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RWE is facing growing criticism from investors as the returns on renewable energy are declining
RWE's shareholders will increase the pressure on Germany’s top power company on Wednesday. They'll demand bolder measures to close a gap in valuation with competitors, including larger share buybacks or even a special distribution. The German utility is also the second largest developer of offshore wind farm in the world. It has come under increasing criticism for its capital allocation policy, most notably by activist investor Elliott. The U.S. investor disclosed last month a stake worth around 1.28 billion euro ($1.46 billion) and urged the group to increase its existing share buyback program by up to 1.5 billion euro. RWE has been forced to reduce ambitious investment programs and look for alternatives to increase value due to lower returns in the clean energy industry. This is partly because of higher interest rates. RWE's competitors, such as Enel Iberdrola Endesa have announced or implemented buybacks. High inflation, geopolitical tensions and uncertainty about renewable energy regulations in certain markets have all put pressure on the development of renewable projects. According to the text of the speech that will be delivered at the annual general meeting of the RWE group, Ingo Speich is the head of sustainability and corporate Governance at Deka. He said that the reduction in RWE's expenditure plans had freed up cash to buybacks between 1 billion and 1.5 billion euros each year. This was a better way to increase shareholder value, he added, than chasing after projects with uncertain returns. RWE trades today at an EV/EBITDA multiplier of 7.4, LSEG data shows. This is lower than Iberdrola’s 9.6 multiple and SSE’s 8.8. RWE said that buybacks will remain a part of their future strategy but they have not yet changed the current program. Henrik Pontzen, of Union Investment, called for a special distribution. He said that shareholders would directly benefit. In prepared remarks, he stated that "if capital can't be invested profitably at this time, it should be divided." Elliott declined to comment. Reporting by Christoph Steitz, editing by Philippe Fletcher.
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China's steel production could be cut by reducing the iron ore output, according to a third-month decline in iron ore.
The price of iron ore futures fell on Wednesday. This was the third consecutive monthly decline, as the steel production in China, the world's largest consumer, could be cut. Meanwhile, demand has slowed before the Labour Day holiday. The daytime trading price of the most traded September iron ore contract at China's Dalian Commodity Exchange was 703.5 yuan (96.81 dollars) per metric ton. This contract has lost 3.96% in the last month. As of 0711 GMT the benchmark May iron ore traded on the Singapore Exchange had fallen 0.67% to $97.8 per ton. This represents a loss of 3.16% for this month. Leading Chinese industry figures have indicated that a reduction in steel production is likely, despite the absence of an official government directive. This will put pressure on prices for steelmaking ingredients. Luo Tiejun urged last week for a united response to the steel production cuts, citing the severe pressures on the domestic industry caused by the persistent downturn and the international trade friction. Baoshan Iron & Steel (China's largest listed steelmaker) said on Monday that a reduction in output across the country was likely to occur this year. ANZ reported that "Iron Ore extended recent losses due to a weakening of market sentiment ahead of the Labour Day Holiday period", adding that Chinese steel plants have slowed down their restocking. The Chinese financial markets will close from May 1 to 5 for Labour Day. Trading will resume May 6. A factory survey released on Wednesday showed that China's manufacturing activity in April contracted at its fastest rate in 16 months, after Donald Trump's "Liberation Day", package of tariffs, ended two months of growth. Coking coal and coke, which are both steelmaking ingredients, have also lost ground. They fell by 0.59% each and 0.97% respectively. The benchmark steel prices on the Shanghai Futures Exchange are stagnant. The price of rebar, hot-rolled coil and wire rod were all down. Stainless steel was also down 0.24%. $1 = 7.2665 Chinese Yuan (Reporting and editing by Varun H. K. and Rashmi. Aich).
