2024-03-08 13:09

March 8 (Reuters) - Federal Reserve Bank of New York President John Williams said Friday that he suspects the "neutral" state of interest rates hasn't risen much in the wake of the coronavirus pandemic. It's likely that based on the most recent data “the neutral rate is still quite low," Williams said in an appearance in London, referring to a level where interest rates neither boost nor slow the economy. Williams did not comment on the monetary policy or economic outlook in his appearance, but he reiterated that achieving price stability is a core responsibility of the central bank. He also said that politics do not factor into the central bank's decision-making process. In recent comments Williams has said he expects the Fed to lower its interest rate target this year but he has not signaled when he expects that to happen. https://www.reuters.com/markets/us/feds-williams-neutral-rate-is-likely-still-low-2024-03-08/

2024-03-08 12:59

LONDON, March 8 (Reuters) - Sterling rose on Friday against a weakening euro and dollar after signs that the European Central Bank (ECB) and the U.S. Federal Reserve might be closer to cutting interest rates than the Bank of England (BoE). The pound rose 0.18% to $1.2826, after hitting its highest since August against a weakening dollar. It was set for its sharpest weekly jump against the greenback since November, up 1.4% this week. Against the euro , sterling rose 0.35% to 85.17 pence, after jumping to a more than three week high. It was on track for its biggest weekly rise against the single currency since early January, up 0.5%. Analysts said sterling's firmness this week was less a product of the UK fiscal outlook and more related to pressure on the dollar and euro after Fed Chair Jerome Powell sounded more confident about cutting interest rates in coming months, while the ECB's governing council had begun to discuss a suitable timeline for monetary policy easing. "We think the BoE is likely to wait somewhat longer than the Fed and the ECB to start easing policy," said Karsten Junius, chief economist at J. Safra Sarasin Sustainable Asset Management. "The main reason for this delayed reaction is that so far, the fall of services inflation and wage growth has been very limited, suggesting that underlying inflation might be stickier than elsewhere," Junius said. Money markets are pricing in a BoE interest cut only in August, according the LSE Group data. Markets see a first Fed cut in June, according to CME Group. Next week brings a raft of UK data, including gross domestic product and wage inflation - a key focus for the BoE. On Wednesday, UK finance minister Jeremy Hunt's spring budget offered a raft of tax cuts, but little in the way of surprises for the market. Hunt trimmed national insurance contributions by 2 pence in the pound but stuck to a fiscally cautious mandate that eased anxiety about Britain's $3 trillion debt burden. https://www.reuters.com/markets/currencies/sterling-climbs-highest-since-august-with-fed-ecb-cuts-weighing-2024-03-08/

