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US inflation eases to 3.3pc in May as Fed meets

  • Spanish Market: Agriculture, Crude oil, LPG, Metals, Natural gas
  • 12/06/24

US consumer inflation eased slightly in May for a second month, a sign Federal Reserve rate hikes are having some success in reining in inflation pressures after a spurt of gains earlier this year.

The consumer price index (CPI) slowed to an annual 3.3pc in May from 3.4pc in April, the Bureau of Labor Statistics reported today. So-called core inflation, which strips out volatile food and energy prices, increased by 3.4pc over the past year, the lowest reading in three years, from 3.6pc through April.

The energy index rose by an annual 3.7pc, compared to a 2.6pc rise in April, while the gasoline index rose by 2.2pc versus 1.2pc in April. Energy services rose by an annual 4.7pc.

Headline inflation had ticked up from 3.1pc in January amid stronger than expected economic data, prompting the Federal Reserve to delay widely expected rate cuts as it pledged it needed to see more evidence of a "sustained" slowing in inflation.

The inflation report, which came in slightly under economists' median forecasts, comes hours ahead of a Federal Reserve policy announcement today expected to reveal projections on whether Fed members still expect to begin cutting the target rate this year and by how much. Fed policymakers today are widely expected to keep their target rate unchanged.

The Fed hiked its target rate to a 23-year high of 5.25-5.5pc in July 2023 and has kept it there since as it has battled to bring down inflation that hit a high of 9.1pc in June 2022.

After the report, the CME's FedWatch tool signaled a 73pc probability that the Fed will cut its target rate in September from near 53pc odds Tuesday.

CPI was unchanged from the prior month, the first flat monthly reading in two years, following a 0.3pc monthly gain in April and 0.4pc gains in the prior two months. Core CPI was up by 0.2pc for the month after a monthly gain of 0.3pc in April.

The energy index fell 2pc in May on the month after rising 1.1pc the prior month. The food index rose by 0.1pc in May after being unchanged the prior month.

