2024-07-26 10:11

LONDON, July 26 (Reuters) - The pound rose on Friday but was still headed for a second consecutive weekly fall against the dollar after a week of turmoil across global markets hit higher-yielding assets and as investors switch focus to next week's Bank of England meeting. The pound, which hit one-year highs last week above $1.31, is heading for a 0.5% decline against the dollar this week. It's still on track for a gain of 1.6% this month and remains this year's top-performing G10 currency against the dollar, with a 1.1% rise, compared with runner-up the euro , which is down 1.67% against the dollar this year. But the recent swell of volatility across markets has hit the pound harder than currencies that are lower yielding, such as the yen or the Swiss franc. Sterling was up 0.14% on the day at $1.28685. Futures traders currently hold the biggest bullish bet on sterling in history, according to weekly data from the U.S. markets regulator . Speculators currently hold a net long position worth $10.77 billion that has almost trebled since the start of this month. In an environment such as the one this week, when currencies with lower interest rates tend to perform better, sterling has come under pressure. Broker IG notes that its proprietary retail trader data , opens new tab shows just 37.63% of traders are net-long, with a ratio of 1.66 short traders for every long trader. In theory, this would suggest the pound has scope for more gains, given the majority of the retail market is short, but IG believes the deterioration in investor sentiment might play a bigger role. "While a contrarian view to crowd sentiment suggests GBP/USD prices may continue to rise due to the majority being net-short, recent changes in sentiment indicate a potential downward reversal in the current GBP/USD price trend," IG said. The Bank of England meets next week and markets are currently attaching roughly a 50/50 chance of a rate cut. This is slightly at odds with a majority of economists polled by Reuters that believes the central bank will deliver a quarter-point cut next week. It has been harder than usual for investors to work out what the thinking among BoE policymakers might be, given that most have not spoken publicly for more than two months due to rules in the run-up to a July 4 national election. Investors have been left guessing whether recent higher-than-expected services prices are enough to prevent the central bank cutting rates from their 16-year high of 5.25%. Sign up here. https://www.reuters.com/markets/currencies/sterling-tiptoes-higher-after-turbulent-week-2024-07-26/

2024-07-26 10:07

EBITDA 393 mln euros vs consensus 398.5 mln Launches review of its business Shelves investment in battery recycling plant Slower EV demand impacts sales July 26 (Reuters) - Metals recycling group Umicore (UMI.BR) , opens new tab on Friday reported a 24% fall in half-year core profit and booked a 1.6 billion euro impairment for its battery materials division in the face of weak demand for electric vehicles. The company, which makes catalytic converters and battery materials for carmakers, has decided to postpone a "large scale" investment in an unspecified battery recycling plant in Europe due to EV market weakness. It will also delay a battery materials plant investment in Canada, as it launches a strategic review of its business. "The market context is challenging and we have seen a slowdown in the growth of EV sales in the short and mid term," CEO Bart Sap told analysts. It now expects production at the European battery recycling plant to start in 2032 at the earliest. Umicore's shares were down 2.6% at 0943 GMT. "The low visibility on underlying market trends and technology choices has dented investor confidence, but the current valuation seems attractive" said KBC analysts in a note. Umicore's adjusted core profit (EBITDA) fell 24% to 393 million euros ($426.68 million), missing the 398.5 million expected by analysts in a company-provided consensus. Profits at the battery materials division fell 99% to 1 million euros. The group said the 1.6 billion impairment would reflect lower values of some of its plants and equipment. Umicore last month lowered its 2024 profit forecast, citing weak demand projections for battery materials due to the EV slowdown. The company on Friday confirmed its full-year guidance for core profit at group level, but forecast that the battery materials division would have an operating profit below break-even in 2025 and 2026. The company specialises in nickel, manganese and cobalt battery materials, and faces additional pressures as some car-makers switch to cheaper lithium-ion phosphate components. CEO Bart Sap told analysts that the two types of batteries can coexist on the market. In June, Umicore announced job cuts at its German business producing automotive catalysts, which helps reduce emissions in gasoline and diesel engines. ($1=0.9211 euros) Sign up here. https://www.reuters.com/markets/commodities/umicore-profit-slumps-weak-ev-demand-takes-16-bln-euro-writedown-2024-07-26/