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TotalEnergies Q1 profit falls on lower oil prices and weak refining margins
By America Hernandez PARIS, 30 April - TotalEnergies, the French oil giant, reported an 18% decline in adjusted net profit for the first three months to $4.2 billion. This was slightly below expectations as earnings declined across all segments, except LNG. According to a LSEG Refinitiv consensus, analysts had predicted $4.3 billion. The lower oil price has resulted in a 6% drop in upstream profits despite a 4% increase of oil and gas production over a year earlier. TotalEnergies, however, said that it would continue to buy back shares up to $2 billion during the second quarter despite Brent crude falling below $70 a barrel this month. At 0919 CET, the shares of this company were down by 3.7%. Total's segment of refining chemicals and lubricants saw a 69% drop in revenue compared to the same period the previous year. This was slightly less than the company had predicted earlier in the month when it released its trading update. The margins for refining crude oil into fuels have increased in Europe over the last six months, but they are still 59% below what they were a year earlier. This is mainly due to a weaker demand and competition from Asian refineries and African refineries. TotalEnergies attributes the seasonality to the business for the 34% decline in earnings from the fourth quarter 2024. The fourth quarter of 2020 will see a 10% drop in integrated LNG earnings. BP, a British competitor, reported a profit decline of 48% due to weaker refining. Galp in Portugal posted a drop of 29% for the first quarter earnings citing lower refining margins as well as falling oil prices. TotalEnergies, unlike BP, Shell and Equinor has stuck with its strategy to increase its renewable energy holdings while it grows its legacy business of oil and gas. (Reporting and editing by Louise Heavens, Aidan Lewis, and America Hernandez in Paris)
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Fontana, EDF: New investment must be focused on the domestic nuclear fleet
The new boss of the state-owned energy company EDF has said that investment must be prioritized to maintain France's nuclear fleet. He also stated his intention to increase nuclear production from 360 terawatt hour (TWh), which is what it is now, to 400 TWh per year by 2030. Bernard Fontana Nominated Chief Executive Officer In March, President Emmanuel Macron’s government lost patience after Luc Remont's former chief Luc Remont and his team disagreed over the best way to simultaneously provide cheap energy and build new capital intensive reactors. Fontana's priority will be to strike new deals with EDF’s largest industrial clients. Fontana told the lawmakers who must still approve his nomination that he was aiming for long-term industrial contracts totaling 40 Terawatt Hours (TWh). EDF's inability to reach new agreements with Remont businesses had been a source for frustration to a government desperate to support a struggling industrial sector that was suffering from high energy prices during a period of intense competition with China and other countries. The cost of operating EDF's reactor nuclear is estimated by the energy regulator CRE to be lower than the price of electricity in 2026. This presents an additional obstacle in negotiations for the next chief.
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China shifts its focus to Europe to export used cooking oil as US tariffs impact shipments
Due to high tariffs, China's exports of used cooking oil to the United States - its biggest buyer - are expected to plummet in the coming months. Sellers will be forced to divert shipments elsewhere or to Europe, according to industry players. The Trump administration has imposed a 125% tariff on Chinese UCO imports starting this month. Three UCO traders in China said that the U.S. shipments, which were worth $1.1 billion last fiscal year, have been falling. The last cargoes are expected to arrive around the end of March or early April, before the trade grinds to an abrupt halt. According to Chinese customs, China's UCO exported reached a record high of nearly 3 million tons last year or $2.64 billion. Richard Dickinson is the head of Amarus Trading in Shanghai, one of China's largest UCO dealers. Some of the exports are being diverted to Europe, and new markets in Asia, such as Korea and Thailand. Industry insiders report that at least four new Sustainable Aviation Fuel plants, using UCO as a component, with a production capacity of 700,000 tons per annum, have been operating or will be operational by the end of this year in Thailand. The U.S. exports have been falling since December last year, as Beijing has removed the tax rebates on UCO. This is also due to a new U.S. policy of clean fuel taxes that discourages imports of UCO. And the latest tariffs are only making the situation worse, according to a shipper. In the next few months, at least half of China’s UCO exports will likely be shipped to the European Union. The EU mandated that 2% SAF must be used this year. CHINA DEMAND IS UP The Chinese UCO industry is expecting a decline in exports this year, as the demand for its SAF sector grows. Dickinson, a Beijing-based senior trader in biofuels, and another Beijing-based senior trader estimate that China's UCO imports will fall to between 150,000 and 200,000 tons per month starting April. This is 20-40% less than the average monthly shipment of 2024. Other sources refused to be identified as they were not authorized to speak with the media. According to sources familiar with the plants, new SAF plants, such as Zhejiang Enprotech, which was launched in late 2024, and other plants that are starting up or scheduled to start in the next few months, owned by Haixin Energy Technology in Shandong, Haike Chemical, in Zhejiang, and Blue Whale Bioenergy, in Zhejiang, will be UCO users. According to estimates, Chinese SAF producers use between 100,000 and 120,000 tons UCO per month. This volume is expected to increase as more plants start operating. China started a pilot program in September last year to use SAF at four airports domestically, Beijing, Chengdu Zhengzhou, and Ningbo.
