2024-12-19 20:06
Banxico signals potential for larger rate cuts amid inflation progress Analysts had forecast 25-bps cut after inflation slowed in November more than expected Peso volatility and US tariff threats may limit Banxico's rate cut pace MEXICO CITY, Dec 19 (Reuters) - Mexico's central bank lowered its benchmark interest rate by 25 basis points to 10.00% on Thursday and signaled larger rate cuts could be considered in future meetings given progress on inflation in Latin America's second-largest economy. The unanimous decision by the Bank of Mexico's five-member governing board is the fifth rate cut this year since it started lowering borrowing costs from a record high of 11.25% in March. The rate reduction came after headline inflation slowed slightly more than expected last month and a day after the U.S. Federal Reserve cut by the same magnitude. "In view of the progress on disinflation, larger downward adjustments could be considered in some meetings, albeit maintaining a restrictive stance," Banxico, as the bank is known, said in a post-meeting statement. Analysts had forecast the 25-bps cut after annual headline inflation slowed in November to 4.55%, below both the 4.59% expected by economists in a Reuters poll and the October figure of 4.76%. Mexico's closely watched core consumer price index, seen as a more reliable measure of price trends as it excludes volatile energy and food prices, fell to 3.58% in the 12 months through November, from 3.80% in October. Banxico targets inflation at 3%, plus or minus a percentage point. While both headline and core inflation are still forecast to follow a downward trend, the board raised its year-end inflation forecasts for 2024 and 2025. The board now sees headline inflation reaching the 3% target in the third quarter of 2026, later than the board's previous guidance of the fourth quarter of 2025. After the board's unanimous cut in mid-November, Mexican markets were rattled by U.S. President-elect Donald Trump's threat of a 25% across-the-board tariff on imports from Mexico. Thursday's statement referenced the Mexican peso's volatility amid "the possibility of measures that could weaken integration with our main trading partner." The peso reversed earlier losses and strengthened marginally against the dollar following Banxico's rate decision. In light of the peso's recent volatility and the threat of U.S. tariffs under Trump, some analysts questioned whether Banxico could really enact larger interest-rate cuts. "We doubt that Banxico will step up the pace of easing anytime soon. With the peso vulnerable to sharp falls if Trump slaps tariffs on Mexico, fiscal risks lingering and the Fed in a hawkish mood, we think that Banxico will continue to cut its policy rate in 25bp steps," said Kimberley Sperrfechter, emerging-markets economist at Capital Economics. Sign up here. https://www.reuters.com/markets/rates-bonds/bank-mexico-lowers-key-interest-rate-opens-door-larger-cuts-2024-12-19/
2024-12-19 19:41
Dec 19 (Reuters) - British oil major BP (BP.L) , opens new tab on Thursday said it has reached a deal with the Iraqi government on the technical terms to redevelop the Kirkuk oil and gas fields. The company had signed an agreement , opens new tab with the Iraqi government in August to develop and explore the Kirkuk oilfield in the north of the country, including building power plants and solar capacity. Iraq, the second-largest oil producer in the Organization of the Petroleum Exporting Countries after Saudi Arabia, has the capacity to produce nearly 5 million barrels per day. "Today's signing is an important step toward a fully termed contract," BP Executive Vice President William Lin said in a statement. The company said negotiations are expected to be completed early in 2025. Unlike historic contracts that offer foreign companies razor-thin margins, the new agreements are expected to include a more generous profit-sharing model, sources have told Reuters. A BP spokesperson, asked for more detail on the technical terms and whether the fields will be redeveloped according to a technical service contract or a profit- or production-sharing model, said she had no further information to share. BP was a member of the consortium of oil companies that discovered oil in Kirkuk in the 1920s. BP has estimated that the Kirkuk field holds about 9 billion barrels of recoverable oil. The company holds a 50% stake in a joint venture operating the giant Rumaila oilfield in the south of the country, where it has been operating for a century. The Iraqi government did not immediately respond to a request for comment. Sign up here. https://www.reuters.com/business/energy/bp-iraq-agree-technical-terms-redevelop-kirkuk-oil-fields-2024-12-19/
2024-12-19 19:31