By Bob Willis


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18/07/24

'Urgent action' needed for UK to hit net zero goals

'Urgent action' needed for UK to hit net zero goals

London, 18 July (Argus) — The UK increased the rate at which it reduced greenhouse gas (GHG) emissions last year, but "urgent action" is needed for the country to meet its targets in 2030 and beyond, independent advisory body Climate Change Committee (CCC) said in its progress report published today. The report assesses the UK's progress towards its net zero goals against policy set out by the previous Conservative government. The new Labour government, which has been in power since 5 July, has already set the scene for a stronger decarbonisation agenda , but it "will have to act fast to hit the country's commitments", the report says. The committee tracked progress on 28 key indicators. Of the 22 that have a benchmark or target, only five are assessed as being "on track". The UK's GHG emissions last year stood at 393mn t/CO2 equivalent (CO2e), down on the year by 5.4pc, or 22mn t/CO2e, provisional data show. This estimate excludes contributions from international aviation and shipping, as these are not included in the UK's 2030 target of a 68pc cut in GHG emissions from a 1990 baseline. And last year's reduced emissions resulted primarily from a drop in gas demand, the CCC says. Combined gas demand in 2023 averaged 156mn m³/d, down from nearly 175mn m³/d a year earlier. While progress has been made, the previous administration "signalled a slowing of pace and reversed or delayed key policies", the report says. The reduction in emissions last year is "roughly in line with the annual pace of change needed" to reach the 2030 target, but the average annual rate over the previous seven years is "insufficient", the committee says. In its first days in office, the new government placed a strong emphasis on decarbonising electricity, but this is "not enough on its own", CCC acting chief executive James Richardson said. The average annual rate of GHG reduction outside the electricity supply sector over the previous seven years was 6.3mn t/CO2e, but this will need to more than double until 2030 if the UK is to meet its targets, the CCC says. In order to reach targets, "annual offshore wind installations must increase by at least three times, onshore wind installations will need to double and solar installations must increase by five times" by 2030. By comparison, oil and gas use should be "rapidly" reduced and the expansion of the production of fossil fuels should be limited, according to the report. The CCC also recommended that about 10pc of UK homes will need to be heated by a heat pump by 2030, in comparison with about 1pc today. The committee criticised the exemption of 20pc of properties from the 2035 phase-out gas boiler plan, saying it is "unclear" how the exemption would reduce costs as fewer consumers would have to pay to maintain the distribution grid. Gas-fired power generation in recent months has dropped on the back of high wind output and brisk power imports. Power-sector gas burn was 25mn m³/d in March-June, roughly half of the three-year average for the period. But if UK power demand increases with electrification, gas-fired power generation could maintain its role in the country's power mix, particularly if it is combined with carbon capture, use and storage technology, for which fast development and scale-up will need to happen this decade, the CCC says. "Biases" towards the use of natural gas or hydrogen must be removed where electrification is the most economical decarbonisation solution in an industry sector. Power prices need to be reduced "to a level that incentivises industrial electrification". Oil, gas industry to meet climate goals The UK's oil and gas sector "is on track to meet its own climate goals and is not slowing down", offshore industries association OEUK said today in reaction to the CCC's report. The UK needs a plan for reducing oil and gas demand and cutting its reliance on imports, according to OEUK chief executive David Whitehouse. "We should be prioritising our homegrown energy production," he said. The sector reduced its emissions by 24pc in 2022 from 2018, meaning it met its target to reduce emissions by 10pc by 2025 early. The industry halved its flaring and venting and cut methane emissions by 45pc in 2022 compared with 2018, Whitehouse said. OEUK plans to reduce emissions by a quarter by 2027 and by half by 2030 against 2018 levels. And it aims to achieve net zero by 2050. By Georgia Gratton and Jana Cervinkova Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

EU’s von der Leyen re-elected as Commission president


18/07/24
18/07/24

EU’s von der Leyen re-elected as Commission president

Brussels, 18 July (Argus) — The European Parliament today approved Ursula von der Leyen's re-election as president of the European Commission. Nominated by EU states in June, von der Leyen received 401 votes, by secret ballot, from parliament's 720 newly elected members. Von der Leyen called for continuing climate and energy policy in her 2024-29 mandate to achieve greenhouse gas (GHG) cuts of at least 90pc by 2040 from 1990 levels. "I have not forgotten how [Russian president Vladimir] Putin blackmailed us by cutting us off from Russian fossil fuels. We invested massively in homegrown cheap renewables. And this enabled us to break free from dirty Russian fossil fuels," said von der Leyen, promising to end the "era of dependency on Russian fossil fuels". She did not give an end date for this, nor did she specify if this includes a commitment to end Russian LNG imports. Von der Leyen went on to detail political guidelines for 2024-29. In the first 100 days of her new mandate, she pledged to propose a "clean industrial deal", albeit without giving concrete figures about how much investment this would channel to infrastructure and industry, particularly for energy-intensive sectors. The clean industrial deal will help bring down energy bills, she said. Von der Leyen told parliament the commission would propose legislation, under the European Climate Law, establishing a 90pc emission-reduction target for 2040. Her political guidelines also call for scaling up and prioritising clean-tech investment, including in grid infrastructure, storage capacity, transport infrastructure for captured CO2, energy efficiency, power digitalization, and deployment of a hydrogen network. She will also extend aggregate demand mechanisms beyond gas to include hydrogen and critical raw materials. Her political guidelines note the dangers of dependencies or fraying supply chains, from Putin's "energy blackmail" or China's monopoly on battery and chip raw materials. Majority report Passing the necessary legislation to implement her stated policies will now require approval from EU states and from parliament. Unless amplified by Germany's election next year, election victories by far-right parties in France and elsewhere appear not to threaten EU state majorities for specific legislation. Parliament's political centre-left S&D and liberal Renew groups, as well as von der Leyen's own centre-right EPP, have elaborated key policy requests . These broadly call for the continuation of von der Leyen's Green Deal, the set of legislation and policy measures aimed at 55pc GHG emission reduction by 2030, compared with 1990 levels. A symbolic issue for von der Leyen to decide, or compromise on, is the internal combustion engine (ICE). Her EPP group wants to stick to technological neutrality and to revise the phase-out, by 2035, of new ICE cars if they cannot run exclusively on carbon-neutral fuels. The EPP wants an EU e-fuel, biofuel, and low-carbon fuel strategy. Von der Leyen's guidelines reflect the need to gain support from centre-right, centre-left, and greens. For the ICE phase-out, she said the 2035 climate neutrality target for new cars creates investor and manufacturer "predictability" but requires a "technology-neutral approach, in which e-fuels have a role to play." She made no mention of carbon-neutral biofuels. It will be impossible for von der Leyen to satisfy all demands in her second mandate. That includes policy asks put forward by the EPP, ranging from a "pragmatic" definition of low-carbon hydrogen, market rules for carbon capture and storage, postponing the EU's deforestation regulation, to catering more for farmers, even by scrapping EU wildlife protection for wolves and bears. EU member states are expected to propose their candidates for commissioners in August, including those responsible for energy, climate, and trade policies. When parliament has held hearings for candidates in late October, von der Leyen's new commission would then be subject to a final vote. By Dafydd ab Iago Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

