2024-05-28 22:39

MEXICO CITY, May 28 (Reuters) - Mexico has been consuming record amounts of electricity and occasionally more than its utility infrastructure can generate and transmit, official data showed, as scorching heat and water shortages raise the likelihood of power outages. In the late afternoon on Monday, Mexico consumed 51,595 megawatts of electricity across the country, grid operator CENACE recorded. When demand exceeds supply, the country becomes much more prone to outages. With some widespread outages so far this year already, and even hotter days forecast, water and electricity have become major election issues ahead of a national vote on Sunday. Finding a sustainable solution that keeps up with rising demand will be a major challenge for the next president. State-owned utility CFE, a near-monopoly that produces 99.47% of Mexico's electricity, and state-owned grid operator CENACE are suffering from aging and insufficient infrastructure as well as inadequate efforts to modernize and invest in renewable power sources. "There have been too many years now where demand was growing but there was an underinvestment in electricity generation and transmission," said Paul Alejandro Sanchez, an independent energy consultant. "The challenge isn't the average demand. It's when demand spikes to such extremes." Heat has driven electricity consumption by both households and industries, but Mexico also keeps growing. Increasing supply in the short term is difficult, and hydroelectric plants in particular have also been hit by extreme water shortages. Over the past six years, energy nationalist President Andres Manuel Lopez Obrador has prioritized CFE, which largely burns fuel oil, a residual waste product Pemex refineries are producing, to generate electricity. Under Lopez Obrador, experts have criticized that electricity generation has become dirtier, more expensive and less sustainable. He also curtailed growth of privately owned generators, many of which have seen their renewable energy plans stymied. International organizations have said Mexico is ideally positioned to become a clean energy powerhouse given its high solar radiation, wind capacity and geothermal sources. Mexico relied on fossil fuels for 77% of its electricity generation last year, according to Ember. Its largest source of clean electricity is solar, with 6%. Lopez Obrador is barred from running for a second term in Sunday's election. But the three candidates vying for the presidency of Latin America's second-largest economy have vowed to tap the country's vast solar, wind and water potential to generate more electricity. Claudia Sheinbaum of Lopez Obrador's ruling Morena party, who is leading the polls, and her closest opponent, Xochitl Galvez, have said they would focus on renewable energy to boost sustainability. The National Autonomous University of Mexico forecasts new heat records in some states will lead to "an increase in energy demand, poor air quality and forest fires." Sign up here. https://www.reuters.com/world/americas/mexicos-electricity-demand-hits-record-amid-extreme-heat-water-shortages-2024-05-28/

2024-05-28 21:48

May 29 (Reuters) - A look at the day ahead in Asian markets. Japanese consumer confidence and Australian inflation are the main points of focus for markets in Asia on Wednesday, as investors ponder the broader implications of a widespread rise in bond yields. U.S. Treasury yields, the benchmark for global borrowing costs, rose to four-week highs on Tuesday in the wake of a weak U.S. debt auction, leading to a mixed performance on Wall Street. The Dow fell, the S&P 500 was flat and Nvidia's extraordinary rally powered the Nasdaq to a fresh record high - shares in the AI poster child have soared 20% in the last three trading days and the firm is now worth $2.8 trillion. But Asian markets on Wednesday may be more sensitive to the tightening of financial conditions from U.S. yields than the U.S. tech boom. Some analysts reckon the 10-year Treasury yield may now be entering a higher range of 4.50% to 4.70%, and the two-year yield is knocking on the door of 5.00% again. Closer to home, Japanese Government Bond yields are also under renewed scrutiny. Yields are making new multi-year highs across the curve, prompting a flurry of comments from Japanese and global officials in recent days. The 10-year JGB yield rose for an eighth straight day on Tuesday to hit a fresh 12-year high of 1.035%, and the 2-year JGB yield inched up to a new 15-year peak of 0.36%. Bank of Japan Governor Kazuo Ueda on Saturday said the bank's 'basic stance' is that long-term bond yields should be set by markets. But this is difficult for the BOJ, which has for years been hoovering up JGBs in its battle against deflation and now owns more than 50% of the entire market. Higher bond yields raises the BOJ's interest bill. A lot. On the other hand, higher JGB yields could support the yen, which officials would probably welcome - Japan's finance minister on Tuesday said he was more concerned about the down side of a weak exchange rate right now, namely the increased burden on companies and consumers from higher import prices. Do JGB yields take a breather here? BOJ data on Tuesday sent out mixed signals on inflation - corporate services prices are rising at their fastest pace since 2015, but other data show key measurements of underlying inflation falling below the bank's 2% target for the first time since August 2022. If 'higher for longer' JGB yields boost the yen, Japan Inc. could feel the squeeze. The weak currency has attracted huge foreign investor flows into Japan, but with further 'material' weakness no longer likely, HSBC strategists are closing their overweight position in Japanese equities. Here are key developments that could provide more direction to markets on Wednesday: - Australia inflation (April) - Japan consumer confidence (May) - IMF's Gita Gopinath briefs media following IMF's annual assessment of the Chinese economy Sign up here. https://www.reuters.com/markets/asia/global-markets-view-asia-graphic-pix-2024-05-28/

