A logo of Brazil’s state-run Petrobras oil company is seen at their headquarters in Rio de Janeiro, Brazil October 16, 2019. REUTERS/Sergio Moraes/File Photo Acquire Licensing Rights
RIO DE JANEIRO, Sept 28 (Reuters) – The head of Brazil’s state oil firm Petrobras (PETR4.SA) said on Thursday it will sign a memorandum of understanding with mining giant Vale (VALE3.SA) to study potential joint ventures in renewable energy, even as looks to new suppliers for diesel.
“Vale is a consumer (of energy) and probably very interested in hydrogen production, it has some activities in energy transition that are interesting,” Petrobras CEO Jean Paul Prates told reporters, saying the companies would look for synergies.
The partnership would come at a time when Petrobras is pushing to move into renewable energy. Earlier this month, the state-run firm unveiled plans to develop offshore wind farms.
Regarding diesel, Prates said Petrobras could if necessary and strategic import the fuel from abroad as bans on Russian imports – the main source of imported diesel in Brazil – could force the country to look for suppliers elsewhere.
Russia surpassed the United States as Brazil’s top supplier this year.
“We’re going to import to meet our contracts and possibly one or two more quotas that are necessary and that we see as an opportunity to enter a new market or a new customer that is good for us,” Prates said.
Meanwhile, spiking oil prices have widened the gap between Petrobras’ refinery prices and those charged abroad, which analysts say is discouraging third-party imports. Petrobras last adjusted its gasoline and diesel prices in mid-August.
“The models, for the time being, indicate it’s possible to maintain the same level with absolutely no risk to the company’s profitability,” said Prates.
Petrobras’ refinery utilization factor is currently at a rate of 94%, he added.
Reporting by Marta Nogueira; Editing by Steven Grattan and Sarah Morland
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A man walks past the Chinese and German national flags before a meeting of officials between the respective trade and economy ministries in Beijing, China, November 1, 2016. REUTERS/Thomas Peter/File Photo Acquire Licensing Rights
BERLIN, Sept 20 (Reuters) – German direct investment in China eased in the first half of the year albeit remaining close to its record high in 2022 and increasing as a share of the country’s overall investment abroad, according to official data analysed by the IW institute.
Investment in China dropped to 10.31 billion euros ($11.02 billion) in the first half of 2023 from 12 billion euros in the first half of last year, the IW said in an analysis shared exclusively with Reuters.
However, that was still nearly twice as much as the 5.5 billion euros invested in 2019, before the coronavirus pandemic hit. It was also more than twice the 4 billion euros invested on average in the first half of the year over the previous decade.
The data underscores concerns that German firms continue to invest heavily in China despite the government’s pleas for companies to reduce their exposure and its sharp cut in investment guarantees for the country.
Overall German direct investment flows dropped more sharply, to 63 billion euros from 104 billion euros last year, as Europe’s largest economy battled recession.
As a result, investment in China as a share of Germany’s overall investments actually increased to 16.4% in the first half from 11.6% last year and 5.1% in 2019, the IW said.
“The trend towards China remains mostly unchanged also this year,” said IW analyst Juergen Matthes. “Although the German economy is overall investing much less abroad, new direct investments in China remain nearly as high as before.”
Matthes pointed out that most of the investments in China were financed by re-invested profits.
Germany’s government has in recent months urged businesses to reduce their strategic dependencies on China given its view that Asia’s rising superpower is a growing threat to global security.
While there are early signs that German companies are beginning to rethink their China strategy, not least because of the economic slowdown there and new security laws, the data is still unclear.
Some China experts say that is partly due to a divergence between a handful of large companies like Volkswagen (VOWG_p.DE) and BASF (BASFn.DE) that are doubling down on their bet on the country, and the rest that are increasingly cautious and looking to diversify, including elsewhere in Asia.
Matthes pointed out that investments in the rest of Asia as a share of Germany’s overall investments was also rising.
“It is notable that nearly a quarter of German direct investment flows recently went to Asia,” he said.
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Reporting by Sarah Marsh; Editing by Friederike Heine and Christina Fincher
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LITTLETON, Colorado, Sept 19 (Reuters) – The deepening debt crisis in China’s construction sector – a key engine of economic growth, investment and employment – may trigger an unexpected climate benefit in the form of reduced emissions from the cement industry.
