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US inflation slows to 2.4pc in Sep

  • Market: Coal, Electricity, Metals, Natural gas
  • 10/10/24

US inflation slowed slightly less than expected in September, but still came in at the lowest annual rate since February 2021, in the first major inflation report since the Federal Reserve started cutting interest rates last month.

The headline consumer price index (CPI) eased to an annual 2.4pc in September, down from 2.5pc in August, according to the Labor Department. The decline was less than the 2.3pc forecast in a survey of economists by Trading Economics. Excluding volatile food and energy, so-called core inflation rose to a 3.3pc annual pace, higher than forecasts for core inflation to match the prior period's 3.2pc pace.

Today's report is the final CPI report ahead of the next Federal Reserve policy decision on 7 November and it follows a much stronger than expected employment report for September, which together could prompt the Fed to move more cautiously. Still, CPI has come down sharply from its peak of 9.1pc in mid-2022 and, despite aggressive Fed tightening, hiring has continued at a healthy rate and the overall economic expansion remains on track, partly thanks to falling energy prices.

The energy index contracted by an annual 6.8pc pace in September after contracting 4pc through August. The food index rose by an annual 2.3pc following a 2.1pc gain in the prior period. Transportation services rose by 8.5pc.

Within energy, the gasoline index fell by 15.3pc after a 10.3pc decline in the prior period. Energy services rose by 3.4pc after a 3.1pc gain. Natural gas services rose by 2pc.

Shelter rose by 4.9pc after a 5.2pc gain. Transportation services rose by 8.5pc following a 7.9pc gain. Auto insurance was up 16.3pc.

On a monthly basis, CPI rose by 0.2pc in September, matching gains in August and July, Labor said. Shelter rose by 0.2pc and food increased by 0.4pc, together accounting for over 75pc of the monthly headline increase, Labor said. The energy index declined by 1.9pc over the month, after falling by 0.8pc in the prior month.

By Bob Willis


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01/11/24

Mexican hydrogen regulatory efforts gain ground

Mexican hydrogen regulatory efforts gain ground

Mexico City, 1 November (Argus) — The Mexican hydrogen association (AMH2) has made significant strides in recent discussions with regulators and officials, unveiling a comprehensive roadmap for industrial hydrogen adoption. The group's report estimates there will be demand for about 392,189 tonnes (t) of hydrogen per year across seven major industries during Mexico's pilot hydrogen development phase. This includes sector-specific hydrogen demands of 148,350 t/yr from oil refining through 10 potential applications; 107,325 t/yr for mining; 55,877 t/yr for hydrogen blending in natural gas; 23,932 t/yr in the metals industry; 35,040 t/yr tied to ammonia production; 15,265 t/yr for public transport; and 6,400 t/yr for methanol production. AMH2's strategy urges the administration of President Claudia Sheinbaum to designate a lead ministry for hydrogen development, prioritize green hydrogen production and introduce incentives for project financing, technology development and energy transition initiatives. Additionally, it calls for regulatory adaptations to facilitate hydrogen's integration into Mexico's natural gas infrastructure, including quality, transportation, distribution and safety standards, especially for industrial equipment. Legal reforms to support hydrogen development will also be needed, according to the report, targeting laws governing mining, water, hydrocarbons, nuclear energy, energy transition, environmental protection, electric power, bioenergy and geothermal power. For green hydrogen — generated with renewable energy — the focus would be on the latter five areas. These efforts align with Mexico's long-term energy plan (Prodesen 2023-2037), which envisions converting 12 combined cycle power plants, totaling 1.024GW, to operate on a 70pc natural gas and 30pc hydrogen blend between 2033 and 2036. AMH2 president Israel Hurtado said although Mexico's pipeline infrastructure could handle up to a 15pc green hydrogen blend, achieving a 30pc blend would require further technological advances expected over the next decade. Prodesen also identifies regions for hydrogen injection into pipeline networks, including Sonora, Sinaloa, Tamaulipas, Oaxaca, Veracruz, Baja California and the Yucatan peninsula. Yet new regulations will be crucial to establish a robust framework for hydrogen blending in existing infrastructure. The Sheinbaum's administration has committed to reducing carbon emissions and promoting clean energy, Hurtado said, with a $13.5bn investment pledge in renewables over six years and a target for 45pc of national power from renewables by 2030. AMH2 has built early connections with Sheinbaum's team, including Jorge Islas, her energy and climate advisor during the campaign, who now heads the energy ministry's (Sener) energy transition unit and supports green hydrogen initiatives. AMH2 leaders also recently met with energy regulator (CRE) president Leopoldo Melchi and commissioner Walter Jimenez, who expressed strong interest in hydrogen regulation. The association and CRE agreed to form a technical workgroup to develop clean hydrogen regulations collaboratively. Looking ahead, AMH2 plans to meet with energy minister Luz Elena Gonzalez and Mexico's economy ministry to further discuss the hydrogen strategy. But CRE's workgroup is on hold pending potential legislative reforms that could reorganize Mexico's energy regulators under Sener's supervision. Projects in development AMH2 has identified 16 hydrogen projects in Mexico, with eight in various development stages and eight announced. Primarily focused on green hydrogen, these projects represent an estimated $19bn investment. The largest, Helax, is a $10bn green hydrogen production facility in Oaxaca, connected to the Interoceanic Trans-Isthmus Corridor. AMH2 anticipates production to start within two years following initial permitting. The roadmap suggests that, even if only six projects are operational by 2030, the sector could generate 3.351GW and attract $1.8bn in investments. These projects are projected to bring in $2.5bn in revenue over six years and yield $1.9bn in tax contributions. By James Young Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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Latin America mulls nuclear power revival


