dollar's tariff-driven rise in currencies halted on Wednesday. The euro remained steady at $1.0359 while sterling last traded for $1.2446. Helen Given, FX Trader at Monex USA Washington said: "We have seen a lot volatility in the headlines about tariffs over the past two weeks." But what we are seeing is that headlines and announcements do not necessarily indicate that tariffs will be levied at the time we thought they would. The yen dropped more than 0.7%, to 153.65 dollars. Brent crude fell 0.38% to $75.71 per barrel, a drop from the recent highs. U.S. crude also fell 0.42% to $73.01. Spot gold was nearing a record-high at $2,888.25 per ounce.
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Minister says Australia will not reduce 'green aluminium' exports to the US in order to avoid tariff
Australia's Industry Minister said on Wednesday that the threat of U.S. Tariffs will not derail the nation's plans to boost "green' aluminium exports. He added that American customers would end up paying more than they would for a product which is in high demand globally. Peter Navarro, a Trump adviser who spoke to CNN after Donald Trump announced that he was considering an exemption for Australia on a 25% flat tariff on imports of steel and aluminum, said in the interview: "Australia just kills our aluminium market." The executive order imposing the tariffs stated that the volume of Australian aluminium had surged since it was granted an exemption from tariffs by Trump in 2018. It was 103% more in 2024 than its average volume between 2015 and 2017. The order stated that "Australia has ignored its verbal agreement to reduce its aluminum exports by a reasonable amount." Ed Husic, the Industry Minister, said that Australia, as a strong ally and a country with close defence ties, would vigorously advocate for a new exception for its aluminum. He also stated that Australia will not reduce aluminium exports into the United States where the West Coast is in high demand. He told reporters in Canberra's National Press Club that the world is a big consumer of aluminium. "We need it to transition to net zero," said Mr. Smith. "Our American friends, do you want to pay more money for a product you have a high demand for?" he asked reporters at the National Press Club in Canberra. The center-left Labor Government of Anthony Albanese, Prime Minister, faces national elections in May. Last month it announced a plan to spend A$2 Billion for aluminium smelters switch to renewable energy to secure up 75,000 direct jobs and indirect ones. Labor has ties with the Metal Workers Union, one of Australia’s largest unions. Husic, a son of an Australian metal worker, claimed that aluminium exports supported thousands of rural jobs. Australia, the sixth largest aluminium producer in the world, contributed 1% to the U.S. steel imports and 2% to its aluminum imports. Reporting by Kirsty Wantham. Gerry Doyle edited the article.
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US Report: Palm oil jumps on rival oil that is stronger
Malaysian palm futures rose by more than 2% in the past 24 hours, following gains made by rival edible oils. A positive U.S. report about world agricultural demand and supply estimates also helped. By midday, the benchmark contract for palm oil delivery in April on the Bursa Derivatives exchange had risen 102 ringgit or 2.22% to 4,695 Ringgit ($1,051.28) per metric ton. The Malaysian market was closed for a holiday on Tuesday. A Kuala Lumpur based trader reported that the Crude Palm Oil Futures were lifted due to a stronger oilseeds rival market and a positive World Agricultural Supply and Demand Estimates Report (WASDE), oilseeds from the U.S Department of Agriculture. Dalian's palm oil contract, which is the most active contract in Dalian, increased by 1.19%. Chicago Board of Trade soyoil prices were up by 0.67%. As palm oil competes to gain a share in the global vegetable oil market, it tracks the price changes of competing edible oils. By February 9, 2024/25 soybean imports from the European Union, which began in the summer, had reached 8.36 million tons, a 10% rise compared to the previous season. According to the European Commission, imports of palm oil reached 1,73 million metric tons in the first quarter, which is a decline of 21% from the same time last year. In its February outlook, China's Agriculture Ministry kept its forecasts largely unchanged for corn, soya beans and other crops in the crop year 2024/25. However, there was a small revision in soybean planted acres from 10,321 million to 10,325 million. The oil price fell after an industry report revealed an increase in U.S. stockpiles of crude and as tariff fears weighed on sentiment. The palm ringgit's currency traded unchanged in relation to the U.S. dollar. Technical analyst Wang Tao suggested that the price of palm oil could retrace to between 4,494 and 4,523 ringgit a ton based on its wave pattern.
Trump Administration prepares reciprocal US tariffs amid trade war fears
Donald Trump's advisers on trade were finalizing plans for the reciprocal duties that the U.S. President has promised to impose against every country that imposes duties on U.S. imported goods, raising fears of an expanding global trade war.
Trump shocked the markets on Monday with his decision to impose tariffs starting March 12 on all imports of steel and aluminum. Mexico, Canada, and the European Union condemned the plans, while Japan, Australia, and other countries said they wanted exemptions.
Industries that depend on imports of steel and aluminum scrambled to reduce the expected cost increase.
Last week, Trump imposed an additional 10% tariff for Chinese goods. This was effective on February 4. Chinese countermeasures took effect this week.
He delayed the 25% tariff on goods coming from Mexico and Canada by a month, until March 4, to allow for negotiations about steps to secure U.S. border security and stop the flow of fentanyl.
Many U.S. workers were pleased with the metal tariffs imposed on Monday, but manufacturing-heavy companies agonized about the next steps. They warned that the tariff increase would have a ripple effect across the supply chain, affecting businesses who rely upon the materials.
White House officials are being tight-lipped regarding the timing or structure of the next tariffs. One source has said that the announcement could come later this week.
Trump announced on Monday that he will announce reciprocal tariffs within the next two business days for all countries who impose duties on U.S. products. He also said he is looking into separate tariffs for cars, semiconductors, and pharmaceuticals.
Experts in trade say that structuring the reciprocal duties Trump wants presents big challenges to his team. This may explain why the latest tariffs were not announced Tuesday.
William Reinsch said Trump officials can choose between a simple 10% or 20% flat tariff rate or a messier option that requires separate tariff schedules that match U.S. rates to those of other countries.
A source who tracks the work on tariffs reported that details are still being worked out as late as Tuesday.
Damon Pike is a principal and trade specialist with BDO International's U.S. division. He said that the reciprocal tariffs Trump envisaged would be a massive undertaking given that the 186 member countries of the World Customs Organization have different duty rates.
"At an international level, you'll find 5,000 different product subheadings at the 6-digit level. That's 5,000 times 186 countries. "It's like an artificial intelligence project," said he.
Experts believe that Trump could use several statutes. These include Section 122 of Trade Act of 1974 which only allows a maximum flat rate of 15% for a period of six months or Section 338 of Tariff Act of 1929, which gives authority to take action against unfair trade practices that harm U.S. Commerce, but which has never been used.
Trump could also use the International Emergency Economic Powers Act to justify tariffs on China, and those pending against Canada and Mexico.
Pike added that, without IEEPA's help, it would take some sort of agency action before trade remedies could be imposed. "But everything seems to move quickly," he said.
Reinsch stated that imposing reciprocal tariffs also ceded the control of U.S. tariff rates to other countries.
"For instance, if Colombia had a high coffee tariff to protect their industry, we'd put a similar high tariff on Colombian Coffee, even though we do not grow coffee. "The only ones who would suffer are the U.S. consumer," he said.
(source: Reuters)