2024-08-29 19:45

Aug 29 (Reuters) - OPEC on Thursday said that Iraq presented clear and determined steps to compensate for over-produced volumes of oil and gave assurances that it would achieve full conformity going forward. OPEC Secretary General Haitham Al Ghais gave these remarks after concluding successful missions to Iraq and Kazakhstan. Sign up here. https://www.reuters.com/business/energy/iraq-assures-opec-full-conformity-with-oil-production-guidelines-opec-says-2024-08-29/

2024-08-29 19:42

CEO, chairman of Thyssenkrupp steel unit step down Company mired in open conflict over steel unit's future Thyssenkrupp slides deeper into crisis FRANKFURT/DUESSELDORF, Aug 29 (Reuters) - The chairman and CEO of Thyssenkrupp's (TKAG.DE) , opens new tab steel division have decided to step down amid a deepening conflict with its ailing German parent company over the future of the business. The move, along with the resignation of five other members of the management and supervisory board of Thyssenkrupp Steel Europe (TKSE), creates a major leadership vacuum at a time when Germany's top steelmaker urgently needs a new business plan. It also lays bare the fundamental differences between TKSE and Thyssenkrupp over the strategic pathway for the steel business, in which Czech billionaire Daniel Kretinsky owns a 20% stake, with talks to sell him another 30% ongoing. At the heart of the conflict lies the question over how much capacity and jobs must be cut at TKSE to raise profitability - and how much money it needs from its parent company to pay for the restructuring. A proposed business plan presented by TKSE's management earlier this month was deemed insufficient by Thyssenkrupp CEO Miguel Lopez, indicating frustration over the fact that the steel unit consistently swallows most of the group's investments. At the time, TKSE said it saw a gap of 1.3 billion euros ($1.4 billion) between the funding Thyssenkrupp is willing to provide and what TKSE thinks is needed. "We no longer see any possibility of our standards of professionalism, open discussion and a speak-up culture with respect in our mutual interaction," TKSE Supervisory Board Chairman Sigmar Gabriel told reporters following a board meeting. "It is no longer possible for us to act responsibly as supervisory board members under these conditions." Gabriel said TKSE CEO Bernhard Osburg is stepping down immediately and that he himself would stay on until mid-September as required under German laws. Tensions have been building in recent months over efforts to map out a new ambitious business plan for TKSE that is aimed at regaining the competitiveness lost in recent years and enabling a sale after numerous unsuccessful attempts. 'UNPRECEDENTED CHAOS' Thyssenkrupp AG, in a statement following the sweeping changes, said it would press ahead with TKSE's restructuring irrespective of the changes. "Despite all its commendable efforts, the management of Thyssenkrupp Steel has not been able to successfully respond to the structural challenges of the steel business and its economic difficulties, not only in recent months but for years," said Siegfried Russwurm, Thyssenkrupp AG's supervisory board chairman. He added that the division has spent more than 3 billion euros over the past five years, missed its own targets several times and caused billions of euros in writedowns due to poor investments. "Thyssenkrupp Steel is constantly consuming liquidity at the expense of its own future, all other businesses and the owners of the group and has not gained control of this situation under its previous management," Russwurm said. Czech energy firm EPCG, via which Kretinsky has bought his TKSE stake, declined to comment. The Alfried Krupp von Bohlen und Halbach foundation, Thyssenkrupp's biggest shareholder with a stake of roughly 21%, was not immediately available for comment. Gabriel said that an earlier plea from German Economy Minister Robert Habeck to delay the meeting in favour of more talks - a rare display of political intervention that shows the gravity of the situation - had found no support. "The management of Thyssenkrupp AG has led this group into unprecedented chaos," said Knut Giesler, who leads the branch of IG Metall, Germany's most powerful union, in North Rhine-Westphalia, where Thyssenkrupp is based. The slew of resignations marks the biggest leadership crisis at Thyssenkrupp since 2018, when both its CEO and chairman quit in rapid succession partly due to investor criticism over a planned steel joint venture with India's Tata Steel (TISC.NS) , opens new tab. That plan later collapsed. ($1 = 0.9024 euros) Sign up here. https://www.reuters.com/markets/commodities/thyssenkrupp-steel-leadership-steps-down-crisis-intensifies-2024-08-29/

