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EU labels only four countries as "high-risk" under deforestation laws
BRUSSELS (May 22) - The European Union's new anti-deforestation legislation will place the most stringent checks on commodities from only four countries. Brazil and Indonesia, two major forest nations, are exempted. In a legal document published on Thursday by the European Commission, it was stated that the law will categorise imported goods from Belarus, Myanmar and North Korea as "high-risk" items of fueling deforestation. Brazil and Indonesia will be labeled as "standard risks" because they have historically had the highest deforestation rates. This means that their goods will be subject to lighter compliance checks when exported to Europe. The United States is one of the countries that was labelled "low-risk" and therefore faced less stringent due diligence regulations. The EU law applies to soya, beef, palm oils, wood, coffee, cocoa, and other derivative products such as leather, furniture, chocolate, and cocoa. Companies in countries with high and standard risks will have to provide information on when and where commodities were grown, as well as "verifiable' evidence that the crops were not grown on deforested land after 2020. The main difference between these groups is that EU member states will have to conduct compliance checks on 9% of exporters from countries at high-risk of deforestation. This number will increase to 3% for countries of standard risk and 1% of low-risk. If a company fails to comply, it could be fined up to 4% its turnover in a member state of the EU. (Reporting and editing by Bart Meijer, Charlotte Van Campenhout, Kate Abnett)
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Copper hits three-week low amid economic uncertainty
The price of copper fell to a record low for a third week on Thursday, and the prices of other base metals were also lower as economic uncertainty and a slowing demand growth persist. The benchmark copper price on the London Metal Exchange was down 0.7% to $9,462 per metric tonne by 0938 GMT, after reaching its lowest level since May 1, at $9,223.20. Alastair M. Munro, broker at Marex, said that the metals market was in a state of paralysis following the expiration of LME benchmark contract last week. The sharp increase in Chinese inventories has put pressure on prices Last week, the withdrawals stopped after a run of three weeks. Analysts and traders said the increase was due to the tepid demand for copper in China, and steady production from a growing sector of smelting. The prospect of increased supply was also a factor in the market's reaction after Freeport Indonesia reopened its Manyar smelter, located in East Java, ahead of schedule following a fire that occurred last year. The smelter is expected to start producing copper cathode in the fourth week of this month. Investor sentiment remained subdued despite a deteriorating U.S. financial outlook. The Moody's downgrade last week fueled a growing narrative of "Sell America", leaving the markets in a state of confusion. A weaker dollar helped to limit losses by making metals priced in dollars cheaper for buyers of other currencies. LME lead dropped 1.1% to $1.952 per ton, after reaching its lowest level since May 9, at $1.947.50. Lead inventories on warrant The number of tons sold has risen by 91% in the last two days, to 234,000 tonnes. This is their highest level since December 2024. Other metals saw a 0.2% decline in aluminium at $2467 per ton. Zinc fell by 0.2% to 2,688. Nickel was down 0.9% to $15,450. Tin lost 1.4% to 32,365. (Reporting and editing by David Goodman in Bengaluru)
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Japan's April crude-steel output drops 6.4% due to weak construction demand
The world's third-largest producer of crude steel, Japan, saw its output fall 6.4% from April 2012 to April 2013, due in part to a weakening construction market and a drop in exports. Shipments that are robust From top Chinese producer. The Japan Iron and Steel Federation reported that the output, which was not adjusted for season, fell to 6.6 millions metric tons after a slight increase the month before. The production also fell 8.4% from the previous month. Steel demand was sluggish because of delays in construction due to labor shortages and material costs. Meanwhile, the slumping overseas market, driven by China’s massive steel exports hurt overseas shipments, according to an analyst with the federation. The analyst added that it is too early to determine the impact of U.S. Tariffs. Nippon Steel closed a blast-furnace at its Kashima Plant, near Tokyo, late in March. JFE Steel (a division of JFE Holdings) plans to temporarily stop one of its furnaces in western Japan by mid-May. Tadashi Imai is the president of the Federation. You can also read about the warnings below. In March, U.S. steel and automobile tariffs could reduce Japan’s annual crude steel production by several millions tons to below 80,000,000 tons. (Reporting and editing by Louise Heavens, Yuka Obayashi)
