2025-02-11 12:20
Trump imposes 25% tariffs on steel, aluminium imports U.S. aluminium premium surges 25% since Friday Domestic smelters will struggle to meet U.S. demand LONDON, Feb 11 (Reuters) - Prices of industrial metals in the U.S. extended gains on Tuesday, reflecting the impact of U.S. President Donald Trump's 25% tariffs on steel and aluminium as industry will struggle to source enough domestic material. While the stated goal of the new tariffs is to aid struggling U.S. metal producers, it will take time to reopen closed plants and build new ones to compensate for large amounts of imports. In the meantime, traders are marking up U.S. metals prices to reflect the price automakers and other industries will have to pay for foreign metal when the measures take effect on March 12. The biggest impact will be on aluminium, used in transport, construction and packaging, with net imports accounting for around 82% of U.S. requirements, according to Morgan Stanley. The U.S. aluminium premium over the global benchmark on the London Metal Exchange has shot up by a quarter since Friday to 35 cents per pound and has surged by 60% since Trump was elected. "Aluminium capacities would have to be massively expanded in a short period of time to replace even a portion of the imports with domestic production," said analyst Volkmar Baur at Commerzbank. The United Steelworkers, a union representing U.S. and Canadian workers, said it welcomes efforts "to contain the global overcapacity that has for too long enabled bad actors like China to flood the global market," but encouraged Trump to work with Canada. "We must distinguish between trusted trade partners, like Canada, and those who are seeking to undercut our industries as they work to dominate the global market," said David McCall, the USW's CEO. The union has opposed efforts by Japan's Nippon Steel (5401.T) , opens new tab to buy Pittsburgh-based U.S. Steel (X.N) , opens new tab. The American Primary Aluminium Association praised Trump for the tariffs. "Today is a great day for the U.S. aluminium industry," said Mark Duffy, president of the association. But U.S. aluminium smelters produced only 670,000 metric tons of the metal last year, down from 3.7 million in 2000, while U.S. demand was 4.3 million tons, U.S. Geological Survey data showed. About 470,000 tons of U.S. production has been curtailed, and could in theory restart, said Amy Gower at Morgan Stanley. "But this would take at least 6-12 months in our view, depending on how much preparatory work has been done." Building new smelters would likely take even longer, she added. That was underscored by the Washington-based Aluminum Association industry trade group, which said it appreciated Trump's trade actions but would like to see more U.S. production. "There is not enough smelting capacity in the United States to supply the growing aluminium industry with the input materials it needs," said Charles Johnson, the association's CEO. New York-based PerenniAL, a privately held distributor of aluminium slab, wire rod, billet and other products used to make wheels, window frames and other products, said it planned to pass along any price increases to its customers. "I don't think anyone in the U.S. is more in favour of increasing domestic aluminium production than me, but it has to be done thoughtfully over several years," said Brian Hesse, PerenniAL's CEO. "You can't cut your nose off to spite your face." STEEL, COPPER The U.S. imports about a quarter of its steel, and domestic prices for U.S. hot rolled coil steel , a semi-processed product, have jumped by nearly 40% since last Thursday. "Supply growth would not offset these volumes in most products, resulting in materially higher U.S. prices, if implemented," said analyst Andrew Jones at UBS. "The larger impact could be the negative impact on growth from an escalating trade war." In Canada, aluminium producers said they were ready to compete but warned the pricing ramifications could harm U.S. consumers, as a similar tariff did in Trump's first term. "Remembering how disruptive a 10% tariff was for the U.S. (aluminium) industry, I can only begin to imagine how destructive a 25% tariff will be for the U.S. economy," said Jean Simard, CEO of the Aluminum Association of Canada. Wider fears about slower economic growth and metals demand due to a possible trade war were reflected in a broad retreat in global industrial metals prices on Tuesday. While Trump did not impose tariffs on copper on Monday, he did threaten duties on the metal last week. Expectations that copper would be next propelled the premium of U.S. futures traded on Comex over the global benchmark on the London Metal Exchange to a record peak on Monday. It pulled back slightly on Tuesday to $725 a ton from $930 at the close on Monday, but it is still roughly double its level at the end of January. Sign up here. https://www.reuters.com/markets/commodities/trump-metals-tariffs-propel-gold-pressure-china-steel-shares-2025-02-11/