Cement output and construction are closely correlated, and as China is by far the world’s largest construction market it is also the top cement producer, churning out roughly 2 billion tonnes a year, or over half the world’s total, data from the World Cement Association shows.
The heavy use of coal-fired kilns during manufacturing makes the production of cement a dirty business. China’s cement sector discharged 853 million tonnes of carbon dioxide in 2021, according to the Global Carbon Atlas, nearly six times more than the next largest cement producer, India.
The cement sector accounts for roughly 12% of China’s total carbon emissions, according to Fidelity International, and along with steel is one of the largest greenhouse gas emitters.
But with the property sector grinding to a halt due to spiralling debt worries among major developers, the output and use of cement are likely to contract over the next few months, with commensurate implications for emissions.
HOUSING SLUMP
The property markets account for roughly a quarter of China’s economy, and for years Beijing has used the sector’s substantial heft to influence the direction of the rest of the economy by spurring lending to would-be home buyers and fostering large scale construction projects.
But the big property developers racked up record debt loads in recent years that have forced borrowing levels to slow, stoked concerns among investors, and slowed spending across the economy.
China Evergrande Group, once the second largest developer, defaulted on its debt in late 2021, while top developer Country Garden has drained cash reserves to meet a series of debt payment deadlines in recent months.
Fears of contagion throughout the property industry has spurred households to rein in consumer spending, which has in turn led to deteriorating retail sales and further economic headwinds.
Beijing has stepped in with a slew of measures designed to right the ship, including easing borrowing rules for banks and lowering loan standards for potential home buyers.
But property prices in key markets remain under pressure, which has served to stifle interest among buyers and add to the pressure on investors and owners.
CEMENT CUTS
With construction activity across China slowing, and several major building sites stopped completely while tussles over debt payments among developers continue, cement output is likely to shrink to multi-year lows by the end of 2023.
During the March to August period, the latest data available, total cement output was 11.36 million short tons, down 2 percent from the same period in 2022 and the lowest for that period in at least 10 years, China National Bureau of Statistics data shows.
In addition to curtailing output in response to the bleak domestic demand outlook in the property sector, cement plants may be forced to curb output rates over the winter months as part of annual efforts to cap emissions from industrial zones during the peak season for coal heating.
Some cement producers will likely look to boost exports in an effort to offset lower domestic sales, and in July China’s total cement exports hit their highest since late 2019.
But Chinese firms will face stiff competition from lower-cost counterparts in Vietnam, which are by far the top overall cement exporters and already lifted overall cement shipments by close to 3% in the first half of 2023, data from the Vietnam National Cement Association (VNCA) shows.
Some Chinese firms may be prepared to sell exports at a loss for a spell while they await greater clarity over the domestic demand outlook.
But given the weak state of global construction activity amid high interest rates in most countries, as well as the high level of cement exports from other key producers such as India, Turkey, United Arab Emirates and Indonesia, high-cost Chinese firms may be forced to quickly contract output to match the subdued construction sector.
And if that’s the case, the sector’s emissions will come down too, yielding a rare climate benefit to the ongoing property market disruption.
The opinions expressed here are those of the author, a columnist for Reuters.
Reporting By Gavin Maguire; Editing by Miral Fahmy
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Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.
A view shows a makeshift dwelling near an area where hundreds of artisan miners have found a rich seam of copper, in the hills of Tapairihua in Peru’s Andes, October 18, 2022. REUTERS/Marco Aquino/file photo Acquire Licensing Rights
LIMA, Aug 31 (Reuters) – Peruvian miner Minsur (MINSURI1.LM) has announced an investment of at least $2 billion in five years as it expands its copper and tin operations, an executive told Reuters on Thursday.
Minsur is set to invest around $543 million in an underground project in Justa mine, which is owned by the firm and Chilean mining company Copec (COPEC.SN), Minsur corporate affairs executive Gonzalo Quijandria said in a phone interview with Reuters.
Another $381 million will be invested to expand the processing plant and to improve the Justa mine camp, which began operations in 2021, Quijandria said.
The mine produced 126,036 fine metric tons of copper last year and was the world’s seventh most productive copper mine, according to official data.
Peru is the world’s No. 2 copper producer.