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Portugal wants European regulators to lead Iberia's outage investigation
Portugal's acting energy minister said that it wants the European energy regulators, ACER, to conduct an independent investigation to determine the cause of the massive power outage which brought Spain and Portugal almost to a standstill in the last month. Maria da Graca Carvalho stated that Prime Minister Luis Montenegro wanted an independent investigation conducted by the European Agency for the Cooperation of Energy Regulators in order to supplement the technical report prepared by the European Network of Transmission System Operators ENTSO-E. Carvalho, in response to questions, said that "ACER is a suitable entity for coordinating any external evaluation process. It could bring more transparency, impartiality, and confidence to the conclusions." In a written statement, the minister said that "there is no evidence at this time" to suggest that cyber attacks, human error or sabotage could have been the cause of the outage. Last week, Spain's Energy Minister said that a sudden loss of electricity generation at a Granada site, followed by outages in Badajoz, Seville and seconds later, caused the unprecedented blackout in Spain and Portugal. Iberia is behind the EU target of all countries having 15% of their energy systems interconnected with the wider European network by 2030. Iberia's contribution remains at only 3%. Carvalho stated that Portugal, despite the reasons for the blackout, was considering how to improve the resilience and security in the national electric system. This is a strategic imperative. (Reporting and editing by Andrei Khalip, Jan Harvey, and Sergio Goncalves)
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Investors on the alert ahead of Trump's "Big Beautiful" tax bill
Bond vigilantes scoured the global debt markets Thursday, keeping both the dollar and the stock market subdued, in advance of an important vote on Donald Trump's 'big beautiful' tax bill. After a disappointing 20-year U.S. bond sale on Tuesday, caution dominated Europe. This reinforced the "Sell America' narrative that was already on investors' mind after Moody's cut its triple A credit rating for United States last week. As global yield curves steepened, Germany's long term bond yields reached their highest level in two months. Figures showed that the British government borrowed more in April than was expected, and euro zone businesses unexpectedly returned to contraction. Stock markets in London and Paris were all down by more than 0.5%. Gold, a safe-haven asset, rose to its highest level in two weeks while bitcoin reached a record high. This was partly due to investors seeking alternatives to U.S.-based assets. The Committee for a Responsible Federal Budget, a non-partisan organization, estimates that the U.S. Bill, which extends Trump's tax cuts of 2017, as well as boosts military and other expenditures, will add $3.8 trillion to the U.S. national debt over the next decade. UBS economist Paul Donovan stated that while final details are yet to be determined, "the overall impact will push the U.S. along a path of rising debt". Bond investors are not happy. The 30-year Treasury bond yield, a proxy of super-long-term U.S. borrowing costs, reached 5,108%, the highest level since October 2023. And, for 20-year bonds, it hit 5,126%, the highest level since November 2023. Japan's bond market has also been a focus, given that it has the highest ratio of debt to GDP among major economies. The 30-year JGB's yield was hovering at 3.155%. This is not far off the record high of 3185% that was hit the previous session. After Wall Street's tepid auction of debt, stocks in Asia fell as well. MSCI's broadest Asia-Pacific share index outside Japan finished 0.6% lower while Japan's Nikkei dropped 0.8% due to a stronger yen. TRADE DEAL PROGRESS The oil price fell by more than 1% after a report that OPEC+ was discussing a production boost for July. This stoked fears that any possible jump in global supplies would exceed the growth of demand. Brent futures in Europe fell $1.05 or 1.62% to $63.86 per barrel, while U.S. West Texas intermediate crude fell 97 cents or 1.58% to $60.60. Investors have also been jittery due to the slow progress made in trade agreements. The Group of Seven will meet in Canada. There, the finance ministers will try to put a positive spin to discussions aimed at reaching an agreement on a communique that focuses mainly on non-tariff matters. Investors are also looking for any hint that currency markets might be included in trade negotiations. Thai and Japanese officials, however, said that currency markets did not feature in their discussions. (Additional reporting from Johann M Cherian, Singapore; editing by Gareth Jones).