2025-02-11 12:17
BP's annual profit drops to $8.9 bln, with a strategic reset planned Elliott's stake raises pressure for board and strategy changes Q4 profit fell 61%, weakest since 2020 Lower refining margins hit Q4; weak margins expected ahead Feb 11 (Reuters) - BP (BP.L) , opens new tab CEO Murray Auchincloss pledged on Tuesday to fundamentally reset the company's strategy as it reported a 35% fall in annual profits, missing analysts' expectations. The drop in profit to $8.9 billion follows weekend reports Elliott Investment Management has built a stake in the company, intensifying demands for strategic shifts. Auchincloss declined to comment on Elliott's reported involvement, in a call with Reuters on Tuesday. Elliott has also declined comment. The oil major also posted a 61% drop in fourth-quarter profits, year-on-year, to the weakest since the fourth quarter of 2020, when pandemic lockdowns shrank demand for oil. BP joins other majors that have experienced a decline in earnings throughout 2024, following record earnings in the previous two years when consumption recovered from the pandemic retreat and the disruption caused by the Ukraine war led energy prices to spike. But BP has underperformed its peers, piling pressure on Auchincloss to deliver change. Its share price traded around flat on Tuesday, falling 0.1% to 464.75 pence by 1021 GMT. On Monday, it had rallied strongly on expectations Elliott's acquisition of an undisclosed stake would enforce reform, possibly including board changes. "We now plan to fundamentally reset our strategy and drive further improvements in performance, all in service of growing cash flow and returns," Auchincloss said in a statement on Tuesday. "Our oil and gas business is well-positioned and performing strongly... we are focused on improving performance in refining, have stopped projects that won't compete for capital, and are restructuring our low-carbon business to grow, but in a more capital-light way." BP'S STRATEGIC RESET Auchincloss has been working towards rebuilding investor confidence in the company, following the resignation of his predecessor Bernard Looney in September 2023 for failing to disclose relationships with employees. He is expected to use the capital markets day (CMD), scheduled for February 26, to announce his new strategy. "Investors will likely be expecting a reversal of the integrated energy company strategy, including a reduction in low-carbon spending, robust cost reduction targets and increased hydrocarbon investment that could lead to production growth," Morningstar analyst Allen Good said. Delivering shareholder returns, the company extended its $1.75 billion buyback target to first-quarter. At the same time, BP said it plans to review financial guidance, including 2025 share buyback and capital expenditure expectations. RBC Capital Markets analyst Biraj Borkhataria said the brokerage expected a lower buyback rate beyond the first quarter. WEAK EARNINGS AND OUTLOOK The company's quarterly earnings were dragged down by weaker realised refining margins. Its fourth-quarter average refining marker margin stood at $13.1 per barrel, down from last year's $18.5 per barrel. For the current quarter, BP expects margins to remain low and a lower level of refinery turnaround activity compared with the fourth-quarter. BP's underlying replacement cost profit, the company's definition of net income, dropped to $1.17 billion in the three months ended December 31, from last year's $2.99 billion. Analysts had projected a fourth-quarter profit of $1.26 billion, based on a company survey, and $1.20 billion according to data compiled by LSEG. For full-year 2024, analysts expected a profit of $9.21 billion, according to LSEG data. Sign up here. https://www.reuters.com/business/energy/bps-fourth-quarter-earnings-drops-four-year-low-2025-02-11/
2025-02-11 11:45
