2024-07-10 13:57

July 10 (Reuters) - Honeywell (HON.O) New Tab, opens new tab said on Wednesday it would buy Air Products' (APD.N) New Tab, opens new tab liquefied natural-gas process technology and equipment business for $1.81 billion in cash, marking the industrial giant's fourth acquisition this year. The deal would complement Honeywell's LNG pretreatment business by adding technologies such as heat exchangers and cryogenic equipment to its portfolio amid growing demand for the fuel in key end-markets including power and data centers. The Energy Information Administration this week forecast average U.S. LNG exports would reach 12.2 billion cubic feet per day in 2024 and 14.3 bcfd in 2025, up from a record 11.9 bcfd in 2023. Air Products' cryogenic equipment and natural gas liquefaction processes are used both onshore and offshore. Its coil-wound heat exchangers, part of the business being bought by Honeywell, is used for reliable liquefaction with minimal deck space requirement. "With the addition of Air Products LNG and expected year-end close, Honeywell is on track to deploy ~$15 billion in 2024 across M&A," said Sheila Kahyaoglu, analyst at Jefferies. Since taking charge as CEO in June 2023, Vimal Kapur has steered Honeywell toward three "compelling mega trends" — automation, the future of aviation and energy transition. Last month, Honeywell announced a deal to buy aerospace and defense technology provider CAES Systems for $1.9 billion. The deal with Air Products is expected to boost Honeywell's adjusted earnings per share in the first full year of ownership. Kahyaoglu estimated the transaction could add 1% to adjusted earnings in 2025. The deal will create opportunities for growth in aftermarket services and digitalization through Honeywell's Forge platform. Honeywell, with a market capitalization of more than $137 billion, supplies products, software and services to various sectors, including construction, aerospace and industrial applications. Air Products and Chemicals disclosed in a regulatory filing that around 475 employees from its LNG business will transition to Honeywell upon the deal's closure. Shares of Honeywell settled 1.83% higher, while Air Products closed 0.4% higher on Wednesday. Sign up here. https://www.reuters.com/markets/deals/honeywell-buy-air-products-lng-business-18-bln-wsj-reports-2024-07-10/

2024-07-10 12:41

MOSCOW/LONDON, July 10 (Reuters) - OPEC on Wednesday stuck to its forecast for relatively strong growth in global oil demand in 2024, predicting robust fuel use in the summer months. The Organization of the Petroleum Exporting Countries, in a monthly report on its website, said world oil demand will rise by 2.25 million barrels per day (bpd) in 2024 and by 1.85 million bpd in 2025. Both forecasts were unchanged from last month. "Expected strong mobility and air travel in the Northern Hemisphere during the summer driving/holiday season is anticipated to bolster demand for transportation fuels and drive growth in the United States," OPEC said in the report. There is a wider than usual split between forecasters on the strength of oil demand growth in 2024, partly due to differences over the pace of the world's transition to cleaner fuels. Earlier on Wednesday, BP said oil demand would peak next year. OPEC+, which groups OPEC and allies such as Russia, has implemented a series of output cuts since late 2022 to support the market. The group agreed on June 2 to extend the latest cut of 2.2 million bpd until the end of September and gradually phase it out from October. Sign up here. https://www.reuters.com/business/energy/opec-keeps-2024-2025-global-oil-demand-growth-forecasts-steady-2024-07-10/