2024-03-08 12:33

LONDON, March 8 (Reuters) - Activity on the CME's (CME.O) , opens new tab aluminium contract has shifted up several gears in recent months with volumes surging and the number of participants expanding. It's still small relative to the London Metal Exchange (LME), which isn't going to lose its status as benchmark price-setter any time soon. Nor will the Shanghai Futures Exchange (ShFE) stop being the dominant futures price reference for China's giant aluminium sector. Rather, the significance of CME's fast-growing aluminium contract is what it says about aluminium's shifting dynamics. The global market is becoming less globalised and the U.S. is starting to drift away from everyone else thanks to the combination of import tariffs and penal duties on Russian metal and Chinese products. The emergence of a North American pricing point is a logical evolution in this tectonic realignment of the market landscape. PHYSICAL DRIFT The CME's first aluminium contract was delisted in 2009 after the U.S. exchange failed to lure users away from the dominant London market. It was ironically the LME itself that opened the door again for its U.S. rival a few years later. Long load-out queues at LME warehouses in Detroit caused U.S. physical premiums to surge. The LME price stayed low but buyers were paying ever more for their metal and were unable to hedge the pricing gap. The CME launched a U.S. Midwest premium contract in 2013 followed a couple of years later by European and Japanese premium contracts. Volume last year across the four contracts totalled almost four million tonnes. The LME's premium contracts, launched much later, notched up volumes of just 202,000 tonnes last year. The Midwest premium briefly converged with the rest of the world before ballooning wider again when the Trump Administration imposed 10% import duties in 2018. The Biden Administration's policy of de-risking supply by closing the door on Russian imports has cemented the structural divergence with other regions. U.S. physical buyers are currently paying around $387 per metric ton over the futures price for metal. Those in Europe are paying around $250 and Japanese buyers just $120. That futures price has until now been set on the LME. But maybe for not much longer. GROWTH SPURT The CME tried again in 2014 with a futures contract to match its premium products but it lapsed into disuse late 2017 and didn't trade at all until July 2019. The trigger for the renewed interest was the CME's decision to expand its delivery network from U.S. locations to international ports, particularly those with physical arbitrage opportunities with the LME warehousing network. Registered stocks were zero prior to June 2019. Today they stand at 45,905 tons, most of it in heavily-used LME locations such as Malaysia's Port Klang and Gwangyang in South Korea. With inventory has come trading volume. Activity in the aluminium contract nearly tripled last year to 30.6 million tons. That's dwarfed by the 1.4 billion tons transacted on the LME, although the difference is accentuated by the LME's unique trading system. A more useful comparison is with the ShFE, which like the CME, offers a vanilla cash-settled futures contract. CME volumes in the first two months of this year came to 9.3 million tonnes, compared with 44.0 million in Shanghai. And the U.S. product is still growing fast. So too are the number of users, over 600 last year compared with 357 in 2022, according to the exchange. CME has also launched aluminium options, which just recorded their best volume month in February. CME ALL-IN ALUMINIUM Although the CME's rising aluminium fortunes have until now been linked via arbitrage with those of its competitor across the Atlantic, there are signs that the contract's success is generating domestic traction. A key development came in April last year, when price reporting agency Platts, part of S&P Global Commodity Insights, began publishing a CME-basis all-in price. Whereas physical buyers would previously hedge their basis risk on the LME and their premium risk on the CME, the new pricing tool allows both components to be executed on the CME. Domestic players such as PerenniAL Aluminum are now offering buyers a CME all-in price reference in this year's term supply contracts, according to CEO Brian Hesse, quoted in a CME update on the contract. Industrial users are being joined by investors. United States Commodity Fund (USCF) announced the launch of the USCF Aluminum Strategy Fund in October. It will trade basis the CME contract, hoping to attract investors looking for exposure to aluminium as a critical energy transition metal. Although included in all the major commodity indices, aluminium has to date failed to attract much retail speculative interest. CME, which offers investor friendly micro products in both precious metals and copper, would seem a good fit for smaller players unable to access the wholesale market in London. CME is assembling the building blocks to become an aluminium price-setter for the North American market. REGIONAL SPLITS This is not necessarily bad news for either London or Shanghai. Three regional futures exchanges can be mutually beneficial thanks to increased arbitrage possibilities. Copper, which has traded on U.S. exchanges since the nineteenth century, is a good example of profitable co-existence. But for aluminium, shifting from London dominance to regional price formation is a completely new development. It is, though, no more than a reflection of geopolitical reality as what was a highly globalised supply chain drifts apart into trading blocs. The opinions expressed here are those of the author, a columnist for Reuters https://www.reuters.com/markets/commodities/booming-cme-contract-sign-aluminiums-atlantic-drift-2024-03-08/

2024-03-08 12:22

COPENHAGEN, March 8 (Reuters) - Norway's Equinor (EQNR.OL) , opens new tab on Friday said its 531 megawatt (MW) Mendubim solar plant in Brazil had started power production, increasing the company's renewable energy production in the South American country by 30%. Mendubim will annually produce 1.2 terawatt hours (TWh) of electricity, and about 60% of that will be sold on a power purchase agreement with Norsk Hydro's (NHY.OL) , opens new tab Alunorte, one of the world's largest alumina refineries. The remaining production will be sold in the power market in Brazil, Equinor said. The Mendubim project is developed and operated as a joint venture between Equinor, Scatec (SCATC.OL) , opens new tab and Norsk Hydro's renewable energy unit Hydro Rein. The three partners have an equal economic interest of 30% in the project, while Alunorte holds the remaining 10%. https://www.reuters.com/business/energy/equinors-mendubim-solar-plant-brazil-starts-production-2024-03-08/