PARIS, Feb 11 (Reuters) - French wine and spirits exports fell for a second consecutive year in 2024, hit by weaker demand for premium vintages as the industry grapples with lower prices, a softer Chinese market and threats of U.S. tariffs, industry group FEVS said on Tuesday. Exports of French wines and spirits totaled 15.6 billion euros ($17.5 billion) last year, a 4% decline from 2023, despite stable volumes at 174 million cases of 12 bottles, the Federation of Wine and Spirits Exporters said. China led the drop in value, with its imports down 20% year-on-year, while smaller markets Singapore and Hong Kong recorded falls of 25% and 12% respectively. With exports totalling 2.1 billion euros, the three accounted for 90% of last year's fall. French spirits exports were hardest hit last year, falling 6.5% to 4.5 billion euros, largely due to China's economic struggles and Beijing's anti-dumping measures on European brandy, chiefly French cognac. Cognac sales dropped 11% in value. However, volume dipped just 1%, supported by restocking in the United States and precautionary purchases amid fears of new U.S. tariffs on French wine, FEVS Chairman Gabriel Picard told Reuters ahead of the Wine Paris exhibition. Producers have also attributed the gap between value and volume to a shift toward younger, cheaper cognac. Wine and spirits shipments to the U.S., France's largest export market, rose 5% to 3.8 billion euros. In the wine sector, volumes edged 0.7% higher, but revenue dropped 3% to 10.9 billion euros, weighed down by an 8% decline in Champagne sales. "For the coming year, we face two major uncertainties: China and the United States. However, there is a feeling that the worst is never certain," Picard said. "In the United States if we set aside the risk of possible taxes, there are still relatively reassuring economic fundamentals," he said. On China, he praised France's efforts to defend the Cognac sector but called for "concrete action" ahead of an expected visit by Prime Minister Francois Bayrou to ease trade tensions. In Champagne, an expected global economic recovery and tighter stocks would benefit sales in 2025 but it was unlikely that exports would go back to their 2023 levels, Champagne houses head David Chatillon told Reuters. ($1 = 0.8916 euros) Sign up here. https://www.reuters.com/business/retail-consumer/french-alcohol-exports-weaken-second-straight-year-2024-2025-02-11/
2025-02-11 11:45
LAGOS, Feb 11 (Reuters) - The Africa Energy Bank, which will fund oil and gas projects and support the continent's energy transition goals, will launch in the first quarter of 2025 and target an asset base of $120 billion, Nigeria's junior oil minister said on Tuesday. The fossil fuel-focused bank, a partnership between trade finance institution Afrexim Bank and the African Petroleum Producers Organization, was due to start operations by mid-2024, an Afreximbank official said last year. "The building is ready, and we are only putting finishing touches to it, by the end of this quarter, this bank will take off," said Nigerian junior oil minister Heineken Lokpobiri. The minister joked that Nigeria too will follow U.S. President Donald Trump's mantra on increasing oil drilling and remove all impediments to grow oil production to 2.5 million barrels per day this year. Currently Nigeria's crude output averages 1.7 million bpd. Nigeria, Africa's top oil producer, beat three rival African countries for the right to host the multilateral lender. Sign up here. https://www.reuters.com/business/energy/africa-energy-bank-launch-q1-targets-120-billion-asset-base-2025-02-11/
2025-02-11 11:37
European shares up, dollar rally pauses More Trump tariff announcements expected U.S. inflation data in focus after Powell's testimony LONDON, Feb 12 (Reuters) - Stocks and dollar held steady on Wednesday ahead of U.S. inflation data that could uphold Federal Reserve Chair Jerome Powell's view that there is no need to rush to cut rates, while a rise in Treasury yields knocked gold back from record highs. An air of caution among investors kept action across the market subdued, given the uncertainty over U.S. President Donald Trump's threat last week to impose reciprocal tariffs on any country that applies duties to U.S. imports. His advisers are said to be finalising plans. Trump on Monday announced 25% tariffs on steel and aluminium up from 10%, with no exceptions, as well as product-specific exclusions, though said he was considering an exemption for Australia. With the risk that Trump's tariffs pose to the U.S. and other economies, investors have slowly scaled back their expectations for Fed rate cuts this year, with June being the most likely timing for the next drop. At his semi-annual testimony to Congress on Tuesday, Powell said little to refute this view, which prompted some traders to take profit on their dollar positions. "We are in a pretty good place with this economy", he said, noting that the Fed was in no hurry to make further interest rate cuts, but stood ready to do so if inflation declines further or the job market weakens. MSCI's All-World index (.MIWD00000PUS) , opens new tab, which last week hit record highs, was up 0.1%, while in Europe, the STOXX 600 (.STOXX) , opens new tab rose 0.2%, helped by upbeat results from Dutch brewer