India’s MRAI urges zero import duty on Al scrap


18/07/24
18/07/24

India’s MRAI urges zero import duty on Al scrap

Mumbai, 18 July (Argus) — The Material Recycling Association of India (MRAI) has urged the government to remove import duties on aluminium scrap in its budget to be presented on 23 July. "Among the key challenges faced by the Indian aluminium recycling industry is paying [a] 2.5pc import duty on aluminium scrap," MRAI said in a letter to India's finance minister Nirmala Sitharaman. "It is a key raw material for aluminium recycling and the government should make it zero until the quality material is available in sufficient quantity in the domestic market." The government has a duty to create a level playing field between primary and secondary aluminium producers, said MRAI president Sanjay Mehta. "If customs duties are applicable on import of scrap, then commensurate export duties on the basis of total cost to country on primary products should also be levied." India does not have sufficient supplies of good quality metal scrap to support its recycling industry and relies heavily on imports. The current import duty system, coupled with the lack of aluminium scrap in India, reduce Indian producers' competitiveness in global markets because most other countries have no import duty on metal scrap. This could decelerate the country's effort to achieve its sustainability goals, added MRAI senior vice-president Dhawal Shah and the managing director of CMR Green Technologies Mohan Agarwal. India imported 1.83mn t of aluminium scrap in 2023 with more than a quarter coming from the US. Europe, the Middle East and north Africa are its other key suppliers. By Deepika Singh Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Australia’s Santos delays FID on Dorado oil field