2024-07-10 12:30

July 10 (Reuters) - U.S. regional banks will probably stockpile more rainy-day funds and stay conservative on stock buybacks as losses from commercial real estate (CRE) loans are expected to pressure their earnings, analysts said. As regional lenders prepare to report second-quarter results next week, they continue to face tough scrutiny from investors over potential weakness from CRE and commercial borrowers. Regional bank stocks have lagged the broader market on concerns that high interest rates will deter borrower demand and weigh on profits for most of 2024. Problems related to CRE loans at regional lender New York Community Bancorp (NYCB.N) New Tab, opens new tab earlier this year, and more recently First Foundation (FFWM.N) New Tab, opens new tab, have put the spotlight on default risks. "CRE portfolios mature gradually over time and losses tend to be lumpy," analysts at Morgan Stanley led by Manan Gosalia wrote in a note. "We expect higher for longer rates will continue to pressure credit quality for the next several quarters pushing more banks to build loan loss reserves through 2024," they added. The largest U.S. banks will kick off the earnings season on Friday. Smaller regional rivals will follow suit in the weeks after. Analysts expect profits to decline broadly as banks set aside more money to cover deteriorating loans, while they earn less from interest payments due to weak loan demand. U.S. Federal Reserve Chair Jerome Powell said on Tuesday that CRE risks will be with banks for years, and regulators were in touch with smaller banks to make sure they are able to manage those risks. Regional banks have also shifted toward making more risky loans. They now hold a larger share of non-investment grade corporate loans, which are more than three times more likely to default than investment grade loans, according to the Fed. The Fed projected total loan losses for banks to reach up to $571 billion under a severe scenario in its annual stress tests last month. Tough stress test results could weigh on regional banks' abilities to buy back stock, analysts at Jefferies led by Ken Usdin wrote in a note. "Acute CRE pressures (mostly in office) and ongoing credit card normalization are driving losses higher in 2024," they wrote. PROLONGED CRE STRESS The future path of U.S. interest rates has also heightened uncertainty for lenders pursuing distressed sales of CRE assets. Lenders have been trying to shed CRE loan portfolios by selling them to non-bank buyers such as private equity firms. "The regional commercial real estate market is not showing much by way of a revival, and the Fed is yet to cut interest rates, which will help neither the regional banks' CRE loan book or the value of their U.S. Treasury holdings," Russ Mould, investment director at UK-based investment firm AJ Bell, told Reuters. CRE property prices continued to decline at the end of the first quarter, albeit at a slower pace, according to a Morgan Stanley report. Prices fell 3% from a year earlier, it said. Meanwhile, distressed CRE sales increased to 3.9% of the total CRE sales at the end of the first quarter, the highest share since the end of 2015. Shares of banks with big exposures to CRE and multi-family properties, particularly in New York and other major metropolitan areas, are "easy targets" for short sellers, Raymond James analysts said. The KBW Regional Banking Index (.KRX) New Tab, opens new tab has shed about 11% so far this year. In contrast, an index tracking larger lenders (.SPXBK) New Tab, opens new tab is up about 18%. Sign up here. https://www.reuters.com/business/finance/us-regional-banks-face-increased-scrutiny-cre-exposure-stifles-buybacks-2024-07-10/

2024-07-10 12:29

BEIJING, July 10 (Reuters) - India has no right to carry out development in the area China calls South Tibet, China's Foreign Ministry said on Wednesday in response to a Reuters report on New Delhi's plans to speed up hydropower projects in the border state. "South Tibet is China’s territory," a foreign ministry spokesman said in a statement. It said India had no right to carry out development there and the establishment of what India calls Arunachal Pradesh on Chinese territory is "illegal and invalid". Reuters reported on Tuesday that India plans to spend $1 billion to expedite the construction of 12 hydropower stations in the northeastern Himalayan state. India's Foreign Ministry did not immediately respond to a request for comment on China's statement. India says its remote state of Arunachal Pradesh is an integral part of the country, but China says it is a part of southern Tibet, and has objected to Indian infrastructure projects there. Last week, India Foreign Minister Subrahmanyam Jaishankar met his Chinese counterpart Wang Yi in Kazakhstan where the two agreed to intensify efforts to resolve issues along their border. Sign up here. https://www.reuters.com/world/india/china-says-india-has-no-right-carry-out-development-arunachal-pradesh-2024-07-10/