2024-08-29 19:42

NEW YORK, Aug 29 (Reuters) - Last month's CrowdStrike IT outage that grounded scores of flights created new problems for California's fuel market, forcing U.S. traders to store jet fuel destined for the state on waterborne tankers, storage broker The Tank Tiger told Reuters this week. The outage exacerbated existing constraints on petroleum storage in California, where policies aimed at ending fossil fuel usage have made it harder to setup new oil and gas infrastructure. "When it comes to petroleum products storage in California, there has been no room at the inn for several years," Ernie Barsamian, founder of U.S. terminal storage clearinghouse, The Tank Tiger said on Wednesday. But California's location on the U.S. West Coast makes it a major petroleum trading hub, keeping demand high. That opens the region to outsized fuel price shocks during periods of disruptions, such as the IT outage or refinery snags. "Despite prevailing demand, permitting for new storage tanks (in California) is a cumbersome process," Barsamian said. As a result, storage costs in California are twice as high as trading hubs in New York Harbor or Houston, he said. California's Certified Unified Program Agency, responsible for implementing the state's Aboveground Petroleum Storage Act Program, did not immediately respond to a request for comment. When flights were grounded in July, the unconsumed jet fuel could not find a home in California, and had to be re-positioned to waterborne locations off the coasts of Houston and New Orleans, Barsamian said. Traders use ships as storage only as a last-resort when land storage is full or unavailable, as keeping the vessels in use longer delays their journeys, tightening the market and increasing costs. Jet fuel inventories in onshore tanks dotting the U.S. West Coast shot up to over 12 million barrels in the week ended July 26, a record high. The CrowdStrike (CRWD.O) , opens new tab outage began on July 19. Strong demand for the product has led to West Coast imports increasing significantly this year, analysts at ship-tracking service Kpler said. That has kept inventories higher than normal this year. West Coast imports from within the U.S. and outside have averaged about 135,000 barrels a day this year, about 25,000 bpd higher than last year, Kpler data showed. West Coast jet fuel stocks stood at 11.8 million barrels last week, nearly 28% higher than last year. Sign up here. https://www.reuters.com/business/energy/global-it-outage-july-exacerbated-california-fuel-storage-issues-says-storage-2024-08-29/

2024-08-29 17:48

RIEHEN, Switzerland, Aug 29 (Reuters) - Swiss National Bank (SNBN.S) , opens new tab Chairman Thomas Jordan on Thursday acknowledged difficulties that the strength of the Swiss franc is causing for Swiss industry, which is already dealing with weaker demand from elsewhere in Europe. "Germany and Europe are the main markets for industry. If the growth is weak there, this automatically affects demand for our industrial goods," Jordan told an event in Riehen, near the northern border city of Basel. "The exchange rate ... does not make the situation easier. It makes it difficult for the industry," he added, speaking at one of his last public engagements before he steps down from the SNB at the end of September. The franc earlier this month rose to its highest level in almost a decade versus the euro, as heavy losses in stock markets, concerns over U.S. and global growth and tensions in the Middle East drew investors to the safe-haven currency. The franc has also gained ground versus the dollar since June, making Swiss exports to the United States more expensive. Jordan said the SNB was committed to price stability, which means an inflation rate of 0-2%, a target it has achieved for more than a year. The central bank had reacted early to inflationary rises which helped it bring price rises under control, and had allowed the SNB to cut interest rates twice this year, the SNB chief said. Jordan said interest rates remained the SNB's main tool, although interventions in currency markets were also an option. Markets currently forecast a 70% probability that the central bank will cut rates by 25 basis points at its next meeting on Sept. 26. They saw a 30% probability of a 50-basis-point cut from the current level of 1.25%. Sign up here. https://www.reuters.com/markets/currencies/swiss-franc-forex-rate-making-life-tougher-industry-snbs-jordan-2024-08-29/