01/11/24
News
01/11/24

Latin America mulls nuclear power revival

New York, 1 November (Argus) — Nuclear power is gaining traction in Latin America as countries see small modular reactors (SMRs) as options for remote regions that are not connected to power grids. "The advent of SMRs are behind Latin America's new interest in nuclear energy, because they do not need to be large and do not require large investments," said Modesto Montoya, a nuclear physicist and former president of the Peruvian Institute for Nuclear Energy. Nuclear power is not a prevalent source of electricity in Latin America, producing around 2pc of the region's power consumption. There are seven nuclear power plants with a total capacity of 5.07GW in operation in the region, located in Argentina, Mexico and Brazil. Argentina has a 32MW SMR plant under construction. But the role of nuclear could increase in the region. Argentina, Brazil and Mexico are providing technical advice to countries that are considering including the technology in their power systems. Earlier this month, El Salvador approved a nuclear energy law and signed a memorandum with the Argentinian government for scientific and technology cooperation for nuclear power. Daniel Alvarez, director of the Agency for Implementation of the Nuclear Energy Program in El Salvador, told Argus that the country was "following the book to develop nuclear power. We want to convert El Salvador into a nuclear country." The country needs to replace fossil fuels as half of the country's power capacity is fueled by bunker fuel. It has 204MW of geothermal capacity installed and, while solar energy is possible, the country's size limits the amount of physical space to add large solar plants. The government's plan is to have a research reactor and 400 people trained to manage a nuclear plant within seven years. The next step would be the construction of SMR. "We have to include alternatives for power generation and SMRs are a very good option. We want to include them in our transition to 2050,"Alvarez said. SMRs are also seen as a solution to the energy problem in the northern jungle city of Iquitos, in Peru, energy and mines minister Romulo Mucho said. It is one of the world's largest cities that is not accessible by road and not connected to the national grid, relying primarily on fuel oil for power generation. Peru has had experience with nuclear technology since 1988, when it opened the nuclear research facility, RASCO. Neighboring Bolivia has been working on a small nuclear program since the previous decade with Russia's Rosatom. It has a center for nuclear medicine and is finishing a small research reactor. Ronald Veizaga, deputy minister of electricity and renewable energies, said Bolivia began the program to improve medical treatment for cancer, but has changed gears. "Critics claim SMRs are expensive, but it is more expensive to have blackouts affecting your population and industry," he said. Traditional nuclear Paraguay is considering a more ambitious path, looking at a traditional nuclear plant. "We need to make political decisions if we want to explore a SMR or a large-scale plant to generate 1GW or more," said Jorge Molina, executive secretary of Paraguay's Radiology and Nuclear Authority. Paraguay could work with Argentina and Brazil to create a regional platform. "Our idea is part of regional integration. Our neighbors are already helping us develop our regulations," he said. But the construction of nuclear plants comes with challenges including high costs, time, labor and materials. Brazil began work on the 1.4GW Angra 3 nuclear plant in 1984 but works have been halted and resumed several times since then. The plant is roughly 67pc complete and has been in limbo since 2015. The country's Bndes development bank recently concluded that abandoning the construction of the project would be less costly than completing it. By Lucien Chauvin Countries with installed nuclear capacity in Latin America GW Country Capacity Argentina 1.64 Brazil 1.88 Mexico 1.55 — Ons, Cammesa, Cenace Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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Striking Boeing workers to vote on new proposal