2024-03-08 12:05

India market flips to discount, China premiums slip India's March gold imports may be negligible- IBJA president Persistent price strength could revive German market- trader March 7 (Reuters) - A surge in global gold prices to record highs could dampen consumption during the wedding season in India, but top buyer China will see robust safe-haven demand this year, analysts and traders said. China and India together account for more than half of total global gold demand. Benchmark spot prices hit a record high of $2,170.99 an ounce on Friday, driven mostly by bets on U.S. monetary easing, which increases investors' appetite for zero-yield paper gold as opposed to competing assets such as Treasury bonds and the dollar. In India, the world's second-largest gold consumer and a major importer, domestic prices rose to a record 65,587 rupees per 10 grams. The rise in prices led to a drop in demand, which prompted dealers to offer discounts of about $30 an ounce over official domestic prices - inclusive of 15% import and 3% sales levies, the highest since April 2023 - versus last week's $1 premiums. "Consumers can't wrap their heads around current price levels. If prices stay this high, it's going to affect demand during the ongoing wedding season," said Prithviraj Kothari, president of the India Bullion and Jewellers Association. "There's no reason for banks and refiners to import. March imports would be negligible," Kothari said. Gold is an intrinsic part of Indian weddings and the summer wedding season is currently under way. "Even after hefty discounts, jewellers are not ready to make purchases for wedding season. They believe prices will not sustain at these levels and will eventually correct," said a Mumbai-based bullion dealer with a private bank. "Scrap supplies are increasing. Consumers who need to buy are exchanging old jewellery for new," said Ashok Jain, proprietor of Mumbai-based gold wholesaler Chenaji Narsinghji. In China, dealers cut premiums to $20-$36 over benchmark prices versus $36-$48 last week, but traders said overall demand should be robust in 2024. "While the price spike has driven some selling, demand will be up after some time as people get used to these levels," especially on safe-haven demand, said Peter Fung, head of dealing at Wing Fung Precious Metals in Hong Kong. Asian buyers are known to be price-sensitive, but that might change, said Ross Norman, an independent analyst based in London. "The mindset changes, and as the market goes higher, it almost validates the reason you're buying," Norman said. Analysts said the surge in gold prices could also attract some new investor interest in other regions. A sustained rally could revive buying activity in Germany, a key retail hub for coins and bars, said Alexander Zumpfe, senior precious metals trader at Heraeus. https://www.reuters.com/markets/commodities/gold-surge-could-dull-india-wedding-season-demand-china-outlook-robust-2024-03-07/

2024-03-08 11:38

LONDON, March 8 (Reuters) - BP (BP.L) , opens new tab said on Friday its overall carbon emissions climbed in 2023 for the first time since 2019 as the company started up new oil and gas projects and increased its production levels. BP's so-called Scope 3 emissions, caused by the burning of the oil and gas produced by the company, increased to 315 million metric tons last year, from 307 million tons in 2022, due to higher production of those fossil fuels. Direct and indirect emissions from BP's operations, respectively known as Scope 1 and Scope 2 emissions, also rose last year to 32.1 million metric tons of carbon dioxide equivalent, up 0.6% from 31.9 million tons in 2022, its annual report showed. The overall increase in operational emissions was due to "temporary production-related changes", project start-ups including in the U.S. Gulf of Mexico and the North Sea, and BP's acquisitions of Archaea Energy and TravelCenters of America. BP aims to reduce its Scope 3 emissions by 10% to 15% by 2025 and 20% to 30% by 2030 from a 2019 baseline. They have so far decreased by 13% over the period. BP aims to reduce operational emissions from 2019 levels by 20% by 2025 and by 50% by 2030. The emissions fell by over 40% between 2019 and 2023. Climate change is caused mostly by burning oil, gas, and coal, and is driving more extreme heat waves, droughts, storms, and sea-level rise. BP also reported a 10% rise in its methane emissions to 31,000 tons in 2023 from 28,000 tons in 2022, due primarily to increased flaring in its Azerbaijan-Georgia-Türkiye region and Tangguh operations. Methane is a greenhouse gas that's more than 28 times as potent as carbon dioxide at trapping heat, but its lifetime in the atmosphere is much shorter. https://www.reuters.com/business/energy/bps-operational-emissions-edge-higher-2023-2024-03-08/