Minsur also operates the only mine in Peru for tin, a relatively rare element, and produces about 9% of this metal globally, according to the company.
Regarding such a production, Quijandria said Minsur plans to invest $462 million in its tin production line and another $100 million in tin exploration projects in the country.
“They are sustaining investments that include new tailings dams in the San Rafael mine and improvements in the Pisco smelter,” he said.
Minsur also plans to invest some $342 million in the modernization of its polymetallic producer Minera Raura.
Earlier on Thursday, Peru’s ministry provided a different breakdown of figures from the company, and Reuters did not receive an immediate response to a query about the discrepancy.
The announcement followed a meeting between Minsur CEO Juan Luis Kruger and Peru’s energy and mines minister, Oscar Vera.
The Mina Justa Subterranea project will be the second largest and most modern underground mine in Peru,” the ministry said in a statement, adding that Minsur expects to present the first permits for the project in the first months of next year, with production expected to start in 2027.
Reporting by Marco Aquino; Editing by Brendan O’Boyle, Paul Simao and Leslie Adler
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WASHINGTON, July 27 (Reuters) – The Biden administration on Thursday continued its push to drive down housing prices, announcing steps to reduce zoning and land-use restrictions that often constrain housing construction, especially in low-income areas, and better protect renters.
The moves, which will also expand financing for affordable, energy efficient and resilient housing and promote commercial-to-residential conversion opportunities, are part of a big White House push to boost the supply of affordable housing.
Inflation in rental markets is decelerating, and data show more apartments will be built this year than any year on record, but housing prices remain high across the country.
“Today’s actions … are a down payment on the historic housing investments proposed in the president’s budget that would boost supply, lower costs and cut dangerous climate pollution, promote homeownership, protect renters, and promote fair housing,” the White House said in a statement.
High housing costs and increased homelessness in cities have caused strife in communities across the country, and could be a salient factor in the 2024 presidential election, in which U.S. President Joe Biden is seeking a second term.
The White House last week announced plans with the Department of Housing and Urban Development (HUD) to reduce or eliminate high application charges for renters and other so-called junk fees that can jack up consumers’ costs by 20%.
On Thursday, it shifted focus to zoning regulations that limit where, and how densely, housing can be built – steps that have limited housing supply, perpetuated historical patterns of segregation, and increased energy costs and climate risk.
“Today, we are acting to increase the supply of affordable housing, which is crucial to lowering housing costs,” Housing and Urban Development Secretary Marcia Fudge said.
As part of Thursday’s actions, HUD announced a new $85 million program to help communities identify and remove barriers to affordable housing production and preservation. Communities with acute needs can apply for up to $10 million in funding.
The money could enable a shift to higher-density zoning and rezoning for multifamily and mixed-use housing, while reducing requirements related to parking and other land use restrictions, the White House said.
The actions come after the U.S. Department of Transportation said it would provide up to $3.16 billion for planning and capital construction projects that prioritize disadvantaged communities and improve access to daily destinations.
The Economic Development Administration (EDA) has also updated the guidelines for grants to emphasize efficient land use and concentrate new developments in areas that are accessible to nearby residential density.
Other measures focused on simplifying underwriting for larger multifamily housing loans and streamlining financing for creation of affordable housing.
The administration will also work to leverage federal funds to support commercial-to-resident conversions, and is setting up a new interagency working group to lead that effort.
Such conversions could also help create zero-emissions housing, which will reduce energy costs for residents and cut dangerous climate pollution, the White House said.
The White House also announced plans HUD to boost protections for renters, including ensuring that renters have an opportunity to address incorrect tenant screening reports and get fair notice in advance of any eviction.
HUD will also provide new funding to tenant organizing efforts, the White House said.
Reporting by Andrea Shalal; Editing by Conor Humphries
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NEW DELHI, July 7 (Reuters) – India’s Reliance Retail, run by Asia’s richest man Mukesh Ambani, has been valued at $92-96 billion by two global consultants, a source with direct knowledge of the matter told Reuters, in a move that could signal plans for an eventual IPO.
Reliance had appointed independent valuers EY, which valued the company at $96.14 billion, and BDO, which priced it at around $92 billion, the source said, declining to be named as the details are confidential.
