US inflation slows broadly in April

  • Spanish Market: Crude oil, Metals
  • 15/05/24

US consumer price gains eased in April, with core inflation posting the smallest gain in three years, signs the economy is slowing in the face of high borrowing costs.

The consumer price index (CPI) rose by an annual 3.4pc in April, easing from 3.5pc over the prior 12-month period, the Labor Department reported on Wednesday. Core CPI, which strips out volatile food and energy, rose by 3.6pc, slowing from 3.8pc the prior month.

The easing inflation comes as the Federal Reserve has pushed back the expected start of interest rate cuts after holding its target rate at a 23-year high since July 2023 as the US economy has continued to grow and generate jobs at greater than expected rates. Job growth however slowed to 175,000 in April, the lowest since October 2023, and job openings and wage gains have also slowed while a measure of manufacturing has contracted.

The CME FedWatch tool boosted the probability of Fed rate cuts in September to about 72pc today from about 65pc on Tuesday.

The energy index rose by 2.6pc over the 12 months ended in April, accelerating from 2.1pc. The gasoline index slowed to an annual 1.2pc in April from 1.3pc

The food index rose by an annual 2.2pc, matching the prior month. Shelter slowed to 5.5pc from 5.7pc.

Services less energy services slowed to 5.3pc from 5.4pc. Transportation services accelerated to an annual 11.2pc, led by insurance costs, from 10.7pc in the 12 months through March.

On a monthly basis, CPI inflation slowed to 0.3pc in April from 0.4pc the prior two months. Core inflation slowed to 0.3pc from 0.4pc the prior three months. Energy held flat at a monthly 1.1pc.

Services less energy services slowed to a monthly 0.4pc gain from 0.5pc.


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24/06/24

Brazil's HRC prices to rise further by July

Brazil's HRC prices to rise further by July

Sao Paulo, 24 June (Argus) — Brazilian prices for hot-rolled coil (HRC) are expected to increase further in July — following increases in June — as domestic producers are betting on higher domestic demand along with lower offers for the type of steel. Brazilian HRC prices are at around $790/t fob, market sources told Argus , with some producers offering about $800/t. That compares with around $730/t last month, sources said. This upward swing is being heavily driven by new tariffs on imported steel , a measure taken by the government aiming to protect domestic producers against unfair competition with cheaper imports, chiefly from China. Brazil imported a little under 430,000 metric tonnes (t) of HRC in 2023 — over three times the 133,000t from 2022 — 62pc of which originated in China, according to customs data compiled by Global Trade Tracker. Brazil is on track to import over 480,000t in 2024 based on the latest import statistics through May. Some producers have told clients that prices would rise by July. Brazilian steelmaker Companhia Siderurgica Nacional (CSN) warned that HRC prices would rise by 7.5pc, while Gerdau would increase it by 8pc, sources familiar with the matter told Argus . CSN and Gerdau declined to comment. Domestic producers are also prioritizing slab production over HRC as export demand for the semi-finished grade has heated up, sources said. Brazil exported 445,800t of slab, a 10.4pc increase from April, according to customs data. Still, some other sources were skeptical that the market would accept such a rise, saying that key consumers are supplied with enough steel for the coming months, leading them to reject increases more broadly. By Carolina Pulice Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Industria mexicana se enfrenta a un peso más débil


