US nears approval of $2 trillion stimulus bill: Update
The US Senate is set to vote today on a massive stimulus bill that will provide funds to businesses, airlines and workers struggling from the coronavirus outbreak but excludes targeted help for the oil industry.
Congressional leaders negotiated the bipartisan $2 trillion deal in just five days, as the death toll in the US from the outbreak surpassed 700 and shuttered US businesses laid off what some analysts expect could be millions of workers. The deal would funnel the equivalent of nearly 10pc of US GDP to struggling businesses, states, hospitals and workers through a variety of grants, loans, cash payments and increased government benefits.
US Senate majority leader Mitch McConnell (R-Kentucky) said the deal would offer billions of dollars in emergency loans to businesses and rush new resources to healthcare facilities already struggling to manage the first wave of coronavirus patients. The agreement is also expected to send direct cash payments to most taxpayers.
"We are going to pass this legislation later today," McConnell said.
But the agreement will not include $3bn that would have gone to purchase 77mn bl of crude to refill the US Strategic Petroleum Reserve, something President Donald Trump wanted to help oil producers struggling from a collapse in prices. Senate minority leader Chuck Schumer (D-New York) touted the removal of the funds in a letter to Democratic colleagues this morning.
"Eliminated $3 billion bailout for big oil," the letter said.
The agreement, text of which has yet to be released, will save "hundreds of thousands of airline industry jobs," Schumer said in the letter. It will also prohibit airlines from stock buybacks and providing bonuses to chief executives. Crucial to the agreement was the inclusion of a Democratic demand for increased oversight of a $500bn fund for businesses, and a prohibition on Trump's hotel and other businesses from receiving loans and investments from those funds.
The prospect of a stimulus deal being reached helped send the US Dow Jones Industrial Average up by 11.4pc yesterday.
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Shell's 1Q profit supported by LNG and refining
Shell's 1Q profit supported by LNG and refining
London, 2 May (Argus) — Shell delivered a better-than-expected profit for the first quarter of 2024, helped by a strong performance from its LNG and oil product businesses. The company reported profit of $7.4bn for January-March, up sharply from an impairment-hit $474mn in the previous three months but down from $8.7bn in the first quarter of 2023. Adjusted for inventory valuation effects and one-off items, Shell's profit came in at $7.7bn, 6pc ahead of the preceding three months and above analysts' estimates of $6.3bn-$6.5bn, although it was 20pc lower than the first quarter of 2023 when gas prices were higher. Shell's oil and gas production increased by 3pc on the quarter in January-March and was broadly flat compared with a year earlier at 2.91mn b/d of oil equivalent (boe/d). For the current quarter, Shell expects production in a range of 2.55mn-2.81mn boe/d, reflecting the effect of scheduled maintenance across its portfolio. The company's Integrated Gas segment delivered a profit of $2.76bn in the first quarter, up from $1.73bn in the previous three months and $2.41bn a year earlier. The segment benefited from increased LNG volumes — 7.58mn t compared to 7.06mn t in the previous quarter and 7.19mn t a year earlier — as well as favourable deferred tax movements and lower operating expenses. For the current quarter, Shell expects to produce 6.8mn-7.4mn t of LNG. In the downstream, the company's Chemicals and Products segment swung to a profit of $1.16bn during the quarter from an impairment-driven loss of $1.83bn in the previous three months, supported by a strong contribution from oil trading operations and higher refining margins driven by greater utilisation of its refineries and global supply disruptions. Shell's refinery throughput increased to 1.43mn b/d in the first quarter from 1.32mn b/d in fourth quarter of last year and 1.41mn b/d in January-March 2023. Shell has maintained its quarterly dividend at $0.344/share. It also said it has completed the $3.5bn programme of share repurchases that it announced at its previous set of results and plans to buy back another $3.5bn of its shares before the company's next quarterly results announcement. The company said it expects its capital spending for the year to be within a $22bn-$25bn range. By Jon Mainwaring Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Japan's trading firms see metals prices cutting profits
Japan's trading firms see metals prices cutting profits
Tokyo, 2 May (Argus) — Major Japanese trading houses are expecting lower profits from their metals businesses during the April 2024-March 2025 fiscal year, mostly because of lower prices of commoditiessuch as iron ore and coking coal. Japanese trading house Mitsui forecast profits for its metal and natural resource business falling by 14pc on the year to ¥290bn ($1.87bn) during 2024-25, primarily because of lower iron ore prices. Mitsui plans to cut iron ore output by 0.3pc on the year to 60.9mn t at its mining projects where the company owns production rights or a production stake during 2024-25. This includes the joint venture project Robe River in Australia with Australian iron ore producer Rio Tinto. Japanese trading house Sojitz also expects profits from its metal and natural resource business to decline to ¥35bn, down by 20pc on the year, mostly because of a bearish coking coal market. The company said its overall coal business can cut production costs during 2024-25, partly because it plans larger-scale