2024-08-29 17:06

Weekly jobless claims fall 2,000 to 231,000 Continuing claims increase 13,000 to 1.868 million Second-quarter GDP growth revised up to 3.0% pace Goods trade deficit widens in July; inventories rise WASHINGTON, Aug 29 (Reuters) - The number of Americans filing new applications for jobless benefits slipped last week, but re-employment opportunities for laid-off workers are becoming more scarce, a sign that the unemployment rate probably remained elevated in August. Though the labor market is slowing, it is doing so in an orderly fashion that is keeping the economic expansion on track. The economy grew faster than initially thought in the second quarter, powered by consumer spending, other data showed on Thursday. Corporate profits also rebounded last quarter, helping to further dispel fears of a recession. While the labor market slowdown positions the Federal Reserve to start cutting interest rates next month, the data argues against a 50 basis point reduction in borrowing costs. "The soft landing narrative for the economy remains intact for now," said Christopher Rupkey, chief economist at FWDBONDS. "Corporate profits bounced back as well in the second quarter which means companies are less likely to do any belt-tightening cost cuts to adjust their headcounts." Initial claims for state unemployment benefits fell 2,000 to a seasonally adjusted 231,000 for the week ended Aug. 24. Economists polled by Reuters had forecast 232,000 claims for the latest week. Claims have retreated from an 11-month high in late July as distortions from temporary motor vehicle plant shutdowns for new model retooling and the impact of Hurricane Beryl faded. The Labor Department's Bureau of Labor Statistics last week estimated that employment growth was overstated by 68,000 jobs per month in the 12 months through March. But most economists viewed this so-called benchmark revision estimate as misleading. The benchmark estimate is based on the Quarterly Census of Employment and Wages data, derived from reports by employers to the state unemployment insurance programs. The data does not include undocumented immigrants, a group that economists believe contributed to strong job growth last year. "The BLS revisions likely revised the data down too much because the revision is based on administrative data from unemployment insurance files, which probably do not capture many of the increased jobs filled by undocumented workers," economists at Morgan Stanley wrote in a note. A step-down in hiring because of tighter monetary policy is accounting for the loss of labor market momentum, rather than layoffs. It has attracted the attention of officials at the U.S. central bank, including Fed Chair Jerome Powell who last week said "the time has come for policy to adjust." Financial markets expect the Fed to begin its easing cycle next month with a 25-basis-point reduction in its benchmark overnight interest rate. A half-percentage point cut is on the table. The Fed has maintained its policy rate in the current 5.25%-5.50% range for more than a year, having raised it by 525 basis points in 2022 and 2023. Stocks on Wall Street were trading higher. The dollar rose against a basket of currencies. U.S. Treasury prices fell. SOLID CONSUMER SPENDING The number of people receiving benefits after an initial week of aid, a proxy for hiring, increased 13,000 to a seasonally adjusted 1.868 million during the week ending Aug. 17, the claims report showed. The so-called continued claims are near levels last seen in late 2021, indicating longer spells of unemployment. Continuing claims data covered the period during which the government surveyed households to determine the unemployment rate for August. Continuing claims rose slightly between the July and August survey periods. Economists are expecting the jobless rate this month to either have remained near a three-year high of 4.3% or fallen to 4.2%. The unemployment rate has risen for four straight months, partly reflecting an immigration-induced surge in labor supply. Gross domestic product increased at a 3.0% annualized rate last quarter, revised up from the 2.8% rate reported last month, the Commerce Department's Bureau of Economic Analysis said in its second estimate of second-quarter GDP on Thursday. The economy grew at a 1.4% pace in the first quarter. Consumer spending, which accounts for more than two-thirds of the economy, increased at an upwardly revised 2.9% rate. It was previously reported to have grown at a 2.3% pace, and is being partly driven by wages. That offset downgrades to business investment, mostly software. Exports and private inventory investment were also revised lower. Inflation was fairly moderate, improving consumers' purchasing power. Income at the disposal of households after accounting for inflation increased at an unrevised 1.0% rate. Households are saving less and also tapping savings to maintain spending. The saving rate was lowered to 3.3% from 3.5%. Corporate profits including inventory valuation and capital consumption adjustments increased $57.6 billion to a record high after declining by $47.1 billion in the first quarter. Profit margins increased 0.2 percentage point to 15.4%. "Profit margins are solid and will be a support to business investment, allowing businesses to absorb any increase in input costs, particularly from supply-chain issues, as consumers are increasingly price sensitive," said Ryan Sweet, chief U.S. economist at Oxford Economics. When measured from the income side, the economy grew at a 1.3% rate last quarter. Gross domestic income (GDI) increased at a 1.3% pace in the January-March quarter. In principle, GDP and GDI should be equal, but in practice they differ as they are estimated using different and largely independent source data. The average of GDP and GDI, also referred to as gross domestic output and considered a better measure of economic activity, increased at a 2.1% rate last quarter after advancing at a 1.4% pace in the first quarter. Though a third report from the Commerce Department's Census Bureau showed the goods trade deficit widening 6.3% to $102.7 billion in July amid a 2.3% surge in imports, the impact on GDP is likely to blunted by rising inventories. Importers are likely front-loading imports, which are ending up as inventories, in anticipation of higher tariffs should former President Donald Trump be returned to the White House in November's election. Wholesale inventories increased 0.3%, while stocks at retailers jumped 0.8%. "Growth will slow in the near term, but there will not be a recession," said Gus Faucher, chief economist at PNC Financial. Sign up here. https://www.reuters.com/markets/us/us-weekly-jobless-claims-fall-slightly-2024-08-29/

2024-08-29 17:03

FRANKFURT, Aug 29 (Reuters) - The European Central Bank should avoid cutting interest rates too fast because it has yet to bring inflation down to 2% even if that goal is now in sight, ECB policymaker Joachim Nagel said on Thursday. "Taken together, a timely return to price stability cannot be taken for granted," Nagel, the Bundesbank's president, said in a speech. "Therefore, we need to be careful and must not lower policy rates too quickly," The ECB is widely expected to cut borrowing costs on Sept. 12 after bringing inflation from double digits in late 2022 down to 2.6 % in July, though it does not expect price growth to stabilise at its target until late next year. Nagel, one of the hawks who favour higher rates, acknowledged that the target was now close but saw risks coming from higher wages and a stronger economic recovery. "While our 2 % target is in sight, we have not reached it," he added. Sign up here. https://www.reuters.com/markets/europe/ecbs-nagel-warns-against-cutting-rates-too-quickly-2024-08-29/