01/11/24
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01/11/24

Striking Boeing workers to vote on new proposal

Houston, 1 November (Argus) — Boeing workers next week will vote on a third labor proposal from the aerospace manufacturer that could end a seven-week work stoppage that has halted production of several commercial aircraft programs. More than 32,000 Boeing employees represented by the International Association of Machinists and Aerospace Workers (IAMAW) will cast their ballots on 4 November after union leadership and the company struck a tentative agreement on Thursday. The new offer comes with a 38pc general wage increase (GWI) spread over four years and a $12,000 ratification bonus — both up from 35pc and $7,000, respectively, from Boeing's previous proposal that workers rejected on 24 October. Sticking points during contract negotiations have centered around pay raises, with workers seeking a 40pc GWI, and the reinstatement of employees' pension plans. The latter is not addressed in the company's latest offer. Boeing's machinists have been on strike since 13 September, putting a squeeze on the company's finances with output of its flagship 737 MAX aircraft stalled. Production of Boeing's 767 and 777 models also has been disrupted. If the deal is approved, the earliest workers could return to their jobs would be 6 November, with everybody having to be back by 12 November at the latest, the union said. By Alex Nicoll Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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US job growth slumps in October, jobless rate at 4.1pc


01/11/24
News
01/11/24

US job growth slumps in October, jobless rate at 4.1pc

Houston, 1 November (Argus) — The US added only 12,000 nonfarm jobs in October, reflecting the impacts of two hurricanes, a strike at aircraft manufacturer Boeing and a slowing trend in hiring prompted by high borrowing costs. The unemployment rate remained unchanged at 4.1pc, still close to a five-decade low of 3.4pc reached in early 2023, the Labor Department reported today. Last month's gains were far fewer than the 113,000 forecast by analysts surveyed by Trading Economics. Job gains for the prior two months were revised down by a combined 112,000 jobs, leaving September with a still robust 233,000 and August with 78,000 jobs. A Labor Department report earlier this week showed job openings in September were at their lowest since January 2021. Still, job gains for the 12 months through October averaged 194,000, a little higher than the 12-month period before Covid-19 struck the US beginning in early 2020, causing millions of job losses and a sharp but short recession. Today's employment report, the last before next week's US presidential election, cements odds of a quarter point cut in the Federal Reserve's target rate next week to nearly 100pc from about 96pc Thursday, according to CME's FedWatch tool. The Fed cut its rate by half a point in late September, the first cut since 2020, as it is just beginning to loosen monetary policy after the sharpest tightening in decades to battle surging price gains. Inflation has since moved close to its 2pc target and job gains have gradually slowed, even as the economy remains robust, growing by nearly 3pc in the second and third quarters of the year. Hurricane Helene made landfall in northern Florida in late September and slammed northwards into Georgia, the Carolinas and Virginia, leaving major damage in its wake. Hurricane Milton struck Florida on 9 October, within the period of both surveys used for the job report. About 32,000 unionized workers at Boeing have been on strike since early September. Job growth trended up in government and in health care and social services, which added 40,000 and 51,000, respectively, while manufacturing declined by 46,000, partly due to strikes. Construction added 8,000 jobs. Average hourly earnings edged up to an annual 4pc from 3.9pc. By Bob Willis Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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Japan's Hibikinada biomass unit to trial runs in Jan


01/11/24
News
01/11/24

Japan's Hibikinada biomass unit to trial runs in Jan

Tokyo, 1 November (Argus) — Japan's 112MW Hibikinada biomass plant, which is being converted from coal and biomass co-firing to biomass-only combustion, will trial run in January 2025. The plant in southern Japan's Fukuoka prefecture, which is held by housing and energy company Daiwa House Industry, will conduct test runs to examine if exhaust gas coming from biomass-only operations can meet environmental regulations and verify that the modified boiler can be stably operated. The construction for conversion started in April and nitrogen injection systems for preventing fires have already been installed. Daiwa will resume conversion works in mid-2025 after evaluating results from the first test runs, and complete it by April 2026. It aims to start biomass-only combustion operations around April 2026 to generate 980 GWh/yr of electricity. Of this, 30pc will be sold under Japan's feed in tariff (FiT) scheme while the company is considering other ways to sell the remaining 70pc, including long-term power purchase agreements (PPAs) and electricity capacity auctions. The plant started operations as a coal and biomass co-firing power plant in February 2019, burning 70pc of coal and 30pc of imported wood pellets. Daiwa bought the operating company in January 2023 and announced it will convert the project to biomass-only combustion in April 2023, then halted operations in April 2024 for conversion. It will burn up to around 450,000 t/yr of wood pellets after converting to biomass-only combustion. Daiwa is aiming to develop more than 2,500MW of renewable energy capacity around 2030, including solar, wind, hydro, and biomass-fired power generation. By Takeshi Maeda Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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