Reliance, EY and BDO did not immediately respond to requests for comment.
Reliance Retail includes Ambani’s core retail businesses, including digital and brick-and-mortar stores. It is fully owned by Reliance Retail Ventures, which also houses other retail operations such as international partnerships and the billionaire’s consumer goods business.
The valuations show consultants estimate Ambani’s businesses are growing fast. In 2020, Reliance Retail Ventures raised 472.65 billion Indian rupees ($5.72 billion) by selling a 10.09% stake, valuing it at roughly $57 billion based on current exchange rates.
Investors at the time included KKR, the Saudi Public Investment Fund, General Atlantic and the UAE’s Mubadala.
News of the valuation comes ahead of a possible initial public offering (IPO) of Reliance’s retail division. Ambani has said he plans to list his retail operations at some point, but has so far not given a timeline or details of his plans.
EY valued Reliance Retail at 884.03 rupees per share, while BDO valued it at 849.08 rupees, the source said.
Reliance Retail has in recent years partnered with a slew of global brands to launch and expand their presence in India. From fashion to food, its partner brands include Burberry, Pret A Manger and Tiffany.
Reporting by Aditya Kalra in New Delhi, M. Sriram and Dhwani Pandya in Mumbai and Chris Thomas in Bengaluru; Editing by Savio D’Souza, Louise Heavens and Mark Potter
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June 12 (Reuters) – Rio Tinto (RIO.AX), (RIO.L) will invest $1.1 billion to expand its “low-carbon” aluminum smelter at Complexe Jonquière in Quebec, Canada, the Anglo-Australian mining giant said on Monday.
The investment will boost annual capacity by about 160,000 metric tonnes of primary aluminum, the global miner said, adding it was sufficient to power 400,000 electric cars.
Pressure to cut greenhouse gas emissions has prompted Rio, Alcoa Corp (AA.N), and other aluminum manufacturers to launch a raft of products with lower carbon emissions.
The Canadian government has been involved in such efforts. It has invested in the ELYSIS technology pioneered by Alcoa and Rio Tinto that eliminates all CO2 emissions and replaces them with oxygen.
“This announcement brings us one step closer to the deployment of the first ELYSIS pots, which will make Quebec the leader in greenhouse gas-free aluminum production,” said Pierre Fitzgibbon, Quebec’s minister of economy, innovation and energy.
The Quebec government will provide up to $113 million in support for the latest smelter expansion.
“This is the most significant investment in our aluminum business for more than a decade…,” Rio Tinto CEO Jakob Stausholm said.
Construction will run over two-and-a-half years, with commissioning of the new pots expected to start in the first half of 2026 and the smelter fully ramped up by the end of 2026.
The project will create up to 1,000 jobs during peak construction, with about 100 permanent jobs.
The investment has been factored into the capital expenditure for 2023 to 2025, Rio Tinto said, retaining the capex guidance of $9 billion to $10 billion for 2024 and 2025.
The expansion will coincide with the gradual closure of potrooms at the Arvida smelter on the same site, Rio said.
Rio and the Canadian government also signed a memorandum of understanding (MoU) to strengthen supply chains for low-carbon primary metals, critical minerals and other value-added products, the miner said.
Reporting by Harish Sridharan in Bengaluru; Editing by Sriraj Kalluvila
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BEIJING, May 26 (Reuters) – Steel rebar prices in China hit their lowest in three years this week, underscoring flagging growth in the world’s second-largest economy, particularly in its weak property sector.
The spot price of HRB400 20mm steel rebar – used to reinforce concrete for buildings and infrastructure – fell to 3,510 yuan ($507.80) per tonne in Shanghai on Thursday, data from consultancy Mysteel showed.
That’s the lowest since April 2020, when the start of the COVID-19 pandemic in China had curbed most industrial activity.
Disappointing demand in what is normally the peak construction season during March and April kicked off the decline, reflected in steel rebar futures falling nearly 17% since late March, with any recovery some months off as China enters its typically slow summer months.
“China’s situation is quite bad. The outlook for steel demand in China has deteriorated compared to three months ago,” Takahiro Mori, executive vice president of Japan’s Nippon Steel Corp (5401.T), told Reuters on Wednesday.
