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Hurricane Erick weakened over Mexico and left a trail of destruction in its wake
Hurricane Erick has weakened since it slammed into Mexico's south Pacific coast on Thursday as a major storm. It left behind a trail that included damaged businesses, wrecked vessels and flooded streets, as authorities warned about the dangers of heavy rain. Erick, a Category 3 Hurricane, made landfall in the area of Puerto Escondido at around 5:30 am local time (1130 GMT). Later, it was downgraded to Category 1, as the storm moved inland. The sustained winds slowed to 85 mph (137 km/h). In coastal towns, residents began clearing debris. Eduardo Gonzalez, a fisherman in Puerto Escondido, said that there were many boats sunk. "We are here to help out our colleagues." Officials warned that Erick's heavy rains, despite having weakened slightly, remained dangerous. The U.S. National Hurricane Center warned of "life-threatening flooding and mudslides", especially in steep terrain. It forecasted up to 16" (41 cm) rain for Oaxaca, and the neighboring state of Guerrero. Mexico's Environment Ministry also warned about waves up to 10 meters. Laura Velazquez said that no deaths had been reported at the time of the press conference. She added that two hospitals were damaged and the power supply had been compromised. CFE, the state-owned utility company, reported that over 120,000 Oaxacans had lost electricity. Service was restored to about 26% of users by late afternoon. Salomon Jara, the governor of Oaxaca, said that roads and highways have been severely damaged. Meteorologists at AccuWeather say that Erick was the first major hurricane to land in the eastern Pacific. Alex DaSilva is AccuWeather's lead hurricane expert. "Rapid intensity near coastal cities...as the water temperature continues to rise" was his concern. AccuWeather warned that areas around Acapulco were particularly vulnerable as the town was still recovering from Hurricane Otis, which struck in 2023. Reporting by Aida Pea-Fernandez, Additional reporting by Jose Cortes, Puerto Escondido Mexico; Editing and editing by Himani Sarkar, Bernadettebaum, Andrea Ricci, Deepa Babington, Toby Chopra
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What is the risk of nuclear contamination from Israel's attack on Iran?
Israel claims it wants to prevent a nuclear catastrophe in the region, which is home to millions of people as well as producing much of the oil in the world. Israel's military announced that it had hit a Bushehr site on the Gulf Coast, home to Iran’s only nuclear power plant. But later said the announcement was an error. Here are some details about the damage that Israel has caused and what experts have to say about the dangers of contamination and other disasters. What has Israel done so far? Israel has declared attacks on nuclear sites at Natanz, Isfahan and Arak, as well as Tehran. Israel claims it wants to prevent Iran from building an atom-bomb. Iran has denied ever wanting one. IAEA, the international nuclear watchdog, has reported damage at the Natanz uranium plant, the Isfahan nuclear complex, including the Uranium Conversion Facility and the centrifuge production plants in Karaj, Tehran and Karaj. Israel announced on Wednesday that it had targeted Arak (also known as Khondab), the location of a heavy-water research nuclear reactor. This type of reactor can produce plutonium easily, which can be used, like enriched Uranium, to make an atom bomb's core. The IAEA reported that they had received information that Khondab Heavy Water Research Reactor had been struck, but it was not operating and had no reported radiological effects. WHAT RISKS DO STRIKES LIKE THIS PRESENT? Peter Bryant, professor of radiation protection science at the University of Liverpool, England, who specializes in nuclear energy policy and radiation protection, has said that he's not concerned with the fallout risk from the strikes. He pointed out that the Arak facility was not in operation while the Natanz site was underground. No radiation leakage was reported. He said that the issue was controlling what happened in that facility. Nuclear facilities were designed to do that. He said that uranium is only dangerous when it's inhaled, ingested, or gets into your body. Darya Dolzikova is a senior researcher at London's think tank RUSI. She said that attacks on the facilities at the front of the nuclear fuel chain - where uranium gets prepared to be used in a reactor -- pose chemical risks, and not radiological ones. UF6, or uranium hexafluoride is the main concern at enrichment plants. She said that when UF6 reacts with the water vapour in air, it creates harmful chemicals. She added that the weather conditions would affect