24/06/24
24/06/24

Industria mexicana se enfrenta a un peso más débil

Mexico City, 24 June (Argus) — La depreciación del peso mexicano después de las elecciones ha afectado al comercio e inversión en energía, con un dólar estadounidense más caro elevando el precio de las importaciones de combustible y gas natural. El peso perdió aproximadamente 11pc de su valor frente al dólar estadounidense a medida que los mercados reaccionaron a la abrumadora victoria electoral del partido en el poder Morena en las elecciones del 2 de junio. El tipo de cambio saltó de Ps16.65/$1 solo una semana antes de la votación a un pico de Ps18.99/$1 en los días siguientes. Desde entonces, la tasa se ha estabilizado en Ps18.30-Ps18.50/$1 en los últimos días. "El nuevo umbral para el tipo de cambio probablemente será de Ps18 por dólar", afirmó Gabriela Soni, directora de inversiones de UBS Asesores México. Añadió que, aunque el movimiento ha sido abrupto, "creemos que está justificado dada la aprobación esperada de las reformas constitucionales que tienen el potencial de erosionar el sistema de división de poderes y afectar a las decisiones de inversión en el país." Soni se refirió a la consolidación histórica del poder político asegurado por Morena y los partidos aliados en las elecciones que les entregó no solo la presidencia, como se esperaba, sino el control de 27 de las 32 gubernaturas estatales, y solo a unos pocos escaños en el senado de obtener mayorías calificadas en ambas cámaras del congreso. Con los resultados, el camino está muy claro para que el presidente Andrés Manuel López Obrador apruebe las controvertidas reformas judiciales durante su último mes en el poder en septiembre. Esto podría significar la eliminación de las reformas energéticas promercado aprobadas en 2014, la disolución de los reguladores del sector energético de México y el endurecimiento de la visión estatista de López Obrador de un sector energético dominado por la empresa estatal de petróleo y gas Pemex y la empresa de electricidad CFE. El tipo de cambio podría bajar aún más en los próximos meses si la economía se mantiene estable, dijo Pedro López, director adjunto de análisis económico de Banco BASE, un banco especializado mexicano que apoya a las empresas internacionales con operaciones en el país. Dicho esto, el tipo de cambio frente al dólar estadounidense "continuará estando sometido a presiones más elevadas estos meses hasta las elecciones presidenciales de EE. UU. en noviembre", dijo López. López dijo que el mercado debería tener una imagen más clara de México para finales de año, después de las elecciones estadounidenses y con mayor claridad después de la próxima sesión legislativa mexicana. Añadió que las presiones inflacionistas derivadas del aumento del tipo de cambio probablemente llevarían al banco central a mantener la tasa de interés de referencia en 11pc, manteniendo tasas de interés altas en México. Estas, a su vez, atraen a los inversionistas globales de nuevo al peso bajo la dinámica actual de tasas, suponiendo que no haya perturbaciones adicionales. Balance de energía Dado que México es un importador neto de energía desde 2015, "una depreciación del peso mexicano tiende a empeorar el balance del petróleo", afirmó Soni. "Sin embargo, México es un exportador neto en sectores no energéticos, especialmente en la fabricación, y la balanza comercial se beneficiaría en estos sectores." Y aunque el tipo de cambio puede ayudar a México a ganar más dinero por las exportaciones de petróleo, "tenemos que recordar que son cada vez menos", dijo Víctor Herrera, jefe de estudios económicos del Instituto Mexicano de Ejecutivos Financieros (IMEF). Pemex está redirigiendo el petróleo hacia sus refinerías, bajo el mandato del presidente para aumentar la producción nacional de combustible. Como resultado, las exportaciones de petróleo crudo mexicano cayeron 31pc año con año en abril a 618,000 b/d. A pesar de los esfuerzos, los productos refinados importados de EE. UU. siguen representando aproximadamente 72pc de su consumo nacional de gasolina, diésel, gas natural y turbosina, según los datos de la secretaria de energía. Se necesitará tiempo para saber qué beneficios, si los hubiera, aportan las ventas de petroleo de Pemex al extranjero, que se traducen en pesos adicionales, afirmó Herrera. Mientras tanto, añadió: "pagaremos dólares más caros para importar gasolina." Por James Young Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Trinidad considers offers for shut oil refinery