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Palm oil prices fall on the back of increased production and stock levels
Malaysian palm futures declined for the third consecutive session on Wednesday, as concerns about higher production and stock levels continued to weigh heavily on market sentiment. At midday, the benchmark palm oil contract on Bursa Malaysia's Derivatives exchange had fallen by 24 ringgit (0.61%) to $3,919 ringgit (908.86 dollars) per metric ton. David Ng is a proprietary trader with Kuala Lumpur's Iceberg X Sdn Bhd. He said that the weakness in the market was mainly caused by concerns about production and an expectation of higher stock levels over the next few weeks. Palm oil stocks are likely to have risen for the first six-month period in March according to a poll, while production has soared by 10.3% compared with the previous month. Dalian's palm oil contract, which is the most active contract, fell 0.44%. Chicago Board of Trade soyoil prices were down by 0.32%. As palm oil competes to gain a share in the global vegetable oils industry, it tracks the price movements of competing edible oils. Oil prices fell as President Donald Trump's tariff policies raised concern about a weakening of global economic growth. Palm oil is less appealing as a biodiesel feedstock due to the weaker crude oil futures. The palm ringgit's currency has strengthened by 0.39% compared to the U.S. Dollar, increasing the price of the commodity for buyers who hold foreign currencies. A trade regulation revealed that Indonesia has lowered the crude palm oil price reference to $924.46 a ton in May. Data from the European Commission revealed that the imports of soybeans by the European Union in the 2024/25 crop season, which began in July, had reached 11,46 million tonnes by April 27. This was an increase of 8% compared to a year ago, while imports palm oil were down by 19%. Technical analyst Wang Tao stated that palm oil could revisit its low of 3,863 Ringgit per metric tonne, which was reached on April 21, as it has now surpassed the last barrier, at 3,931 Ringgit.
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WGC expects India's jewellery sales to decline, but investment demand will increase.
The World Gold Council (WGC), a global organization that promotes gold, said the share of investment demand will rise in India by 2025 as the price rally reduces jewellery demand, but attracts investors who are looking to diversify portfolios in the face of geopolitical tensions. Sachin Jain said on Wednesday that the correction in stock markets amid fears of a global trade conflict has driven investment demand. This is especially true for gold exchange-traded fund (ETFs), whereas jewellery demand has taken a hit. In the quarter of January-March, jewellery demand fell by 25% over the previous year to 71.4 tons. This is the lowest level for this period since 2009. The WGC reported that the investment demand grew by 7% to reach 46.7 tons. The WGC data revealed that the share of investment demand within total gold demand soared to 39.5% during the first quarter 2025. This was the highest level in over a decade. Jain stated that many potential jewellery buyers have been putting off purchases due to the volatile price of the products. Once prices stabilize, they will likely enter the market. In the first week of this month, domestic gold prices reached a new record of 99.358 rupees for 10 grams. The price of gold has risen by 25% in 2025, after rising 21% in 2024. The WGC, despite the recent price rise, maintained its forecast of gold demand for India between 700 and 800 tons by 2025. This is down from the 802.8 tons last year, which was highest since 2015. The data revealed that scrap supplies in the quarter of March fell by 32% compared to a year earlier, reaching 26 tons. WGC reported that the Reserve Bank of India increased its gold reserves by 3 tons during the quarter ending March, but the buying activity has been less constant in recent months than it was in 2024. (Reporting and editing by Rashmi aich; Rajendra Jadhav)
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Aperam anticipates a recovery of earnings in the second quarter
Aperam, a Luxembourg-based steel company, said on Wednesday that it expects to see its adjusted profits grow and its debt decline sequentially in its second quarter after a quarter affected by lower shipments from Brazil and price pressures. The group stated that the purchase of Universal Stainless in January should support this. Universal strengthens and stabilises our earnings It also means that generating cash to pay dividends and reduce leverage is now our top financial priority," CEO Timoteo Di Maulo said in a press release. Aperam reported adjusted earnings before taxes, depreciation, and amortization (EBITDA), of 86 millions euros ($97.80) for the first quarter. Analysts expected an average of 84 million euro, according to company-compiled consensus. Aperam announced earlier this month that its first-quarter earnings would be lower than last year due to seasonal increases in Europe, the consolidation of Universal and pricing pressures in Europe.