how much material was dispersed. In low wind, material is likely to settle near the facility. In high winds, material will travel further, but also disperse widely. Underground facilities have a lower risk of dispersion. What about nuclear reactants? A strike on Iran’s Bushehr nuclear reactor would be of major concern. Richard Wakeford is Honorary Professor of Epidemiology, University of Manchester. He said that whereas contamination from attacks on the enrichment facilities will be "primarily a chemical issue" for the nearby areas, extensive damage of large power reactors would "be a different tale". He added that radioactive elements could be released into the ocean or through a plume containing volatile materials. James Acton, director of the Nuclear Policy Program for the Carnegie Endowment for International Peace said that an attack on Bushehr could "cause an absolute radiological disaster", but that an attack on enrichment plants was "unlikely" to have significant off-site effects. He said that uranium is barely radioactive before it enters a nuclear reactor. "The chemical form of uranium is toxic, but it doesn't travel long distances. It's also barely radioactive." "Israel's attacks so far have had virtually no radiological effects," he said, despite his opposition to Israel. Why are Gulf States particularly concerned? The Gulf States' impact on any attack on Bushehr will be exacerbated by the possible contamination of Gulf water, putting at risk a vital source of desalinated drinking water. According to the authorities, in the UAE, more than 80% drinking water is desalinated, and Bahrain has become fully dependent on desalinated waters since 2016. 100% of the groundwater was reserved for contingency planning. Qatar is completely dependent on desalinated drinking water. According to the General Authority for Statistics, in Saudi Arabia, which is a larger country with more natural groundwater reserves, 50% of water supplies will be desalinated by 2023. Some Gulf States, such as Saudi Arabia, Oman, and the United Arab Emirates, have access to multiple seas to draw their water, but countries like Qatar and Bahrain are congested along the Gulf shoreline with no other coastline. If a natural catastrophe, an oil spill or even a targeted assault were to disrupt a water desalination facility, hundreds of thousands would lose their access to freshwater instantly, said Nidal Ilal, Professor and Director of the Water Research Center at New York University Abu Dhabi. He said that coastal desalination plants were particularly vulnerable to regional hazards such as oil spills and nuclear contamination.
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Eni, a company based in Italy, has launched a demonstration plant for the recycling of mixed plastics
Versalis is the chemical division of the Italian energy company Eni. On Thursday, Versalis unveiled a demonstration facility based on a new technology it has developed for the chemical recycling mixed plastic waste. The "Hoop" technology allows for the conversion of mixed plastic waste to a feedstock which can then be used to create new plastic materials that are suitable for any application, including packaging intended to come into contact with food and pharmaceutical packaging. Eni is reorganizing its chemical division, which has been losing money. The European petrochemical industry is struggling with an oversupply. Eni will build a new steam cracker in Priolo, Sicily based on Hoop Technology. Versalis CEO Adriano Alfoni stated that a final investment decision could be made on the new recycling facility in Priolo next year, at an event for the opening of the Mantua demo plant. He added that the new factory might be ready by the start of 2029. Alfani stated that Eni will spend approximately 200 million Euros by 2029 for the plant at Priolo as well as other facilities dedicated to the mechanical recycling of plastic. This sum is part of a 2 billion euro ($2.3 billion) investment plan announced last year by the state-controlled company, which aims to turn Versalis around. In the last five year, Versalis has lost 3 billion euros. The overhaul will include new activities such as plastic recycling, energy storage and bio-refining. It will also involve the closure of several primary petrochemical facilities, including steam crackers. Alfani stated that Versalis may in the future look at spinning off certain businesses, such as its biochemistry company Novamont and taking on minority partners. Novamont's financial performance improved in 2018 compared to 2023, and was close to breaking even at the core profit level. Last year, sources said that Eni waited for Novamont to improve its financial results before re-evaluating the sale of the minority stake.