24/06/24
24/06/24

Trinidad considers offers for shut oil refinery

Kingston, 24 June (Argus) — Trinidad and Tobago is again seeking an operator for the mothballed state-owned 165,000 b/d Guaracara refinery, and will decide by the end of August on several offers for the facility, prime minister Keith Rowley said on Sunday. The government has received eight expressions of interest from domestic and foreign companies to purchase or lease the refinery at Pointe-a-Pierre on the southwest coast that was closed six years ago, government officials told Argus . Rowley did not name the potential operators. But Indian steel producer Jindal Steel and Power "is interested in the potential of the refinery," Rowley's office said last week after he met in Port of Spain with the company's chairman Naveen Jindal. Trinidad shut the refinery in 2018 after a steady decline in crude production forced increases in imported feedstock, sending up refining costs that the government said were "unsustainable." A new owner would likely face similar challenges in obtaining feedstock as the country's crude production has moved from 144,400 b/d in 2005 to average 49,880 b/d in January-March of this year. A restart of the refinery "will be feasible only if there are arrangements for access to competitively priced imported crude that will allow profitable operating margins," a government official told Argus today. The government is making "very good progress" in efforts to offload the refinery, energy minister Stuart Young said on 21 June. But the company that would take over the plant "would have to be able to address several issues including asset management and the financial capability to operate the refinery," Young said. The government has failed since 2018 to reach an agreement with domestic and foreign interests for reopening the refinery. It renewed efforts to offload the facility following the late 2020 collapse of a sale agreement with area labour union-owned company PET that made a $700mn offer, outbidding US private equity firm Beowulf Energy and German refiner and trader Klesch. The government and California-based electrical contractor Quanten failed to reach an agreement in December 2022 for the takeover of the refinery. Growing oil producer Guyana rejected a proposal from Trinidad in February that it should supply crude to allow the Guaracara plant to be reopened. By Canute James Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Q&A: New DLE method seeks to access US lithium reserves


24/06/24
24/06/24

Q&A: New DLE method seeks to access US lithium reserves

London, 24 June (Argus) — Direct lithium extraction (DLE) technology has been around for a few years now, but several methods exist and are mine-specific. US-based Iliad technologies is attempting to find a universal method by which to extract lithium and export this technology to an increasingly diversified global lithium market. Argus spoke with Iliad chief executive Samuel Moore. Edited highlights follow: How does Iliad's DLE technology work? It is born out of Energy Source Minerals, which is a company that is developing a project in California on the Salton Sea. The genius of Iliad was really the need for technology that worked at high temperatures and could deal with the fluids coming up from the Salton Sea, and we decided there was not really anything on the market that was right for our project. It is based on absorption desorption, which is one of the longer-standing methods of DLE that I know of. It has been used for 30-plus years and in Argentina. What happens is that the lithium-bearing brine enters the system. The kinetics of the brine push the lithium into an absorbent material that is designed to capture the lithium and ignore everything else. It is almost the reverse of a filter. Everything else washes through the system and is injected back into the ground. Then we wash the lithium out of that absorbent material using just water. So we do not use any reagents, we do not use any acid, and we do not use any other harmful materials. It is a very clean system. We run a continuous process and smaller columns with a very clever valve that basically pumps the fluid through 30 different columns of absorbent. We work the absorbent continuously to take a stream of lithium chloride out of the back end. It means we use a lot less absorbent and a lot less water. Does Iliad technology work in different forms of brine, different from the geothermal brines in the Salton Sea? One of the myths of DLE is that you need a different solution for different clients. We do not think this is true. We have tested on more than 30 different lines. We have tested geothermal obviously, but we have tested salars [large brine fields] and in Smackover [lithium mining area in the US]. We have tested waters that come up with oil and gas. In different countries, we have a lot of data now and Iliad works universally with all of them. I don't think it is true to say that each different project requires a different technology. Our flavour of absorption desorption is very effective. We have tested brines with lithium of as low as 40 parts per million (ppm) and as high as up into the thousands. It works at both of these readings and at everything in between. We are really confident and comfortable that there are technologies out there that have universal application, and we are going to be one of those. Who could make use of this technology, and in what areas of the lithium sector? Our modern take on DLE unlocks resources that couldn't really be developed before. The traditional way to develop brine field lithium was with evaporation ponds in South America, but you get very large losses. You only get 40-50pc recovery when you do that, it takes a long time and the product quality is not there. So DLE allows a step change in performance than what is currently in the the industry and targets resources that are not really able to be targeted today. If you come back to the US, say the Smackover formation, you may get to process 204ppm of lithium. South America has 600ppm-plus of lithium, so DLE gets you lower. Then you get into the conversation around the geopolitics. Do I want to establish a lithium supply chain in the US, Europe and Canada — places that traditionally have not had one? I think DLE is going to be key to unlocking the domestic supply chain that the US government has clearly signalled is very important to it. We raised independent capital from Livent, now Arcadium Lithium. It was our cornerstone investor throughout that process. So it has taken a shareholding early, which is really interesting because it is the one industry participant that has done DLE for 30 years in Argentina already. How do lithium producers use DLE to reduce their impact on the environment? This will be the cleanest lithium you can produce — no question. Take our first project, for example. We are attached to the side of a geothermal power station. We capture the brine, so it comes to us hot. We capture the lithium using our method. Once the lithium has been removed, it goes back down the hole, in the same way that it does today. We use steam from the power station, and we use heat from the brine to do a lot of the processing. We use water to capture the lithium out of the absorbent material. We have no reagents and no harsh chemicals. [It is a] very low energy requirement. Compare this to hard rock mining, where you have a very large carbon footprint, a massive land footprint and then a huge amount of chemical use and the processing of that ore. You do not have evaporation ponds — once again, these leave a very large land footprint and incur very large water losses because you are evaporating the brine to the atmosphere to capture the salts left behind. So I mean, DLE — particularly really efficient DLE, like Iliad absorption desorption — will be the cleanest lithium you can get. By Thomas Kavanagh Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