2024-07-10 12:00

LITTLETON, Colorado, July 10 (Reuters) - Australia's electricity producers lifted generation from fossil fuels by more than from clean power sources during the first half of 2024, undermining the momentum of the country's energy transition from polluting fuels. Utilities generated 76.55 terawatt hours (TWh) of electricity from fossil fuels during the first six months of this year, which was 4.2% more than during the opening half of 2023, data from energy think tank Ember shows. That jump in fossil fuel-fired generation was the largest for that time frame in at least nine years, and highlights the enduring challenge facing Australian power producers as they try to wean generation systems away from fossil fuels. In contrast, utilities increased electricity from clean power sources by only 1.3% during the first half of 2024 from the same period last year, which was the smallest rise in clean generation during the first half of the year since 2017. The sluggish growth pace of clean power output saw clean power's share of Australia's generation mix shrink for the first time in seven years, to 35.6% of total utility-supplied electricity generation. HYDRO HIT A key drag on clean generation was a nearly 14% fall in hydro power output during January to June from the year before. Low rainfall in key southern areas during the southern hemisphere summer clipped hydro power output to 6.45 TWh, down from 7.5 TWh during the same period a year ago and the lowest for that period since 2017. Output from wind farms also shrank during the first half of the year, by 5.3% from the first half of 2023, which left solar farms as the main contributor to Australia's clean power generation expansion so far this year. SOLAR SHINES Utility-supplied solar electricity generation during the first half of this year was a record 21.5 TWh, up 12% from the first half of 2023. That strong growth pace exceeded all other forms of generation in Australia's power system so far this year, and helped cement solar as Australia's main clean electricity generation source. Even so, the intermittent nature of solar generation - which stops completely at night and can dip sharply during cloudy periods - has meant that Australian utilities have been forced to crank up generation from fossil fuels this year to ensure overall electricity supplies expanded to meet demand. KING COAL Coal remains the largest single power generation fuel in Australia, accounting for 67 TWh of electricity during the first half of the year. That total is up 4.4% from the same period in 2023, to the highest since 2021. Coal's share of total generation was 56.3%, compared to 55.7% during the first half last year. Generation from natural gas was 9.6 TWh, up 3% from the first half of 2023. Emissions from fossil fuel use in power generation were 70.22 million metric tons during January through June, up 2.85 million tons from the first half of last year and the highest in two years. That emissions count is liable to rise further above last year's total as the southern hemisphere winter sets in and output from solar plants declines just as demand for heating rises. A steep recovery in both wind and hydro generation over the coming months during the traditional peak output periods of both power sources could help lift total clean electricity output, and may possibly limit the overall volume of fossil fuel use in Australian power generation. But with fossil fuel generation already running 4% ahead of last year's pace through the opening six months, 2024 looks set to be another year of growth in fossil fuel-fired output in Australia despite ongoing efforts to decarbonise electricity production. Sign up here. https://www.reuters.com/markets/commodities/australia-lifts-fossil-fuel-fired-electricity-output-h1-2024-2024-07-10/

2024-07-10 11:52

MADRID, July 10 (Reuters) - Gas produced from organic waste is important to Europe's transition to a low-carbon economy and could help ensure companies don't leave the region, the executive chairman of Spanish energy company Naturgy (NTGY.MC) New Tab, opens new tab said on Wednesday. "We need to find solutions to decarbonise that do not lead to relocations," Francisco Reynes told an event in Madrid. "And the renewable gases are part of this solution." The Spanish energy firm is expanding its biomethane operations - which process agricultural or other organic waste - and now has three plants, with others under construction. Some environmental groups are critical of biogas because it can emit the same contaminants as burning fossil fuels. The green transition should be open to all technologies available, Reynes said, since "electrification is important but not everything can be electrified". He also called for a simple and effective regulatory framework for companies to invest in the shift to a low-carbon economy. Sign up here. https://www.reuters.com/sustainability/climate-energy/biogas-has-role-switch-greener-future-naturgy-chief-says-2024-07-10/