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Oil, tariffs and wars disrupt central bank's roadmap
Investors are becoming more uneasy about the uncertain economic environment. The shock rate reduction in Norway on Thursday highlighted how U.S. Tariffs, Middle East conflict, and a shaky Dollar make global monetary policies and inflation harder to predict. Norway's crown fell by about 1% in relation to the dollar and euro, indicating how unexpected this move was. Switzerland's central bank, which warned of a cloudy outlook for the global economy, cut its borrowing costs on Thursday to 0%, surprising some traders who expected a return to negative interest rates. A day earlier, the U.S. Federal Reserve had kept interest rates at current levels and Jerome Powell, the chair of the Federal Reserve Board said that "nobody" was confident about the future rate path. Markets must contend with monetary policy uncertainties in the face of geopolitical, trade and other risks. A gauge of volatility expected in European equities reached a two-month peak as stocks fell across the region and government bonds, which are usually safe havens for geopolitical risks, were sold off. Mark Dowding, chief investment officer of RBC Global Asset Management and BlueBay, said: "We are in a period of significant policy and macro-uncertainty." He added that he would not be making active market wagers on the investment portfolios of his group because he could not see a clear interest rate trend. Investors said that volatility was on the rise because geopolitical factors such as a volatile dollar and fluctuating oil prices made it difficult for central banks to give investors and markets a clear roadmap. T.S. Davide Oneglia, director of European and Global Macro at Lombard. BROKEN MODELS The Fed is not the only central bank that has cut rates. It also faces inflationary threats from President Donald Trump’s tariffs. The dollar, which is the backbone of global trade, commodity values and asset valuations has become weaker and volatile due to trade war stress, and anxiety about government debt. Nick Rees, Monex Europe's head of Macro Research and a specialist in macroeconomics, said: "That is a massive shift that has occurred on the global markets. Everyone is trying to evaluate it." All of the standard economic rules that we use to forecast are totally broken right now. The dollar has fallen almost 9% this year against other major currencies, but it has also risen since the war between Israel and Iran broke out. Francois Villeroy de Galhau, a policymaker at the European Central Bank, said that if the volatility in oil prices continues for a long time, then it may be necessary to adjust its rate-cutting plans. Analysts said that the new status quo of markets could be a period of central bank surprises, which would create rapid shifts to market narratives, asset pricing, and volatility trends. Oneglia stated that "we're entering a new cycle where variables are more volatile because events and human factors play a major role, and not just monetary policy, which is easily predictable." Kit Juckes, Societe Generale’s head of FX Strategy, said that Norway’s surprise cut was due to the fact that the Norwegian crown had been a “runaway top currency” during the trade war era. The Swiss franc is soaring, as investors search for alternative wealth stores that do not use U.S. dollar. This has led to a drop in import costs and pushed the economy towards deflation. The franc rose on Thursday against the dollar, as traders believed that the SNB's cuts were too small to prevent deflation. Ninety One's multi-assets head John Stopford stated that the risk of global stock prices increasing was a concern and that options that offer protection against incoming volatility appeared to be fairly inexpensive. He bought bonds in countries where rates and inflation could drop materially. For example, New Zealand. But he was against longer-dated U.S. Treasuries, and German Bunds, where the economic uncertainty is higher, and borrowing by government will likely increase. After investors relaxed over tariffs, global stocks are still almost 20% higher than their April lows. Stopford stated that there is more to be concerned about in the near term. Stopford continued, "The stock exchange feels like a thatched home in a hot land with a high fire risk. People aren't charging a lot to insure this house."
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Dollar up, stocks down as Middle East War sparks safe-haven trade
The dollar rose and global stocks fell on Thursday as investors sought perceived safe havens amid growing concerns about possible U.S. participation in the Israel-Iran war air battle, which has fueled a rise in oil prices this week. Donald Trump, on the geopolitical side, kept the world guessing as to whether the United States will join Israel in its bombardment of Iranian nukes sites. He told reporters outside the White House, Thursday, "I may do this." I may or may not do it." The recent flurry in central bank decisions across Europe has highlighted the difficulty central bankers face in setting monetary policies due to Trump's unpredictable approach on trade and tariffs. The STOXX 600 index fell 0.6% in Europe. It is now on track for its third consecutive day of declines. This would be the biggest weekly decline since April's tariff-induced turmoil. U.S. S&P futures dropped almost 1% despite the fact that most U.S. market, including Wall Street and Treasury Market, will be closed for a holiday on Thursday. Kyle Rodda is a senior financial market analyst at Capital.com. He said, "Market participants are still jittery and uncertain." He added that speculation was rampant "that the U.S. would intervene. This would be a material escalation, and could invite direct retaliation by Iran against the U.S." This scenario could lead to a larger regional conflict with consequences for the global energy supply, and possibly economic growth. The Middle East crude supply shocks have been the main cause of recent market anxiety. They've driven crude oil prices up 11% in one week. Brent crude rose 2% on Thursday to $78 per barrel, its highest level since January. Gold was trading at $3,365 per ounce on Monday, a slight decline from the previous day. The dollar rose, while the euro fell by 0.2% to $1.1462. Both the Australian and New Zealand Dollars - two risk-linked currencies -- also fell by around 1%. CENTRAL BANK POLICY To Trump's dismay, the Federal Reserve kept interest rates at their current levels on Wednesday. Policymakers also maintained projections of two quarter-point cuts in rate this year. Jerome Powell, Fed Chair, struck a cautious tone about future easing. He said that he expected "meaningful" inflation as a result Trump's aggressive tariffs. MUFG strategists said that the Fed is "underestimating the weaknesses in the economy which were present before the shock of the tariffs, and specifically, almost ignoring cracks in the labor markets that have been evident for years." As expected, the Bank of England kept UK rates the same on Thursday. Policymakers also said that trade policy uncertainty will continue to harm the economy and cause a fall in the pound. The Norges Bank shocked the markets with a quarter point cut on Thursday, which weighed heavily on the crown currency. Meanwhile, the Swiss National Bank, although it cut rates to zero as expected, did not drop below zero, giving the franc an extra boost. Analysts said that consumers were looking for a cheaper gold alternative.