18/07/24
18/07/24

Australia’s Santos delays FID on Dorado oil field

Sydney, 18 July (Argus) — Australian independent Santos will now target a 2025 final investment decision (FID) on its 80pc-owned Dorado oil project in Western Australia (WA), after deferring it in 2022 and last year indicating a 2024 decision. Dorado's 10pc stakeholder Australian independent Carnarvon Energy said the joint venture (JV) will evaluate a lower capital expenditure (capex) option by reducing capacity below the previously guided 75,000-100,000 b/d and phasing development wells, targeting front-end engineering and design re-entry later in 2024 "once the JV secures the best option vessel or hull". Carnarvon said overall capex prior to the first oil from the offshore field will now be below its previous guidance of $2bn. Dorado JV's other shareholder is Taiwan's state-owned CPC with 10pc. Santos reported higher April-June oil and gas output than the previous quarter on 18 July, with production from the 7.8mn t/yr Gladstone LNG (GLNG) in Queensland state up on a year earlier. It produced 22.2mn bl of oil equivalent (boe), up by 2pc from 21.8mn boe during January-March because of the return of WA's Devil Creek gas plant following a maintenance shutdown, as well as higher liquids production following cyclone-related disconnections during January-March. But output was 3pc below the year-earlier figure of 22.8mn boe. GLNG is on track to swap 18PJ (480mn m³) of gas into the domestic market over April-September 2024, Santos said, with the project maintaining its guidance of around 6mn t of LNG shipped for the year to 31 December. Production at the 6.9mn t/yr ExxonMobil-operated PNG LNG in Papua New Guinea (PNG) was down on January-March with natural decline at the Hides field, partially offset by high compression reliability from the Santos-operated Gobe and Kutubu fields. Finalisation of drilling and completion of operations activities at PNG LNG's Angore C1 and C2 wells has been achieved with both wells perforated for production. Angore project teams are now starting tie-in execution with production of 350mn ft³/d (10mn m³/d) expected during October-December. The $4.6bn Barossa backfill project in the Timor Sea is 77pc complete, Santos said, with pipeline testing completed in June and on track for its first gas in July-September 2025 within its cost guidance. Santos' 1.7mn t/yr Moomba carbon capture and storage project in South Australia is mechanically complete and on track to raise injection of Cooper basin gas plant carbon dioxide during July-December. Santos maintained its 2024 production guidance of 84mn-90mn boe and will release its half-year results on 21 August. By Tom Major Santos results Apr-Jun '24 Jan-Mar '24 Apr-Jun '23 y-o-y % ± q-o-q % ± Volumes ('000 t) GLNG (100pc) 1,338 1,649 1,263 6 -19 Darwin LNG (100pc) 0 0 134 100 0 PNG LNG (100pc) 2,001 2,009 2,065 -3 0 Santos' equity share of LNG sales 1,264 1,352 1,333 -5 -7 Financial LNG sales revenue ($mn) 762 901 838 -9 -15 Total sales revenue ($mn) 1,313 1,398 1,336 -2 -6 LNG average realised price ($/mn Btu) 11 13 12 -4 -10 Oil price ($/bl) 89 89 83 7 0 Source: Santos Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

China's Sunwoda plans $275mn battery plant in Vietnam


18/07/24
18/07/24

China's Sunwoda plans $275mn battery plant in Vietnam

Singapore, 18 July (Argus) — Major Chinese lithium-ion battery manufacturer Sunwoda plans to build a 2bn yuan ($275mn) battery plant in northern Vietnam's Bac Giang province. The site is expected to produce consumer battery cells, system-in-package and batteries, said Sunwoda. Capacity was undisclosed but the site is expected to generate around $1bn/yr of revenue, according to an official portal by Bac Giang Provincial People's committee. Northern Vietnam houses sites of multiple major technology and semiconductor firms including Apple, Foxconn and Samsung, but unannounced or short-notice power cuts have affected production bases in the region. Power outages in Northern Vietnam during May-June 2023 disrupted production and were estimated to have shaved 0.3pc off the country's GDP, according to a 2023 report by World Bank. But the province has "overcome the power supply difficulties", said the current chairman of the Bac Giang Provincial People's committee chair Le Anh Duong. The power supply lines and stations for manufacturing plants in the province have been strengthened, Duong said, adding that the province is looking at upgrading its electricity transmission system and prioritising the allocation of electricity output to key manufacturing companies. Sunwoda will be on its power supply priority list if Sunwoda goes ahead with the investment, said Duong. Rising market barrier pressure and overseas demand prompted major Chinese battery firms to expand overseas in an attempt to deal with geopolitical curbs. Disclosed overseas investment from China's lithium-ion battery sector totalled Yn565bn as of June, according to Chinese research institution EV Tank earlier this month. By Joseph Ho Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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