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Kazimir, ECB's Kazimir, shifts his focus on gas prices and sees inflation risks rising
Peter Kazimir, a policymaker at the European Central Bank, said that euro zone inflation could be higher than projected and the growth of power and natural gas prices is a growing concern. The ECB increased interest rates on Thursday for a second time this year and also raised its inflation forecasts. This has fueled market speculation that there could be up to three rate increases in the next year. Kazimir is a policy hawk who has been outspoken in his calls for higher interest rates. However, unlike other colleagues, he did not call for a rate increase. He said policymakers should be open to new ideas and that the bank would act decisively when the evidence warranted it. Kazimir, Slovakia’s central bank head, said in a recent blog that his attention was now focused less on fuel and oil prices and more on the prices of gas and electricity. Food inflation, which is so important to perceptions and expectations of the future, is also expected to increase. Gas prices have reached a record high of four years, as European nations waited to fill their gas storages in the summer months hoping that the conflict with Iran would end. Gas storage is now being rushed to fill the gap left by historic levels. Prices are soaring, which will likely increase heating and electricity prices and cause inflation. The growth in food prices is unexpectedly low, but a "perfect storm" of factors including the European drought, El Nino weather phenomenon, and the soaring prices for diesel and fertiliser, which are key inputs to agriculture, will likely push prices up in the next few months. Kazimir stated that "the inflation risks are clearly skewed to the upside." The 'energy shock' has already lasted much longer than expected. But its full effects haven't yet filtered through to the economy. Financial markets expect a rate increase by the end the year, but the ECB's next meeting is on October 29.
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Solar Industries of India to purchase Omnia from South Africa for $1.36 Billion
India's?Solar Industries announced on Monday that its unit would acquire South Africa's?Omnia Holdings for?about $1.36billion in a?all cash?deal. The explosives and ammunition manufacturer is looking to expand their global mining business. Solar SA Investments is an indirect wholly owned subsidiary of Solar Industries. It will acquire all the outstanding shares of Johannesburg listed Omnia. This acquisition is subject to regulatory approvals and Omnia shareholders' approvals. African countries are stepping up their efforts to increase output and attract?investment in critical minerals. Zambia, a country rich in copper, is aiming to triple its production at a time when metal prices are rising. Solar expects that the expansion of its footprint will increase Africa's mining revenues by multiples from fiscal 2028. Solar Industries, based in Western India, manufactures industrial explosives, initiating systems, and other products for mining, construction, defence, and space industries. It operates more than?40 production facilities worldwide. Omnia is a company that provides services and products to the mining and agriculture industries. It operates in 23 countries, and has customers in over 40 other countries. The company reported revenue of $1.41 billion for the year ending March 31.
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European shares tempered as oil surge, tech slide weighs
On Monday,?European stocks were?subdued? as?technology shares fell? after executives from leading AI companies called on a slowdown in development? while another rise in oil prices? dampened the broader risk appetite? As of 0810 GMT the pan-European STOXX 600 was little changed, at 638.95, in choppy trading, with most major regional exchanges trading lower. Anthropic CEO Dario Amedei called for 'AI companies to slow down the rate at which model capabilities are advanced due to concerns of misuse. Shares in technology firms fell 1.4% in line with weakness among Asian peers. Infineon, a German company, lost 5.8% of its value, while ASML, a Dutch firm, and ASMI, based in the Netherlands, each suffered losses of 4.4% and 5%. Oil prices were up more than 2% as a result of the Houthi attacks on Saudi Arabia, and Iranian attacks against ships in the Gulf. This exacerbated supply concerns after the closure of an important Saudi oil pipeline. With a 0.4% increase, the European energy sector was one of the brightest spots. The focus now shifts to the U.S. Federal Reserve and its upcoming?policies decision. Traders are increasingly betting on a rate increase of 25 basis points. Last week, the European Central Bank raised interest rates.
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What role does Aliko Dangote’s oil refinery play in his conglomerate business?