Sources: Chinese sovereign fund CIC will sell US private equity investments worth $1 billion, according to sources
Two people familiar with the matter have confirmed that China Investment Corporation (CIC), a sovereign Chinese investor, is selling its PE investment portfolio worth about $1 billion on the secondary market.
According to the sources, assets were held by a number funds, which are managed by eight U.S. managers, such as Blackstone Inc. and Carlyle Group.
CIC has hired U.S. Investment Bank Evercore to provide advice on the sale. They aim to complete the divestments before the end of June.
A third party with direct knowledge said that the total value and deadline for the sale of assets are not set and may change depending on the market and pricing.
Blackstone and Carlyle declined comment. CIC and Evercore have not responded to requests for comments.
Due to the sensitive nature of the issue and the need for confidentiality, all sources declined to make any comments.
The first two respondents said CIC began discussing the sale in late 2024 with asset managers and advisers as part of its efforts to optimize its investment portfolio.
The $1 billion of assets, which was initially invested in PE funds in 2016 and 2017 is nearing the end its investment cycle.
However, the move comes at a time when geopolitical tensions and trade tensions have caused market volatility and uncertainty, particularly between Beijing and Washington.
Both countries have intensified their scrutiny of certain investments made by each other's financial institutions.
Financial Times reported, last week, using unidentified sources that Chinese state-backed fund, CIC included, had cut off new investments in U.S. PE companies in response to Beijing's pressure. CIC hasn't commented on the FT piece.
Beijing-headquartered CIC, founded in 2007, is mandated to diversify China's giant foreign exchange holdings via overseas investments. According to previous public disclosures, the U.S. was the Chinese sovereign fund’s largest investment destination.
CIC took a minor stake in Blackstone and invested in Morgan Stanley during the global financial crisis. It sold this minority stake to Blackstone in 2018. CIC is a major investor in U.S. PE Funds. Nearly half of the portfolio is made up by so-called alternative investments.
PE funds have a typical investment cycle of 10 to 15 years. However, since the COVID-19 epidemic it has become more difficult for PE funds to sell their investments through initial public offerings (IPOs), or via trade sales.
The person declined to provide further details. Other sovereign funds, asset managers specializing in secondary markets, and private investors, such as family offices are also potential buyers of the CIC portfolio.
According to them, the portfolio can be sold in different tranches or all at once, depending on the price negotiation.
CIC's most recent annual report indicates that the sovereign fund managed $1.33 trillion in assets as of December 31 2023. About 64% are managed by external managers.
The annual report reveals that U.S. stocks accounted for 60.29% CIC's overseas equity market holdings at the end of 2023. The total portfolio was made up of 33.13% public equities.
CIC's cumulative annualised net return over the past 10 years was 6.57% by 2023. Its cumulative annualised net return since its inception is 6.23%. (Reporting and editing by Sumeet Chaterjee, Neil Fullick and Kane Wu)
(source: Reuters)