2024-07-26 10:04

MEXICO CITY/NEW YORK/SINGAPORE, July 26 (Reuters) - Mexico is seeking to import more motor fuel for next year than it had previously planned, to compensate for delays in the startup of its new Olmeca refinery, half a dozen traders said, marking an about-turn by state energy company Pemex. The purchases for next year signal that the refinery would not be ready any time soon, a damper on the legacy of outgoing President Andres Manuel Lopez Obrador, who commissioned it after he was elected in 2018 to wean the country off expensive imports. Pemex, the most indebted among peers worldwide, is a major crude producer but relies heavily on gasoline and diesel imports because its six ageing refineries struggle to process its heavy Maya crude, producing instead record amounts of fuel oil. Earlier this year, Pemex had indicated to suppliers that it planned to significantly cut imports of both fuels because the 340,000-barrel-per-day (bpd) refinery would finally work at capacity, the market sources said. Reuters, however, revealed last month that the refinery is unlikely to produce any commercially viable fuels from crude before the end of the year as engineers were still working on key parts more than two years after it was inaugurated. The Paris-based International Energy Agency was also skeptical , opens new tab. In its June report, it wrote that the refinery was unlikely to come online any sooner than the fourth quarter of next year. Reuters was unable to determine by how much Pemex had earlier planned to cut imports for next year. Pemex did not respond to a request for comment. However, Mexico is now back in the market for deals that would guarantee fuel supplies through the rest of this year and next, and has made inquiries in the U.S. and across Asia, the traders said. Pemex traders are seeking similar volumes to those they previously imported, a trader at a large commodity house said. That was confirmed by another U.S.-based trader working for a large refiner in Latin America. They have also made inquiries with Chinese refiners in the past two weeks, but no deals have been made yet, two Asian traders said. New deals for 2025 supplies would contradict what Pemex CEO Octavio Romero said earlier this month - that Mexico would drastically lower imports of fuels in the coming months. The Olmeca refinery would start up in next days, he said then. New coking units in the Tula and Salina Cruz refineries will also boost output to above national demand and Pemex would have a surplus, he added. In the first five months of the year, Pemex produced 306,547 bpd of gasoline and 181,565 bpd of diesel in its six domestic refineries, official data showed. It imported 358,545 bpd of gasoline and 128,215 bpd of diesel. SPOT PURCHASES AMID DELAY Without the new refinery working at capacity, low imports could cause a fuel shortage next year that would be an embarrassment to the government and incoming President Claudia Sheinbaum, three Mexican traders said. Pemex and the government have pushed back the startup date of the refinery, whose cost has more than doubled to roughly $17 billion, at least a dozen times over the past years. Mexico typically imports most of its fuels from the U.S. as shipping from Asia takes longer and is more expensive, though variations in prices in Asia can make the arbitrage economical. Pemex bought at least three spot cargoes for early August-loading gasoline cargoes of around 300,000 barrels each in the past week from Asia – likely from China and Singapore – as arbitrage economics were lucrative, the traders added. However, to ship cargoes from northeast or southeast Asia to Mexico on a contractual term basis would be more challenging as it means the arbitrage must be profitable throughout the period. Sign up here. https://www.reuters.com/business/energy/mexico-seeks-more-2025-fuel-import-deals-after-refinery-delays-2024-07-26/

2024-07-26 08:03

KYIV, July 26 (Reuters) - Russia overnight attacked Ukrainian energy facilities in two regions with drones, disrupting electricity supplies, Ukraine's national power grid operator said on Friday. Power supplies have, however, been already restored to most consumers in the northern Chernihiv and Zhytomyr regions, Ukrenergo said. Ukrainian air defences destroyed 20 out of the 22 Russian attack drones launched overnight, Ukraine's air force chief said. Most of the drones were shot down in the Kherson, Sumy, Zhytomyr and Chernihiv regions. The governor of the Chernihiv region said that some infrastructure and a dormitory were damaged during the attack on the town of Nizhyn, without giving further details. Russian missile and drone attacks on Ukraine's energy sector have intensified since the spring, resulting in blackouts in many regions and forcing Kyiv to start large-scale electricity imports from the European Union. Sign up here. https://www.reuters.com/world/europe/russian-drones-attack-ukrainian-power-facilities-overnight-causing-disruptions-2024-07-26/