Nigeria's Dangote Group sells a 3,3% stake in the 700,000 barrels per day?oil refining plant to the public in what will be the largest such transaction on the continent. Answers and questions regarding the business conglomerate owned by Africa’s richest man, Aliko?Dangote. What is the size of Dangotes' business group? The 69-year-old entrepreneur is the owner of Dangote Industries Limited. This industrial group, which produces cement, sugar, and salt, is one of Africa's biggest. The company is also involved in the refining of crude oil, as well as other activities such as the production and distribution of petrochemicals, fertilisers, and power. Dangote Industries is his primary holding vehicle for the majority of operating companies which are privately owned. This changes with the listing the "refinery complex" located near Lagos. Which parts of the group are most important? Dangote Cement, Africa's leading cement manufacturer, has a capacity of 51.8 millions metric tons per year. Nigeria is responsible for 35.3 millions tons of this capacity. The company is also active in Cameroon and other countries such as the Congo Republic, Ivory Coast (Ivory Coast), Ethiopia, Ghana Senegal Sierra Leone South Africa Tanzania Zambia. It aims to increase total?capacity by 2030 to 80 million tons. The group's most ambitious expansion is in its refining division, the newest business. The refinery started processing crude oil in 2024. It produces petrol, jet fuel and liquefied petroleum gases, as well as by-products of chemicals such polypropylene. An adjacent plant, which produces fertiliser, has a capacity of 3,000,000 tons per year of urea and ammonia. It supplies Nigeria as well as export markets such Brazil, India Mexico and the United States. Sugar, salt seasonings, and other food items are among the group's consumer products. These activities are supported by the Dangote Group's storage facilities, pipelines, power plants and marine terminals. How did Dangote build the group? Dangote’s strategy is based on the import substitution, which means offering locally produced goods for Nigerians to replace those they have traditionally purchased from overseas. Cement was Nigeria's first big success. The investments in plants, quarries, and logistics have helped Nigeria to become a regional supplier. Dangote then applied the same strategy in his latest ventures in?refining, petrochemicals and fertilisers to reduce reliance on imports and serve the domestic and international markets. The group's investments are aimed at controlling costs and ensuring supplies. However, these investments come with a large capital expenditure and risks, such as construction delays and significant debt costs.
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Nigerian billionaire Dangote launches Africa's largest share sale, the IPO of an oil refinery.
Aliko Dangote, the Nigerian billionaire who owns the oil refinery in question, launched the 'public offering' of the company on Monday. The sale opened up the plant to retail investors and raised money for the expansion. The offer to buy 4.1 billion ordinary shares for 525 Naira each began at 8am local time (0700 GMT), and will end on October 13th. The offer would have raised 2.15 trillion Naira ($1.6 billion) if fully subscribed. However, this could increase to $2.1 billion should the offer be?oversubscribed' and the company choose to use the greenshoe option in order to issue additional?shares. The refinery, built at a cost around $20 billion in the suburbs of Lagos has changed the fuel market of Nigeria since its start-up operations in 2024. Dangote supplies the majority of Nigeria's gasoline. The Iran War has also benefited Dangote financially, as it increased demand for Dangote jet fuel in Africa and Europe. Africa's richest person has made the offer to Nigerians who can buy as little as 10 shares via fintech and digital investment platforms. There is no restriction on who can buy these shares. "We want everyone... to own a share," Dangote stated at a signing event last week. The refinery currently processes 700,000 barrels of crude oil per day. It hopes to increase that to 1.4 millions barrels by the year 2029. Calculations show that the offer values this plant at $47 billion. Dangote said he expected interest in the IPO?to mirror a July private placement that was 3.7-times oversubscribed.
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The CEO of Grupa Azoty says that the company could re-establish its fertilizer production in Poland in response to supply shortages.
The European Union's trade barriers and global supply disruptions have made this sector vital to the EU's food security. "Today, it appears that a major shift in direction has occurred. "We are talking about rebuilding production capacity and defining fertilizer as a strategic industry," CEO Marcin Celjewski said on Friday. Celejewski stated that in order to fully rebuild the capacity, EU support would be needed, including special funding and a regulatory framework supportive of this. He warned that it was still too early to "commit" to a new strategy for the company while the conflicts in Ukraine and the Middle East continue. Azoty, meanwhile, is taking advantage of a gap in supply created by new EU import tariffs, a carbon border tax, and other measures that have eroded the cost advantages enjoyed by foreign fertilizer producers, causing them to withdraw from the region. Celejewski stated that the company would revert its previous plans to close factories, and instead rely on imported ammonia, adding that new investments had already been made. It also considers land at its Police Plant in northwestern Poland that was previously intended for a?green ammonia hub' as an alternative for conventional ammonia investments. Celejewski, Azoty's CEO, said that the company has no intention of selling Compo Expert, a specialty fertilizer manufacturer which complements its core portfolio. Azoty, a state-controlled company, has been facing severe financial problems since 2022 because of high gas prices and massive debts tied to its flagship Polimery Police project. The 'chemicals manufacturer has agreed to sell Polimery Police to the state energy group Orlen. This pending court approval is pending while it finalizes a long-term restructuring of its debt with its creditors. Celejewski stated that the company would be reducing capital expenditures, even for profitable installations. The company will not have the funds to make major investments until the debt restructuring is completed.