Heineken (HEIN.AS) , opens new tab and UK homebuilder Barratt Redrow (BTRW.L) , opens new tab In addition to January's CPI report, Powell will deliver a second day of testimony on Wednesday. "Normally the second act doesn't get as many headlines but there's a chance today's CPI may solicit a slightly different tone or encourage different questions. All depends on where the release is relative to expectations," Deutsche Bank strategist Jim Reid said. Nasdaq futures were little changed, while S&P 500 futures slipped 0.08%. TARIFF FATIGUE Some analysts have said much of Trump's rhetoric on tariffs appears to be more a negotiating tool, as many of his more aggressive threats have ended up being watered down, delayed or not materialising at this point. This has kept European equities and the euro supported to an extent. "The challenge for traders is that, despite some fatigue in the Trump trades, there's no way to predict if tomorrow will be the day Washington significantly expands tariffs. That's why we're reluctant to call a meaningful dollar correction without some kind of macro-supporting evidence," ING strategist Chris Turner said. The euro was up 0.1% at $1.0373. The European Union, along with Mexico and Canada, has condemned Trump's latest round of metal tariffs, with the EU saying the 27-nation bloc would take "firm and proportionate countermeasures". U.S. Treasury yields rose on Wednesday, as a selloff following Powell's testimony extended, pushing the yields on the benchmark 10-year note to a one-week high of 4.556%, which in turn boosted the dollar 0.85% against the Japanese yen to 153.78. In Asia, Chinese investors' newfound enthusiasm for artificial intelligence plays showed no signs of slowing. Hong Kong's Hang Seng Index (.HSI) , opens new tab jumped 1.83%, lifted by a rally in shares of Alibaba (9988.HK) , opens new tab after a media report that it is partnering with Apple to roll out AI features for iPhone users in China. In commodities, gold fell 0.3% to $2,889 an ounce, under pressure from higher bond yields and Powell's sense of calm about the need for rate cuts, while oil eased 0.7% to $76.46 per barrel. Sign up here. https://www.reuters.com/markets/global-markets-global-markets-2025-02-11/
2025-02-11 11:36
LONDON, Feb 11 (Reuters) - Bank of England policymaker Catherine Mann said on Tuesday that her unexpected vote for a half percentage-point cut in interest rates last week did not mean she wanted a series of rate cuts or that she would vote the same way again in March. Mann's vote came as a surprise to investors, who she said had viewed her as an "uber-hawk", though her approach was better understood as one of "activism", unlike the gradualism favoured by most of the BoE's Monetary Policy Committee. In a speech on Tuesday, she said she still viewed restrictive monetary policy as necessary and saw the long-term equilibrium level of British interest rates at the higher end of a 3.0-3.5% range given by a BoE survey of investors. Her position contrasts with that of Swati Dhingra - the other Monetary Policy Committee member who voted for a 50 basis-point cut - who has consistently voted for looser policy. "Active doesn't mean cut, cut, cut," Mann said in a question and answer session after a speech at Leeds Beckett University in northern England. Mann said she had voted to keep rates on hold until now because of persistent weaknesses in Britain's economy that acted to push up inflation. "Those structural impediments continue to be in evidence in this economy, and so the notion that somehow (I support) '50 now, 50 next time' - that would not be a full reading of what I have just said." Nonetheless, Mann judged that sufficient evidence had built up of soft consumer demand, the risk of a sharp deterioration in the labour market and weakening corporate pricing power for her to drop her opposition to cutting rates. Voting for a half-point cut was the clearest way to signal this to financial markets, she said. "I chose 50 basis points now, along with continued restrictiveness in the future, and a higher long-term Bank Rate to 'cut through the noise'," she added, saying she rejected the gradualist approach preferred by most policymakers. Last week the BoE halved its growth forecast for 2025 to 0.75% but also forecast inflation would rise from 2.5% in December 2024 to around 3.7% by the third quarter of this year. Mann said her commitment to continued 'restrictiveness' in interest rates "ensures that, as we move through the inflation hump, (inflation) expectations remain anchored both in the near and longer term". Sign up here. https://www.reuters.com/markets/rates-bonds/bank-englands-mann-bigger-rate-cut-was-needed-cut-through-noise-2025-02-11/