output at the Gregory Crinum coking coal mine in Australia, without disclosing further details. But Sojitz said it cannot generate higher profits because of lower coking coal prices. The trading house expects the average coking coal price to fall to $230/t during 2024-25, according to the company's chief financial officer Makoto Shibuya, down by $57/t from a year earlier. The company reiterated that the price is not necessarily their selling price. Sumitomo expects profits from its natural resource business would remain flat at ¥72bn on the year, mostly as its nickel production in Madagascar recovers from the output cuts in 2023 , with an aim to produce 19,000t of nickel during 2024-25, up by 9.8pc on the year. A rebound in nickel production could offset possible losses from coal and coking coal prices falling to $266/t and $133/t respectively in the ordinary market, down by $21 and $9, according to the trading house. Sumitomo plans to increase coking coal production by 9.1pc to 1.2mn t but reduce coal output by 4.8pc to 4mn t during 2024-25. By Yusuke Maekawa Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
US southbound barge demand falls off earlier than usual
US southbound barge demand falls off earlier than usual
Houston, 1 May (Argus) — Southbound barge rates in the US have fallen on unseasonably low demand because of increased competition in the international grain market. Rates for voyages down river have deteriorated to "unsustainable" levels, said American Commercial Barge Line. Southbound rates declined in April to an average tariff of 284pc across all rivers this April, according to the US Department of Agriculture (USDA), which is below breakeven levels for many barge carriers. Rates typically do not fall below a 300pc tariff until May or June. Southbound freight values for May are expected to hold steady or move lower, said sources this week. Southbound activity has increased recently because of the low rates, but not enough to push prices up. The US has already sold 84pc of its forecast corn exports and 89pc of forecast soybean exports with only five months left until the end of the corn and soybean marketing year, according to the USDA. US corn and soybean prices have come down since the beginning of the year in order to stay competitive with other origins. The USDA lowered its forecast for US soybean exports by 545,000t in its April report as soybeans from Brazil and Argentina were more competitively priced. US farmers are holding onto more of their harvest from last year because of low crop prices, curbing exports. Prompt CBOT corn futures averaged $435/bushel in April, down 34pc from April 2023. Weak southbound demand could last until fall when the US enters harvest season and exports ramp up southbound barge demand. Major agriculture-producing countries such as Argentina and Brazil are expected to export their grain harvest before the US. Brazil has finished planting corn on time . unlike last year. The US may face less competition from Brazil in the fall as a result. Carriers are tying up barges earlier than usual to avoid losses on southbound barge voyages. Carriers that have already parked their barges will take their time re-entering the market unless tariffs become profitable again. The carriers who remain on the river will gain more southbound market share and possibly more northbound spot interest. By Meghan Yoyotte and Eduardo Gonzalez Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
US Fed signals rates likely to stay high for longer
US Fed signals rates likely to stay high for longer
Houston, 1 May (Argus) — Federal Reserve policymakers signaled they are likely to hold rates higher for longer until they are confident inflation is slowing "sustainably" towards the 2pc target. The Federal Open Market Committee (FOMC) held the federal funds target rate unchanged at a 23-year high of 5.25-5.5pc, for the sixth consecutive meeting. This followed 11 rate increases from March 2022 through July 2023 that amounted to the most aggressive hiking campaign in four decades. "We don't think it would be appropriate to dial back our restrictive policy stance until we've gained greater confidence that inflation is moving down sustainably," Fed chair Jerome Powell told a press conference after the meeting. "It appears it'll take longer to reach the point of confidence that rate cuts will be in scope." In a statement the FOMC cited a lack of further progress towards the committee's 2pc inflation objective in recent months as part of the decision to hold the rate steady. Despite this, the FOMC said the risks to achieving its employment and inflation goals "have moved toward better balance over the past year," shifting prior language that said the goals "are moving into better balance." The decision to keep rates steady was widely expected. CME's FedWatch tool, which tracks fed funds futures trading, had assigned a 99pc probability to the Fed holding rates steady today while giving 58pc odds of rate declines beginning at the 7 November meeting. In March, Fed policymakers had signaled they believed three quarter points cuts were likely this year. Inflation has ticked up lately after falling from four-decade highs in mid-2022. The consumer price index inched back up to an annual 3.5pc in March after reaching a recent low of 3pc in June 2023. The employment cost index edged up in the first quarter to the highest in a year. At the same time, job growth, wages and demand have remained resilient. The Fed also said it would begin slowing the pace of reducing its balance sheet of Treasuries and other notes in June, partly to avoid stress in money markets. 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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