Property and infrastructure account for about 60% of demand in the world’s largest steel sector but infrastructure stimulus has slowed and the property market is showing little growth.
China steel demand declined by 3.4% in April from a year earlier versus an increase of 8.7% in March, analysts at Huatai Futures said in a research note on May 21.
Demand in May fell 2.5% on the year, they said.
Also, just 53.11% of new special purpose bonds that are typically used to fund infrastructure projects flowed to the sector in April, down from 56.38% in March and 63.29% in February, analysts at China Future said in a note on May 24.
Investment in the property sector, the largest user of steel, declined by 6.2% year-on-year in the first four months of the year, data from the National Bureau of Statistics showed, worsening from a 5.8% fall for the January-March period.
New construction starts by floor area contracted by 21.2% as well over January-April from a year earlier, worsening from a 19.2% fall during the first three months, according to the NBS.
“The impact of stimulus measures on the property sector is not as good as it was before … Demand (for houses) may contract further,” analysts at Sinolink Securities said in a note on Wednesday.
In addition, the manufacturing sector also unexpectedly contracted last month.
The resultant sluggish demand is increasing pressure on steel mills ahead of the summer months of June-August, when construction in China typically slows as high temperatures and heavy rain in the south hinder outdoor activity.
Only a third of the country’s mills are currently operating at a profit, according to Mysteel, and shares in global miners plunged this week as iron ore prices fell on China’s weak demand.
Steel demand will not improve until September, when weather is more favourable for construction and a raft of economic stimulus measures in place since late last year filter through to the property market, an East China-based steel producer said.
Nippon’s Mori said the outlook could be bleaker than that.
“It could remain weak at least throughout this year or this fiscal year (to March 31, 2024). Therefore, we don’t expect the market to improve quickly,” he said.
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Reporting by Amy Lv and Dominique Patton in Beijing; Additonal reporting by Yuka Obayashi in Tokyo; Editing by Tom Hogue
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LONDON, May 26(Reuters) – Experienced tech investors are hunting for undervalued opportunities in an over-valued space.
At stake is how best to invest in the potential of Artificial Intelligence (AI), which took a leap forward in November when Microsoft-backed OpenAI released its ChatGPT bot, without buying into a bubble.
Shares in Nvidia (NVDA.O), which makes computer chips that train AI systems, have almost doubled since ChatGPT’s launch. The company’s stock market value at roughly $940 billion is more than double that of Europe’s Nestle (NESN.S). Nvidia surged some 25% on Thursday alone after forecasting a sales jump.
Shares in loss-making AI software company C3.AI, which grabbed the stock ticker , have risen 149% this year and Palantir Technologies (PLTR.N), which has launched its own AI platform, is up 91% year-to-date.
Investors are chasing exposure to generative AI, the technology run by ChatGPT that learns from analysing vast datasets to generate text, images and computer code. Businesses are trying to use generative AI to speed up video editing, recruitment and even legal work.
Consultancy PwC sees AI-related productivity savings and investments generating $15.7 trillion worth of global economic output by 2030, almost equivalent to the gross domestic product of China.
The question for investors is whether to jump on the AI train now, or exercise caution, especially given mounting concern amongst regulators about the technology’s potentially disruptive impact.
“There are clearly going to be winners in all this,” said Niall O’Sullivan, chief investment officer of multi-asset for EMEA, at Neuberger Berman. “It’s just that that’s very hard to be true for the entire market.”
STILL EARLY
Instead of backing hot start-ups or rushing into highly valued AI-themed businesses that might fail, seasoned investors are taking a lateral view to back already proven technology companies that might benefit from the longer-term trend.
“It’s going to be as transformative as the internet, as the mobile internet, as the mainframe computer was,” said Alison Porter, a tech fund manager at Janus Henderson, whose funds have positions in Nvidia, with Microsoft as their largest holding.
However, Porter also cautions that “we are still very early on the use cases for AI.”
She favours big tech groups like Microsoft (MSFT.O) and Alphabet (GOOGL.O) because they have “strong balance sheets”, that make them “able to invest in many different technology advances”, including their recent focus on AI.
BEWARE, THE HYPE
Dizzying valuations have made some investors wary of the technology hype cycle. This concept, popularised by consultancy Gartner, starts with a trigger, such as the launch of ChatGPT, followed by inflated expectations and then disillusionment. Even if a technology moves to mass adoption, many early stage innovators can fail along the way.