Dec 19 (Reuters) - Micron Technology (MU.O) , opens new tab shares slumped about 15% on Thursday, as a bleak forecast indicating sluggish demand for personal computers and smartphones overshadowed a lift from robust growth in sales of AI-related chips. The market for dynamic random-access memory (DRAM) chips used in personal computers and smartphones has remained under pressure since the end of the pandemic amid a lingering supply glut and sluggish consumer demand. Micron's flash memory chip revenue in fiscal 2025 is expected to be significantly weaker, as sales of such chips are more exposed to PC and mobile phone shipments, Morningstar analyst William Kerwin said. The post-pandemic growth in demand for traditional PCs did not match expectations and AI-enabled computers are yet to gain mass popularity. Adding to the industry's woes, the expected transition to Windows 11 following Microsoft's (MSFT.O) , opens new tab decision to end support for Windows 10 has been more gradual than predicted. The company's market value is set to fall by more than $17 billion to about $99 billion, if losses hold. Meanwhile, revenue from the company's high-bandwidth memory chips, a type of DRAM chip used to power advanced AI systems, more than doubled sequentially. "Micron's HBM story remains intact as the company has positioned itself to capitalize on market expansion opportunities from data center investments in 2025," Piper Sandler analysts said. The Boise, Idaho-based company is only one of the three HBM chip providers alongside South Korea's SK Hynix (000660.KS) , opens new tab and Samsung (005930.KS) , opens new tab. Demand for HBM chips has helped boost Micron's stock by about 22% so far this year and analysts expect it to remain a key driver. At least 10 brokerages cut their price targets on the stock following results, according to data compiled by LSEG. Micron's 12-month forward price-to-earnings ratio is 10.67, lower than Qualcomm's (QCOM.O) , opens new tab 13.4 and Advanced Micro Devices' (AMD.O) , opens new tab 23.97. Sign up here. https://www.reuters.com/markets/us/micron-slumps-bleak-quarterly-forecast-clouds-ai-related-boost-2024-12-19/
2024-12-19 19:28
KAHANI, Mayotte, Dec 19 (Reuters) - Early last Sunday, after a night spent working at a small Mayotte maternity ward as a vicious storm devastated the French islands, midwife Lucie Gerard learned that a stranded woman was giving birth in a nearby home. After a 20-minute dash through the debris-strewn streets, she arrived at the house, only to learn that the baby boy had just been born. His mother had named her seventh child Chido, after the previous night's storm, the most powerful cyclone to hit Mayotte in nearly a century. "I was two minutes late," Gerard said with a smile. "The baby was born at 8.45 and I arrived at 8.47." Mayotte, an archipelago in the Indian Ocean off East Africa, is officially home to 320,000 people. However, the true number may be much larger due to difficulties in counting undocumented migrants, mainly from Comoros and Madagascar, estimated to be 100,000-strong. High birthrates and immigration have turned Mayotte, France's poorest overseas territory, into the country's fastest-growing department. Mayotte's main hospital in the capital Mamoudzou houses France's busiest maternity ward, with a child born once an hour, French Interior Minister Bruno Retailleau said this week. Three-quarters of mothers there are without papers, Retailleau said. But many other undocumented mothers, fearful of getting deported, choose to give birth at their homes in the scruffy shantytowns that were flattened by the storm. Chido's mother declined to speak with Reuters reporters who located her at her home in Barakani, a small town in the west of Mayotte's main island. Chido and his mother are in good shape, a neighbour said. Gerard's clinic is not. In the five days after the storm, the Kahani medical centre delivered 18 babies and examined eight infants born at home. But as of Thursday it was still without water, and largely without electricity. Two small diesel generators ran essential equipment like incubators for premature newborns and an ultrasonic device. The centre's head, Adrien Cussac, said they had to turn away some patients, including a person who suffered a stroke and a quadriplegic man who they could not help. The fridges for medication, vaccines and blood samples were not operational, forcing staff to store everything in a special insulation box. The spokesperson for Mayotte's healthcare body did not respond to requests for comment. Midwife Gerard said she was relieved no baby or mother had died at the clinic due to the tough conditions. "We're delivering babies just with our strap-on head lamps," she said. With deteriorating living conditions after the cyclone, and limited access to medical facilities, health officials said the risk of newborns suffering from infections and illnesses like tetanus and jaundice was rising significantly. One woman who had given birth at her home on Saturday had lost her baby who was premature and could not survive without special care, said Imene Boukott, another midwife in Kahani. Asked if she was thinking about leaving the island and returning to mainland France where she grew up, Boukott said no. "I somehow feel I'm needed here more than ever now." Sign up here. https://www.reuters.com/world/europe/cyclone-chido-waned-baby-chido-was-born-mayotte-home-2024-12-19/
2024-12-19 18:55