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Essar purchases UK petrol station operator SGN Retail and adds 118 sites
The company announced on Monday that India's Essar Group has acquired UK petrol station operator SGN Retail. This acquisition adds 118 sites to its network of fuel retail outlets, which it hopes to expand to 800 by 2031. Essar Energy Transition Retail (EET Retail), which operates 235 petrol stations, said that the acquisition would bring this number up to 235. EET Retail ?is part of Essar Energy Transition Fuels, which operates ?the 200,000-barrel-per-day Stanlow refinery in the United Kingdom. This acquisition will accelerate our?plan for a nationwide, vertically integrated platform with?800 sites. It is backed by direct refining supply, and will deliver competitive prices at UK petrol pumps to motorists," Arvan Ruia said, Chief Executive of EET Retail. Two sources familiar with the matter, who spoke on condition of anonymity, said that the deal was worth between PS400 and PS450 million (between $540.04 million and $607.55 millions). A spokesperson for Essar declined to comment on deal value. EET Retail announced that the acquisition would be financed by cash and a PS250 million senior debt facility provided by banks such as First Abu Dhabi Bank,?Macquarie Bank, Mizrahi - Tefahot Bank, Royal Bank of Canada, and SMBC Bank International.
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Report: Himalayas nearing tipping point; millions of livelihoods on the line
According to a study released earlier this month, the Himalayas is approaching a tipping-point as 'glaciers' melt faster now than they did a decade before. This threatens?water security, as the region is expected to reach "peak water" in the mid-20th century. The?findings?follow the collapse of an Himalayan Glacier in late August, along the Nepal-Tibet Border. This caused flash floods and cascading land slides in the valleys beneath. More than 5,300 people are missing in Nepal and China’s Tibet region. At least 1,300 deaths have been confirmed. The study concluded that as glaciers retreat they leave behind unstable glacial ice lakes, held back by nothing more than loose rock or?ice above valleys populated by millions of people. The study was created by Systemiq, a sustainability consulting firm, in collaboration with the Integrated Mountain Initiative (IMI), the Integrated Centre for Integrated Mountain Development, and India’s G.B. Pant National Institute of Himalayan Environment. The study revealed that the Himalayan glacier loss has accelerated over the past decades. Only 21 of the estimated 40,000 Himalayan glaciers in the Hindu Kush-Himalaya area, which spans eight countries, from Afghanistan to Myanmar was monitored on the ground. Nearly 200 glacial lakes were classified as "high risk" in India, and 56 as "very high", leaving millions of people exposed downstream. The region's "peak water", or the point at which river flows cease to rise and begin to decline, would have profound implications on water security. The Himalayas, which account for more than 20% in India's GDP and a major part of the nation's economic infrastructure, is a region that hundreds of millions of people rely on. The Himalayan region, which makes up about 18% of India’s land area, is responsible for approximately 35% of all natural disasters in the country.
Gold nears record high amid US rate cuts
Gold held steady near its all-time highest on Monday. It moved closer to the key $3,600 mark, buoyed by expectations that the U.S. Federal Reserve will cut rates this month after a weaker than expected jobs report last weekend.
As of 0454 GMT, spot gold had not changed much at $3,583.41 an ounce. Bullion reached a record-high of $3,599.89 per ounce on Friday.
U.S. Gold Futures for December Delivery fell by 0.8% to $3624.
The main drivers are the U.S. job data and expectations that the Fed will cut by 50 basis point in September. The marginal change is a significant one compared to the situation before the employment figures, said Capital.com's financial market analyst Kyle Rodda.
"Basically...all the tailwinds for gold are blowing at the moment, and despite an inflation shock in this week, we'll make a good check of $3,600."
The U.S. unemployment rate rose to nearly four-year levels in August. This confirms that the labor market is softening, which will lead the Fed to cut rates next week.
According to CME FedWatch, traders have priced in a rate cut of 25 bp this month. There is an 8% probability that the cut will be a 50 bp jumbo.
Gold becomes cheaper when interest rates are lower.
The Fed will now be focusing on the U.S. Inflation report due out on Thursday, which could provide more information on the expected size of its rate cut.
Bullion prices have risen 37% this year, after a gain of 27% in 2024. This is due to the weakening dollar, central bank purchases, a softerening of monetary policy, and a wider geopolitical, economic, and political uncertainty.
China's central banks added gold to their reserves in August. This is the 10th consecutive month that they have purchased bullion.
Gold speculators increased their net long positions to 168.862 contracts in the week ending September 2.
Silver spot fell 1% elsewhere to $40.57 an ounce. Platinum increased 0.2% to $1375.33 and palladium remained flat at $1109.50.
(source: Reuters)