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Gold prices up for a fourth day amid US debt worries
The gold price rose for a fourth consecutive session on Thursday. It reached a two-week-high as investors sought refuge in the metal of safety amid concerns about the U.S. government’s growing debt burden and its fiscal outlook. As of 0705 GMT spot gold rose 0.3% to $3,324.91 per ounce after reaching its highest level since the morning session. U.S. Gold Futures increased 0.4% to $3326.30. Investors are concerned about the US fiscal situation. "The rally in gold began last week following Moody's downgrade, and continued into this week as the decision was made to pay this large tax bill," Ole Hansen said, head of commodity strategies at Saxo Bank. The dollar is also weak. The gold price correction that has been attempted over the past few weeks or last month seems to have run its course. Moody's lowered the top sovereign credit rating of the United States by one notch, citing its growing debt pile of $36 trillion. The sale of U.S. Treasury Department bonds for 20 years, valued at $16 billion, was met with a lackluster demand by investors on Wednesday. This impacted the risk-taking attitude among Wall Street investors. Market participants are also concerned that the U.S. debt will increase by trillions of dollar if Congress passes Donald Trump's tax-cut proposal. During times of political or financial instability, gold is used to store value. Dollar index is near a two-week low. This makes bullion attractive to other currency holders. Trump's tax and spending bill passed a critical hurdle on Thursday. The House of Representatives voted along party lines in order to start a debate which should lead to an approval vote later that morning. Other than that, silver spot rose 0.3%, to $33.49 per ounce. Platinum rose 0.2%, to $1078.16, and palladium fell 0.7%, to $1030.28.
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Andy Home: US Aluminium smelters compete with Big Tech to get scarce power.
In the United States, it's been 45 years since anyone has built a primary aluminum smelter. Alumax opened the Mt Holly plant, in South Carolina, in 1980. The country now had 33 smelters with a combined capacity of nearly five million metric tonnes of aluminium per year. Six is the number today. Two have been completely curtailed. Mt Holly and two other plants are operating below capacity. The annual production has dropped to 700,000 tonnes. Emirates Global Aluminium is hoping to turn the tide in Oklahoma with a new facility. The new plant joins Century Aluminum which received federal funding from the Joe Biden Administration for a "green" low carbon smelter in the Ohio/Mississippi River Basin. Both projects are facing the same problem. The high power prices have killed most of the country's metal smelters, and the lack of affordable power has discouraged anyone from building a smelter since the turn of the century. The fact that tech companies are willing to pay anything for their data centres, which consume a lot of electricity, makes it difficult for any smelter projects to compete with them for power. No power, no metal Since ancient times, aluminium compounds have been used as dye fixers by the Egyptians and for pottery by the Persians. It wasn't until early in the 19th century, however, that someone figured out how to refine it into metal. Even then it was still a costly curiosity. In 1869, the global production of aluminium was only two tons and it was worth more than gold. Charles Martin Hall, in the United States, and Paul Heroult, in France, independently discovered a solution that involved electrolysing an intermediate product known as alumina. Hall-Heroult is the dominant process for producing metals that are ubiquitous in vehicles, buildings and consumer packaging. It also requires a large amount of power. According to the U.S. Aluminum Association, it takes 14,821 Kilowatt-hours to produce a ton aluminium. A smelter of modern size with an annual capacity of 750,000 tonnes requires more electricity than a city of the size of Boston. It's a huge challenge for primary aluminum producers in the United States, given that the Energy Information Administration has estimated the country to be facing a deficit of energy of 31 million megawatt hours by 2030 and 48 millions by 2035. ALUMINIUM VERSUS AI Matt Aboud is Senior Vice President for Strategy & Business Development, Century Aluminum. He says that the power to build a U.S. aluminum smelter is now available. He explained the problem at last week's CRU Aluminium Conference, held in London. It is that there is no fixed price for a long time, and a smelter would need that to secure its profitability, as well as pay off construction costs which will reach billions of dollars. According to the Aluminum Association, a new U.S. aluminum smelter needs a minimum of a 20-year contract for power at a cost not exceeding $40 per MWh in order to be financially viable. Every smelter is competing with Big Tech. They are both on the hunt for energy in order to power their next-generation artificially intelligent data centres. According to the Aluminum Association report released on rebuilding U.S. Supply Chain Resilience, tech companies are "not limited in what they will pay" for reliable 24/7 electricity. Microsoft reportedly paid Constellation Energy $115 per megawatt hour in order to restart Three Mile Island Nuclear Plant in Pennsylvania. It warned that even reactivating