2024-07-26 07:33

MILAN, July 26 (Reuters) - Italian energy group Eni (ENI.MI) , opens new tab promised on Friday to accelerate its share buyback after reporting a smaller than expected drop in second-quarter net profit. The group said a stronger than anticipated performance at its upstream and Gas & LNG divisions supported its results, while actions it was taking to streamline its portfolio would translate in a lower debt at the end of this year. Between April and June adjusted net profit came in at 1.52 billion euros ($1.65 billion), down 21% from a year ago, but above an analyst consensus of 1.42 billion. During the past quarter the energy group pressed ahead with divestments, signing a deal to sell upstream assets in Alaska and announcing exclusive talks with investment firm KKR (KKR.N) , opens new tab to dispose of a stake in its biofuel unit Enilive. Thanks to these moves, Eni said it now expected its leverage ratio, which measures total debt in relation to equity, to be significantly below 0.2 by year end, better than its original projection. "This will enable us to speed up the execution of our 1.6 billion euro share buyback program and confirm our delivery of both business growth and shareholder returns," Eni Chief Executive Claudio Descalzi said in a statement. Shares in the Italian group were up 2.6% on Milan bourse, outperforming a slightly negative blue-chip index (.FTMIB) , opens new tab at 0727 GMT. Analysts had put the group's debt under the spotlight after credit rating agency S&P recently revised its outlook on Eni to negative from stable. An 8-billion euro disposal plan to be completed by 2027 should reduce the leverage and also help the energy group unlock fresh funds to be invested in its budding low-carbon businesses. The state-controlled group also said it was improving its 2024 pro-forma adjusted operating profit guidance to around 15 billion euros. In April it had guided for earnings before interest and tax (EBIT) of more than 14 billion euros this year. Eni recorded a proforma adjusted EBIT at its exploration & production division of 3.5 billion euros in the second quarter, better than an analysts' estimate of 2.43 billion euros. Oil and gas production rose by 6% year-on-year driven by the ongoing ramp-up at the group's flagship projects in Ivory Coast and Congo floating LNG, higher contribution from Libya and by the full integration of recently acquired Neptune Energy. The Gas and LNG business (GGP) posted an adjusted operating profit of 0.33 billion euros, above a 0.18 billion consensus. ($1 = 0.9209 euros) Sign up here. https://www.reuters.com/business/energy/enis-q2-net-profit-falls-beats-analyst-expectations-2024-07-26/

2024-07-26 07:17

MUMBAI, July 26 (Reuters) - The Indian rupee declined to its weakest level on record on Friday, pressured by dollar demand from local oil companies, custodial banks and tepid risk sentiment. The rupee was at 83.7175 against the U.S. dollar as of 10:35 a.m. IST, having slipped to a record low of 83.7250 in early trade. The currency had closed at 83.6975 in the previous session. The rupee has weakened to record low levels in four of the five trading sessions this week. The declines came amid outflows from local equities, volatility in the Chinese yuan, and expectations that the Reserve Bank of India (RBI) may allow the currency to weaken slightly as it seeks to correct its overvaluation. Foreign investors have net sold about $1 billion worth of Indian equities since Tuesday, when the government decided to raise taxes on profits from equity investments and on equity derivative transactions. The dollar index was at 104.2 on Friday while Asian currencies were mixed, with the offshore Chinese yuan down 0.2% after rallying sharply on Thursday. Volatility in the yuan may pose a risk to carry trades between the Chinese and local currency, adding pressure on the rupee. The rupee is expected to keep drifting lower steadily with the RBI likely to continue intervening to manage the pace of depreciation, traders said. Meanwhile, data released on Thursday showed that the U.S. economy grew more than expected in the April-June quarter but inflation pressures subsided. "We continue to think that the Fed (Federal Reserve) will start its rate cut cycle from September, and this month’s Fed meeting could be important to watch to see if there are any hints," Michael Wan, senior currency analyst at MUFG Bank, said in a note. Sign up here. https://www.reuters.com/world/india/rupee-slips-all-time-low-traders-expect-gradual-depreciation-persist-2024-07-26/