MVP start-up shows permitting troubles in US


24/06/24
24/06/24

MVP start-up shows permitting troubles in US

Washington, 24 June (Argus) — The start-up of the Mountain Valley Pipeline (MVP) after a delay of over five years highlights the difficulty the US gas industry faces in building greenfield pipelines under current permitting rules — which are unlikely to change any time soon. The 500km natural gas pipeline began commercial operations on 14 June, at a $7.85bn price tag that was more than double the cost expected when the project was first proposed in 2015. The 2bn ft³/d (20bn m³/yr) pipeline will move shale gas from a mountainous region in West Virginia to demand centres in Virginia, with the possibility for future expansions. MVP is expected to run at just 35-40pc of its nameplate capacity until downstream bottlenecks are removed, according to analyst groups RBN Energy and East Daley Analytics. The pipeline offers the promise of eventually easing price pressure in markets in southeastern US and increasing Appalachian gas output that would otherwise remain constrained. The pipeline — soon to change ownership once US independent EQT closes its $5.5bn all-stock acquisition of operator Equitrans Midstream — is the sole survivor of a round of eastern US pipeline cancellations in 2020-21 caused by permitting issues. MVP was also delayed by permitting lawsuits that forced construction crews to repeatedly halt work, adding billions of dollars to project costs as inflation increased the price of both labour and materials. Construction on the project resumed last year only after extraordinary intervention from the US Congress, which approved all remaining pipeline permits as part of an unrelated law that raised the limit on federal debt. The permitting obstacles for pipelines in the eastern US show no signs of fading, despite smaller changes to speed permitting negotiated through legislation last year. Retiring US senator Joe Manchin, a Democrat from West Virginia, is circulating a comprehensive permitting package he says would fast-track the approval process for pipelines and renewable energy projects. Gas groups say any meaningful permitting bill will have to revise the judicial process and limit the ability of states such as New York to continue using water permits to veto new pipelines. In exchange, renewable energy projects could follow a faster permitting schedule for electricity transmission. But that is a deal many progressive Democrats are reluctant to take, particularly as they face the prospect that former president Donald Trump will win in US presidential elections in November. Far-right Republicans are hesitant to give President Joe Biden a permitting win when they believe they can get a better deal if Trump is elected. But without legislative changes industry officials expect permitting delays to continue whoever is in the White House. "This is not a left or right thing," EQT chief executive Toby Rice says. Sticky red tape Trump's campaign says if he is elected he will speed up approval of gas pipelines serving the Appalachian basin by removing "all red tape". But his regulatory changes when in office failed to make a material difference in permitting timelines, and he repeatedly failed to broker a legislative deal to hasten permitting. Gas industry officials say they want to expedite permitting regardless of the election results, and believe momentum could occur when voters start feeling the effects of delays. "The motivation for pipeline reform I think will increase when the American consumers believe that their energy needs are impacted by the lack of infrastructure," Iowa-based Berkshire Hathaway Energy's gas transmission president, Paul Ruppert, says. The difficulty and time required to permit large greenfield pipelines in the eastern US has led developers to focus on adding capacity to existing pipelines or pursuing shorter expansions instead. By Chris Knight Mountain Valley and its peers Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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