PANAMA CITY, Dec 19 (Reuters) - More than 100,000 metric tons of copper concentrate stuck at the closed First Quantum (FM.TO) , opens new tab mine in Panama do not currently pose an environmental risk, Panamanian President Jose Raul Mulino said on Thursday. The mine, one of the world's top sources of copper, was shut down in November after Panama's Supreme Court declared Canadian First Quantum's contract with the country unconstitutional, a move that followed environmental protests. Since then, commodities markets have been watching to see what decision Panama's government takes on whether it will allow the export of the 130,000 tons of copper concentrate left behind after the mine's closure. Mulino said environmental authorities visited the site a little over a month ago and concluded that the stocked copper was environmentally safe for the moment. Environmentalists as well as mining companies had raised concerns over risks from leaving the copper on site. "I asked Minister (Juan Carlos) Navarro to conduct that investigation, and he says there is no environmental threat right now," Mulino said at his weekly press conference. He added that the government plans to decide in January whether First Quantum's proposed maintenance plan for the mine, known as Cobre Panama, can move forward. First Quantum declined to comment. The company in a statement in April called for immediate removal of the copper concentrate to mitigate potential problems. "Due to prolonged storage pending export authorization, increased drying and chemical reactions that produce hazardous gases and elevated temperatures are being observed in monitoring, posing significant health, safety and environmental risks," the company said in the April statement. A plan for removing the copper must address payment for the metal, as well as an ongoing protest against the mine by fishing boats that are blocking the mine's pier, Mulino said. "If it has to be taken out, it has to be taken out, but there also has to be payment to us, Panama, because it is our material extracted under a concession that no longer exists," Mulino said. "All those things will eventually be part of the comprehensive review of the problem," he said. Cobre Panama, when operational, accounted for 40% of First Quantum's revenue and nearly 5% of Panama's GDP. Sign up here. https://www.reuters.com/markets/commodities/panama-president-sees-no-environmental-threat-copper-closed-first-quantum-mine-2024-12-19/
2024-12-19 18:55
Nornickel has struggled to import equipment to Russia Considers buying into existing plant rather than building one Low processing fees have increased pressure on Chinese smelters LONDON/BEIJING, Dec 19 (Reuters) - Chinese conglomerate Xiamen C&D (600153.SS) , opens new tab and Russia's Nornickel (GMKN.MM) , opens new tab are in talks to create a joint venture in China to process Nornickel's copper raw material into metal, two sources with knowledge of the matter told Reuters. Nornickel has struggled to import equipment to sanctions-hit Russia, where it produces copper used in the power and construction industries. It said in April it would close its Arctic facility and build a copper plant in China by mid-2027, but it has since been looking at buying a stake in an existing smelter rather than the original idea of building from scratch, one of the sources said. "Nornickel is negotiating for possible organisation of production in China. If agreements are reached, we will disclose them," Nornickel said in response to a request for comment. It declined to provide any detail. The smelter in question is Shandong-based Yanggu Xiangguang Copper in which Xiamen C&D holds a majority stake, the sources said. They asked not to be identified because they were not authorised to speak on the issue. Nornickel and Xiamen C&D have yet to reach a final agreement, finalise the size of the investment or stakes in the potential joint venture, they added. "It's an opportunity for the Xiangguang (facility) as low processing fees have added pressure on smelters to generate profit especially next year," the second source said. Xiamen C&D did not respond to Reuters' requests for comment. Xiangguang declined to comment. Xiangguang has annual production capacity of 400,000 metric tons of copper cathode. This roughly matches Nornickel's need to move its copper smelting base from the Arctic facility to China, the world's largest consumer of the metal. Nornickel produced 425,000 tons of refined copper last year, nearly 2% of global mined output. Xiangguang smelter relies on concentrate from third parties for processing. The sector's profitability and smelting activity have been hit by low processing fees following an expansion of capacity in China. According to analysts, the smelter is operating at 60-80% of capacity and needs a guaranteed feed supply. The sources said securing a supply was the incentive on the Chinese side for a deal. They also said a consequence of processing Nornickel's feed would mean Xiangguang's metal would no longer be deliverable against the copper contract on the London Metal Exchange (LME), a market of last resort. The LME banned from its system metal produced in Russia on or after April 13. Nornickel is not under Western sanctions imposed on many other Russian firms after Moscow invaded Ukraine in February 2022. But many Western consumers have self-sanctioned, declining to renew contracts with the company since then and Nornickel has diverted its metal to China. Both sources also said that, if the deal is agreed, technology would need to be modernised at Xiangguang smelter so that it can process the nickel and platinum group metals that Nornickel's copper concentrates contain. Sign up here. https://www.reuters.com/markets/commodities/nornickel-talks-with-xiamen-cd-shift-copper-smelting-china-2024-12-19/