2024-05-28 20:48

PORTO ALEGRE, Brazil, May 28 (Reuters) - Tens of thousands of students in southern Brazil have been gone a month without seeing their classrooms after catastrophic floods submerged some schools and turned others into shelters, raising concerns about their mental health. Of Rio Grande do Sul state's more than 2,000 public schools, nearly a fifth remain closed, affecting some 185,000 students. "We have children who are completely traumatized. When it starts raining they panic," said Rio Grande do Sul state Education Secretary Raquel Teixeira. Rains that started in late April have swollen several rivers and lakes in Brazil's southernmost state of Rio Grande do Sul to record highs, causing floods that killed at least 169 people and left more than 580,000 displaced, according to state officials. In the northern part of state capital Porto Alegre, near the Guaiba river, which still is above flood levels, primary school Brasilia remains partially under water. The school's soccer court is a pool, while classrooms and books are covered in mud. "We have impacts on infrastructure, physical and material; we have pedagogical impacts; we have psychological, and we have emotional impacts", Teixeira said. Elsewhere in Porto Alegre, at Roosevelt school, principal Marcio Freitas said employees know they will be the emotional support for parents and about 800 students as soon as they get back for classes, which are expect to resume by early June. "To have this situation (of flooding) in our last year of school, plus to have lost our last years of elementary school (to COVID-19), gives us ... a very bad feeling," said Sophia Souza Assumpcao, a high school senior at Roosevelt. Freitas, the principal, said he has faced many challenges working in public education over the year, but none as big as this one. Still, he said education gives no time to suffer. "If you fall you have to get up quickly. That's life in education." Sign up here. https://www.reuters.com/world/americas/floods-southern-brazil-leave-students-without-classrooms-month-2024-05-28/

2024-05-28 20:36

HOUSTON, May 28 (Reuters) - Hess (HES.N) New Tab, opens new tab shareholders on Tuesday approved the proposed $53 billion merger with Chevron (CVX.N) New Tab, opens new tab that paves the way for the No. 2 U.S. oil company to gain a prize asset and a foothold in rival Exxon Mobil's (XOM.N) New Tab, opens new tab massive Guyana discoveries. The approval clears one hurdle, but the deal still requires regulatory approval and must face a lengthy arbitration battle with Exxon and CNOOC (0883.HK) New Tab, opens new tab, Hess' partners in Guyana. Regulatory approval could come next month, said Frederic Boucher, risk arbitrage analyst at Susquehanna Financial Group, based on the time the Federal Trade Commission (FTC) took to approve Exxon's acquisition of Pioneer Natural Resources earlier this month. But the most crucial step to approve the deal, he said, is a resolution of the dispute filed by Exxon and CNOOC asserting they have a right of first refusal to any sale of Hess's Guyana assets. A majority of Hess's 308 million shares outstanding voting in favor of the deal was required for approval. Results were preliminary and Hess did not immediately provide the vote tally. The vote is a win for CEO John Hess, who put his reputation and the future of a company founded by his father on the line. The result puts to rest claims by some shareholders who wanted additional compensation for the delay in closing the sale. Exxon's arbitration could push the deal's closing into 2025. “We are very pleased that the majority of our stockholders recognize the compelling value of this strategic transaction and look forward to the successful completion of our merger with Chevron,” CEO Hess said. Hess and Chevron shares gained on the results. Hess rose a fraction to $152.05 and Chevron climbed less than 1% to $159.04. "Assuming Chevron wins the arbitration from Exxon or finds a settlement, the transaction is now going to happen," said Mark Kelly, an analyst with financial firm MKP Advisors. The yes vote has huge implications for both companies. Acquiring the profitable oilfields in Guyana from Hess would provide Chevron with a means to mitigate the geopolitical risks tied to the TengizChevroil project in Kazakhstan, which mainly transports its oil through Russia to a port on the Black Sea. In addition, this acquisition could counterbalance the cost overruns experienced at Chevron's Australian liquefied natural gas (LNG) projects, which have been affected by labor and operational issues. Acquiring Hess's Guyana holdings would fill out Chevron's oil and gas reserves and provide a new avenue for production growth, beyond their existing operations in the U.S. and Central Asia, said Allen Good, an analyst with Morningstar investment firm. Hess shareholders will own nearly 15% of the much larger Chevron and get access to its dividend, which is four times greater than Hess'. The shareholder sign-off also strengthens the companies' hand in any negotiations with Exxon. While Exxon has expressed no interest in bidding for Hess as a whole, it has not ruled out a potential bid for Hess' assets in Guyana. "It's good Chevron cleared this hurdle given the rumblings over the uncertainty of the Guyana arbitration," Good said. "However, I don’t think it will influence the outcome of Exxon’s claim". Chevron anticipates moving the FTC regulatory process towards its conclusion in the coming weeks, a spokesperson said. "We are confident our position on the preemption right will be affirmed in arbitration," the company said. Exxon operates all production in Guyana with a 45% stake in the giant Stabroek Block. CNOOC owns another 25% of the joint-venture. Both claim a right of first refusal on any Hess sale of its 30% stake. Proxy firm Institutional Shareholder Services had recommended shareholders vote to abstain and urged Hess to offer an incentive to shareholders because of the deal delay. John Hess spent the last month lobbying large shareholders to win support for the merger. He had personally visited or called more than 30 firms, according to people familiar with the matter. Sign up here. https://www.reuters.com/markets/deals/hess-investors-vote-chevron-deal-amid-growing-postponement-calls-2024-05-28/