“There’s a question about where we are in that curve with AI, where the hype is so visible,” said Mark Hawtin, investment director at GAM Investments. “There are ways to get exposure to the (AI) theme without picking something that is highly valued.”
PICKS, SHOVELS
Janus’ Porter recommended backing proven companies that may be “big beneficiaries in terms of providing infrastructure,” for future trends in generative AI that, as of now, are unclear.
GAM’s Hawtin said he has also hunted out companies that provide the “picks and shovels,” necessary for enabling new AI technology.
For example, AI systems require huge volumes of data to analyse and learn from, but just 1% of global data is currently being captured, stored and used, according to Bank of America.
Hawtin’s funds hold Seagate Technology (STX.O), which makes hard drives and data storage products, and chipmaker Marvell Technology for this reason, he said.
Jon Guinness, tech portfolio manager at Fidelity International, said management consultancy Accenture is in his portfolio because as businesses consider how to use AI, “I strongly think you call in the experts.”
STICKING TO BIG TECH
Trevor Greetham, head of multi-asset at Royal London Investment Management, said he was “overweight” in dominant tech stocks in part because AI supported their valuations, but he cautioned against AI-themed stocks.
“There will be an awful lot of losing lottery tickets,” he said, recalling the dotcom crash of the early 2000s.
Also sticking with big tech, Fidelity’s Guinness said his funds hold Amazon, partly because of its efforts to make AI less expensive for businesses. Amazon’s Bedrock service, for example, lets companies customise generative AI models rather than invest in developing them themselves.
“The big benefits of AI,” Janus’ Porter said, “are going to happen over the long term.”
“Investors want to invest in AI now and they expect things to happen now,” she added. “But we would never blindly buy into AI and we don’t do things at any price.”
Reporting by Naomi Rovnick; Additional reporting by Lucy Raitano. Editing by Dhara Ranasinghe and Sharon Singleton
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BEIJING, May 11 (Reuters) – China has decreased its second batch of export quota volumes for refined oil products, consultancies and trader sources said on Thursday, focusing on local demand during the refinery overhaul season and boosting domestic sales amid poor export margins.
The export volumes, comprising 9 million tonnes of refined products and 3 million tonnes of marine fuel, were allotted primarily to state-owned refiners, according to two refining sources and consultancies Longzhong and JLC.
China Petrochemical Corp (Sinopec) , China National Petroleum Corp , China National Offshore Oil Company <0883.HK> and Sinochem Group (600500.SS) were the main recipients of these quotas, taking around 92% of the total allocation.
Reuters has asked the four companies for comment.
In addition, private refiner Zhejiang Petrochemical Corp, a refinery subsidiary of state defence conglomerate Norinco and China National Aviation Fuel Company were assigned 1.01 million tonnes.
China’s Ministry of Commerce did not immediately respond to a faxed request for comment.
The quota was less than the first batch of 18.99 million tonnes in early January but double the allocation of 4.5 million tonnes issued around a year earlier, Reuters records show.
The smaller export quota comes as refiners stockpile products amid strong demand expectations for gasoline and diesel in the peak summer season.
China’s gasoline and diesel export volumes have fallen for three consecutive months as refiners kept more cargoes for the domestic market where they are earning better profit margins, despite overall slow domestic demand growth.
While refiners have been unwilling to export because of the stronger local margins, the year-on-year increase in quotas mean that they can still choose to export should domestic demand turn weak at some point in time.
Longzhong estimated refiners could lose about 482 yuan ($69.73) a tonne on gasoline exports and 734 yuan a tonne on diesel exports in the current market.
“This year, quota holders have greater flexibility to prepare export plans and capture arbitrage opportunities,” said Energy Aspects analyst Sun Jianan.
The 3 million tonnes of low-sulphur fuel export quotas in this second batch was down from 8 million tonnes in the first batch for this year.
However a trader from a state-owned Chinese oil company said the previous batch of low-sulphur fuel quotas had yet to be used up as marine bunkering demand was weak in the first quarter.
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Reporting by Andrew Hayley in Beijing and Muyu Xu and Trixie Yap in Singapore; Editing by Jacqueline Wong
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