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The main political group of the EU is at odds with Germany on budget increases
The main political group of the European Parliament has said that the next budget for the European Union must be larger than the current budget. This puts them at odds with Germany, who is the largest contributor and does not want an increase. With 188 members in the 720 seat parliament, the European People's Party is the largest political grouping within the EU. Its support will be vital for an agreement on the EU's budget for 2028-2034, which funds joint EU policies. The budget, also known as the Multiannual Financial Framework (MFF), has been 1% of the EU's gross national income for decades. This is now around 1.2 trillion euro ($1.38 trillion), spread over seven years. "New priorities need new resources to cover debt repayments as well as the Union's growing spending needs." "We cannot do more with fewer resources," said Siegfried Muresan, vice-chairman and negotiator of the next EU budget. The EU budget is used to support the farmers, research, development, innovation, border control, climate action, and border management. The governments want to use it for security, defence and to improve Europe's industrial base so that they can compete with China and the United States more effectively in terms of clean and digital technology leadership. "The EU budget plays a crucial role in making Europe more secure. We need to allocate more money for security and defense. Muresan stated that a modest, limited budget increase is necessary. Germany, as the largest net contributor to the European budget, doesn't want to contribute more. A German document expressing Berlin's view stated that "there is no basis" for increasing the (EU budget volume) relative to Gross Domestic Income. Own Resources In addition to national contributions which are the majority of EU budget revenue, the EU also receives money from its "own resources". These include revenues from a portion of Value Added Tax (VAT) collected by the governments, tariffs, and contributions based on how much non-recycled packaging waste is generated by a particular member state. Discussions are underway about expanding these dedicated sources of income to boost EU revenue, particularly as a means to repay the hundreds billions of euro the EU borrowed jointly to restart its economic recovery after the COVID epidemic. Germany has opened the door to this method of increasing EU budget revenue. The German government paper stated that "the Federal Government will... examine constructively the Commission's proposal in this regard so that... repayments won't have to be made on the regular EU budget." The European People's Party has also rejected the idea that the next EU Budget should tie disbursements with a country's reform milestones or targets, like the EU Post-COVID Recovery Fund. In a press release, the Party stated that "local and regional authorities as well as other beneficiaries can't be punished or held responsible for reforms which aren't implemented at national level". The Party said that it also did not support any further centralisation of government spending plans. "Regional and Local Authorities know better the specific needs and circumstances on the ground." Reporting by Jan Strupczewski. Editing by Jane Merriman
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Severstal warns that Russian steel plants could close due to low export profits.
Alexander Shevelev said that the Russian steel industry could close down due to low demand at home and the high rouble, which reduces profitability for exports. A Russian Railways document, seen by us last month, showed that the high rate in Russia, which was 21% for many months before it was reduced to 20 % earlier in June has caused steel producers to reduce their loading volumes. This is a reflection of the slowing Russian economy and its subdued demand. Shevelev stated that high rates could cause the demand for steel to drop by 10% to 39 million tonnes this year. Analysts attribute the rise to the ease of geopolitical tensions with President Donald Trump and his administration. Shevelev stated that the overly strong rouble makes metal exports unprofitable, a fact that is affecting an industry which has relied on it for years. He added that "the weakness of the export markets, and a strong Russian rouble, simply don't allow most metals manufacturers to cover variable costs." Shevelev stated that it is possible for some metallurgy factories to stop production due to the excess supply of metals on the domestic market. "I hope that it will not come to that. In time, we'll be able loosen up the monetary policy. But for now, everything is pointing towards the closure of certain facilities that do not manage costs well." Severstal is also burdened with a heavy logistical burden because it cannot sell into nearby European markets. (Reporting from St Petersburg by Anastasia Lyrhikova, Writing by Alexander Marrow and Editing by Ed Osmond).