2024-05-28 20:19

TSX ends down 0.5% at 22,265.05 Industrials decline 2.1% Financials were down 1.1% Scotiabank falls 0.8% despite earnings beat May 28 (Reuters) - Canada's main stock index fell on Tuesday, including declines for industrial and financial shares, as worries that interest rates would stay elevated for longer than previously thought prompted investors to pocket some of this month's gains. The Toronto Stock Exchange's S&P/TSX composite index (.GSPTSE) New Tab, opens new tab ended down 108.33 points, or 0.5%, at 22,265.05. Since the start of May, the index has advanced 2.5%. "It does feel like the market is starting to give back some of that big gain that we had throughout the month of May," said Greg Taylor, a portfolio manager at Purpose Investments. "We are starting to get more concern that the Fed is not going to cut anywhere close to the extent that they had (projected)." Wall Street's major indexes were mixed as investors awaited U.S. inflation data this week that could sway expectations for Federal Reserve rate cuts and as U.S. trading moved to a shorter settlement cycle of one day for securities transactions. Canada transitioned on Monday. The Toronto market's industrials sector (.GSPTTIN) New Tab, opens new tab fell 2.1% as railroad stocks lost ground, while heavily weighed financials ended 1.1% lower. Bank of Nova Scotia (BNS.TO) New Tab, opens new tab reported better-than-expected quarterly earnings, boosted by gains in its capital market business, rises in brokerage revenue in Canada and mutual fund fees overseas. Still, its shares were down 0.8%. Energy shares (.SPTTEN) New Tab, opens new tab were a bright spot, rising 1.4%, as the price of oil settled 2.7% higher at $79.83 a barrel on the expectation that OPEC+ will maintain crude supply curbs at its June 2 meeting. The materials group (.GSPTTMT) New Tab, opens new tab, which includes metal miners and fertilizer companies, also rose. It was up 0.9% as gold and copper prices climbed. Sign up here. https://www.reuters.com/markets/tsx-futures-dip-precious-metals-slide-2024-05-28/

2024-05-28 20:11

SAO PAULO, May 28 (Reuters) - Nutrien (NTR.TO) New Tab, opens new tab, the world's largest producer of potash, said on Tuesday that it is indefinitely halting three fertilizer-blending facilities in Brazil as part of a broader reorganization to weather tough market conditions. Nutrien confirmed the move, which had been announced only to employees, in a statement to Reuters, adding that it was part of a strategy to prioritize efficiency and profitability. The company said that it will rely on partners and on its two other blenders in Brazil to supply fertilizer to local customers. "This decision allows Nutrien to reactivate (the plants) in the future when there is a more stable market scenario," the statement said. Two of the plants are located in Goias state and the other is a new blender in Minas Gerais that has not yet started operations. The move to idle plants in Brazil follows a decision to put assets in Argentina, Chile and Uruguay up for sale, part of a regional turnaround first reported by Reuters. Nutrien's troubles in South America come as fertilizer companies struggle with market volatility since Russia's invasion of Ukraine sent prices skyrocketing in 2022 only to collapse the next year as global supplies stabilized. Since April 2023, several senior Nutrien executives were fired or quit the company in Brazil. The exodus has continued this year, according to three sources with direct knowledge. Nutrien did not have an immediate comment on the departures. One of the sources, who requested anonymity to discuss confidential information, said the company has also decided to close an older blending facility in Sao Paulo state, although it was not announced yet. Nutrien did not comment on the future of that blender. It also declined to comment on any layoffs related to the idling of the three plants. Sign up here. https://www.reuters.com/markets/commodities/canadas-nutrien-idles-three-blenders-brazil-indefinitely-2024-05-28/