idle aluminium lines would be difficult, given that the average price of electricity in 2023 will be $73.42 per megawatt hour (MWh) for the four states where smelters are located. "WHERE the wind sweeps down the plain" EGA has not yet signed a deal to provide electricity for its 600,000-ton smelter project in Oklahoma. According to a Memorandum of Understanding, signed by the state governor Kevin Stitt, the final go-ahead depends on an agreement "power solution framework" based on a Special Rate Offer from Public Service Company of Oklahoma. According to the EIA, Oklahoma produces almost three times as much energy as it consumes. In 2023, natural gas will account for around half of the electricity generated in Oklahoma. Wind power will make up another 42%. Oklahoma is actually the third-largest wind power state, after Texas and Iowa. To run an aluminum smelter using intermittent wind power, it would require a large amount of grid storage, so gas would be a part of the energy mix. It's better than coal, but it isn't ideal for an industry that collectively tries to reduce its carbon footprint in order to produce "greener" aluminium. DO NOT CHANGE IT! Even if EGA is able to secure a long-term, viable power deal, it will take until the end of this decade for the project to produce its first hot metal. According to projections by the Aluminum Association, by then, 14 new remelt facilities would have been established, bringing the U.S. scrap aluminum demand to 6.5 millions tons. Recycling uses much less energy, usually around 5%, than it does to produce new metal. It also has a lower capital cost. The shortage of scrap is the main obstacle to growth in secondary production in the United States. Only 43% of beverage cans are recycled in the country. This equates to 800,000 tonnes of aluminum thrown away every year. Also, it exports large amounts of scrap aluminium. Exports will increase by 17% annually to 2.4 millions tons in 2024. Most of these are destined for China which is hungry for recyclable materials. To reduce import dependence of a metal classified by all U.S. government agencies as critical, capturing more recyclable material and sending less abroad is a complementary approach. This is also more cost-effective and faster than waiting to find out if EGA or Century will win the fight with Big Tech to get enough power for a new primary melter. These are the opinions of the columnist, who is also an author. Mark Potter edited this article
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Reliance, India's largest solar manufacturer, will start manufacturing modules this year.
Reliance Industries, owned by Indian billionaire MukeshAmbani, will begin production of solar photovoltaic panels this year. A company executive announced the news on Thursday. Partha P. Maitra, Reliance Industries' President of Strategy and Initiatives, said: "We are building three larger factories... to meet the clean energy needs." India is scrambling to reach its clean energy target after failing in 2022. Global Energy Monitor's report shows that the country has increased investments in this sector over the last year. However, it needs to double the capacity additions within the next five to reach its goal of 500 GW of non-fossil energy capacity by 2030. Maitra stated that Reliance plans to increase solar module production to 20 GW annually. He said that the factory's micro-power electronics and battery production will begin next year. If it happens, we will be No. The world's second largest solar PV manufacturer. The executive stated that we will be producing 14% of the total number of solar PV modules outside China. Reporting and writing by Nidhh Verma, Bengaluru; editing by Mrigank Dahniwala.
Johnson Matthey gains on Honeywell's $2.4 billion unit purchase
Johnson Matthey, a UK chemicals company, announced on Thursday that it had agreed to sell the catalyst technologies division to Honeywell International, for 1.8 billion pound ($2.4 billion), which includes debt. This news pushed its shares by a third.
Early trading saw the share price of the company rise 33.6%, to 1856 pences, setting it up for its largest one-day gain yet.
Johnson Matthey will streamline the company following pressure from an activist investor and focus on two of its main businesses, which are making pollution filters for automobiles and processing platinum group metals.
The company to be sold manufactures and designs catalysts that are used in the production and use of sustainable aviation fuels, fertilisers, and paints.
Liam Condon, Chief Executive of Johnson Matthey, said: "We are now going to fundamentally reshape Johnson Matthey and make it a leaner and more focused business."
Condon was appointed in 2021, shortly after the company had exited its battery materials division and issued a profit warning. Since then, it has sold its medical devices components business.
Catalyst Technologies accounted for about 19% in Johnson Matthey’s total sales during the year ending March 2025.
Standard Investments - one of the largest shareholders - urged Standard Investments last December that it should conduct a strategic review, and overhaul its board.
JM changed its Finance Director in February and launched a pay review for its executives in January.
The British company stated that the deal will generate net proceeds in the region of 1.6 billion pounds. It added that approximately 88% of this amount would be returned to the shareholders.
(source: Reuters)