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Greenland grants EU-backed critical Metals Project Permit to Mine
Greenland granted a permit for a project backed by the European Union to mine molybdenum. This metal is used in aerospace, defence, and energy, and China has placed export restrictions on it. After U.S. president Donald Trump expressed interest in buying it earlier this summer, the resource-rich Arctic Island has seen increased activity in its mining industry over the last month. The government of Greenland said that the permit was given to Toronto-listed Greenland Resources, a company supported by the European Raw Material Alliance and which holds the license to the Malmbjerg Project in eastern Greenland. According to the company, an open pit mine in Malmbjerg can produce 32.8 million pounds per year of molybdenum concentrated. This could supply around 25% of Europe’s molybdenum needs. Molybdenum, a white metal with a silvery luster, is used to improve the resistance of steel to heat and corrosion. It's therefore essential for industries such as defence and clean energy. China implemented export controls on five metals in early February, including products containing molybdenum, as a response to U.S. president Donald Trump's tariffs on Chinese goods. According to the U.S. Geological Survey, China accounted about 40% of molybdenum global production in 2013. Molybdenum has been deemed a critical metal by the European Union as well as the United States. Greenland Resources has signed agreements to off-take coal with Finland’s Outokumpu, and Italy’s Cogne Acciai Speciali. Greenland has a rich natural resource base, but the mining industry is slow to develop due to bureaucracy. Greenland granted an exploitation license to a Danish and French mining group last month, while this month the EU selected 13 new critical materials projects, including graphite in Greenland to increase metals, minerals, and supply. The U.S. export credit agency announced last week that the company building a large mine of rare earths in Greenland had met the initial requirements for applying for a loan worth $120 million.
The European Union is prioritizing rare earth access at the China summit
Four sources familiar with plans say that European Union leaders are planning to use their summit with China in the coming month to push for better access to Chinese minerals and rare earths. The two sides will also be tackling a range of tariff issues.
China has held a near-monopoly in rare earth production for years. After the announcement of tariffs by U.S. president Donald Trump on April 2, China increased its export controls for the minerals in response to demand from automakers and the defence industry, as well as producers of renewable energies.
China has also complained to the EU, as the EU has tried to protect the auto industry from cheap imports from China. Meanwhile, China has taken measures against the brandy industry in France.
The European Commission's Ursula von der Leyen, and the European Council's Antonio Costa will be traveling to Beijing on July 24-25 for a summit.
The event will mark 50 years of EU and Chinese relations. It will also be held two weeks after the deadline set by United States to most trade partners for them to reach agreements to avoid higher tariffs.
According to an EU official who declined to identify himself, European leaders will press their case in separate meetings with President Xi Jinping, Premier Li Qiang and other Chinese officials.
According to two EU sources, the EU mission in China will focus solely on rare earths up until the summit.
In May, the Chinese ministry of commerce announced that a "green-channel" had been established to expedite rare earth licenses for EU companies. One EU diplomat, however, said that only half of the several hundred applications had been processed.
The situation is improving although the percentage cleared licenses does vary. Adam Dunnett said that delays in clearance of customs can occur even after the license is granted.
Trade conflicts between Europe, China and the quest to solve supply shortage are among them.
China has responded by imposing anti-dumping measures against EU brandy after Brussels imposed tariffs for unfair subsidies on Chinese electric vehicles. Beijing has launched trade investigations into EU dairy products and pork.
BRUXELS NOT BEIJING
The run-up to this summit has been a bit rocky. Beijing had been the original host, but when China said that Xi wouldn't travel to Brussels, Beijing was selected.
One EU official commented that China "played its cards very effectively". China, according to the official, had identified rare Earths as a vulnerability and waited until the very last minute before making any concessions.
The EU wants China either to extend the period of rare earth licenses or scrap them to export to the EU. Beijing should make a clear distinction between the EU, the United States and any other country. During talks in London, earlier this month, China offered to give U.S. companies priority for rare earth export licenses.
"If China wants to have the EU at the same distance as the Trump administration, China’s trade regimes can't equate the U.S. with Europe," said Hosuk Le-Makiyama of the trade think tank ECIPE. He met senior Chinese officials in the past week.
A second EU official stated that the impending deadline for securing an agreement with the United States could force the EU into being tough on China in return for lowering U.S. Tariffs. This would make it difficult for EU to negotiate a deal with Beijing.
Officials said that it was possible for the deadline of July 9 to be delayed or details of any U.S. agreement could come out later, which would limit the chances of EU progress in China.
China has asked the EU to replace the import tariffs it imposed on Chinese electric cars with minimum price commitments, and make other concessions. This is after the EU delayed the imposition on EU brandy. China says the talks are nearing their end, while EU officials claim that progress has been minimal.
(source: Reuters)