FILE PHOTO: U.S. and European Union flags are pictured during the visit of Vice President Mike Pence to the European Commission headquarters in Brussels, Belgium February 20, 2017. REUTERS/Francois Lenoir
March 19, 2019
BRUSSELS (Reuters) – European Commission Vice President Jyrki Katainen said on Tuesday that Washington’s “selfish” approach to trade was not sustainable, but it was too early to say that EU-U.S. trade talks were doomed to fail.
The Trump administration has imposed stiff tariffs on U.S. imports of steel and aluminum and set off a trade war with China in a bid to redress what it sees as unfavorable terms that contribute to a U.S. trade deficit of over half a trillion dollars a year.
The Commission, which negotiates trade agreements on behalf of the 28-nation European Union, has been in talks with U.S. authorities since last July, seeking to clinch a deal on industrial goods trade.
EU governments are now discussing the details of a negotiating mandate for the Commission, while Washington has until mid-May to decide whether to make good on President Donald Trump’s threat to impose tariffs on imports of European cars.
“It is too early to say that our trade discussions are doomed to fail,” Katainen told a regular news briefing.
“There are discussions going on on several levels and … we can end up having some sort of an agreement with the U.S. on trade, but let’s not go deeper than this,” he said, adding that the scope of negotiations had to be clear and that a deal would require a lot of good will and political capital on both sides.
Asked about a reform of the World Trade Organization (WTO), Katainen said it was problematic and that attempts to get it done were like pushing a rope.
“Japan, China and the EU are willing to reform the WTO, the U.S. has not been that interested, but they are willing to cooperate,” he said.
“Even though the U.S. authorities may think that selfishness is better than cooperation, it is not a sustainable way of thinking. We need better, rules-based trade in the future where the international community sets the rules,” he said.
U.S. Trade Representative Robert Lighthizer told Congress last week that the WTO was using an “out of date” playbook despite dramatic changes including the rise of China and the evolution of the internet.
He said Washington was nonetheless working “diligently” to negotiate new WTO rules to address these problems.
(Reporting By Jan Strupczewski; Editing by Kevin Liffey)
FILE PHOTO: A worker is seen building an aircraft engine at Honeywell Aerospace in Phoenix, Arizona, U.S. on September 6, 2016. REUTERS/Alwyn Scott
March 19, 2019
WASHINGTON, (Reuters) – New orders for U.S.-made goods rose less than expected in January, held back by decreases in orders for computers and electronic products, in another indication of slowing manufacturing activity.
Factory goods orders edged up 0.1 percent, the Commerce Department said on Tuesday, as demand for primary metals and fabricated metal products fell. That followed an unrevised 0.1 percent gain in December.
Economists polled by Reuters had forecast factory orders rising 0.3 percent in January. Factory orders increased 3.8 percent compared to January 2018.
The release of the report was delayed by a 35-day partial shutdown of the federal government that ended on Jan. 25.
Reports last Friday showed manufacturing output fell for a second straight month in February and factory activity in New York state hit nearly a two-year low this month.
Manufacturing, which accounts for about 12 percent of the economy, is losing momentum as the stimulus from last year’s $1.5 trillion tax cut package fades. Activity is also being crimped by a trade war between the United States and China as well as by last year’s surge in the dollar and softening global economic growth, which are hurting exports.
In January, orders for machinery rose 1.5 percent after falling 0.4 percent in December. Orders for mining, oil field and gas field machinery fell 2.7 percent after tumbling 8.2 percent in December.
Orders for electrical equipment, appliances and components rebounded 1.4 percent after dropping 0.3 percent in December. Computers and electronic products orders fell 0.9 percent after decreasing 0.4 percent in December.
Orders for primary metals declined 2.0 percent and fabricated metal products orders fell 0.6 percent. Transportation equipment orders increased 1.2 percent in January, slowing from the prior month’s 3.2 percent rise.
Orders for civilian aircraft and parts increased 15.6 percent in January. Motor vehicles and parts orders gained 0.4 percent.
The Commerce Department also said January orders for non-defense capital goods excluding aircraft, which are seen as a measure of business spending plans on equipment, rose 0.8 percent as reported last week. Orders for these so-called core capital goods dropped 0.8 percent in December.
Shipments of core capital goods, which are used to calculate business equipment spending in the gross domestic product report, also increased 0.8 percent in January as previously reported. Core capital goods shipments edged up 0.1 percent in December.
(Reporting By Lucia Mutikani; Editing by Andrea Ricci)
FILE PHOTO: Pumpjacks are seen against the setting sun at the Daqing oil field in Heilongjiang province, China December 7, 2018. REUTERS/Stringe
March 19, 2019
By Dmitry Zhdannikov
LONDON (Reuters) – Oil prices rose to new 2019 highs on Tuesday, supported by supply cuts from OPEC and falling output from Iran and Venezuela due to U.S. sanctions.
Brent crude oil futures were up 55 cents at $68.09 per barrel at 1145 GMT, having earlier risen to a new 2019 high of $68.16 a barrel, their highest since November 2018.
U.S. West Texas Intermediate (WTI) futures were at $59.47 per barrel, up 38 cents from their last settlement. They have also risen on Tuesday to their highest since November 2019 of $59.57 a barrel.
The Organization of the Petroleum Exporting Countries on Monday scrapped its planned meeting in April, effectively extending supply cuts that have been in place since January until its next regular meeting in June.
OPEC and a group of non-affiliated producers including Russia, known as OPEC+, cut supply in 2019 to halt a sharp price drop which began in the second-half of 2018 due to booming U.S. production and fears of a global economic slowdown.
Saudi Arabia has signaled that OPEC and its allies may continue to restrain oil output until the end of 2019.
“The OPEC+ deal has brought stability to crude prices and signs of an extension have taken crude higher,” said Alfonso Esparza, senior market analyst at futures brokerage OANDA.
Prices have been further supported by U.S. sanctions against oil exports from Iran and Venezuela, traders said.
Venezuela has suspended its oil exports to India, one of its key export destinations, the Azeri energy ministry said on Tuesday, citing Venezuela’s oil minister.
Because of the tighter supply outlook for the coming months, the Brent forward curve has gone into backwardation since the start of the year, meaning that prices for immediate delivery are more expensive than those for dispatch in the future, with May Brent prices around $1.20 per barrel more expensive than December delivery Brent.
(GRAPHIC: Brent crude oil forward curves – https://tmsnrt.rs/2FlM7YZ)
Outside OPEC, analysts are watching U.S. crude oil production, which has risen by more than 2 million barrels per day (bpd) since early 2018, to around 12 million bpd, making the United States the world’s biggest producer ahead of Russia and Saudi Arabia.
Weekly output and storage data will be published by the Energy Information Administration (EIA) on Wednesday.
Bank of America Merrill Lynch said in a note that economic “risks are skewed to the downside” and that “we forecast global demand growth of 1.2 million bpd year-on-year in 2019 and 1.15 million bpd during 2020”.
The bank said it expected “Brent and WTI to average $70 per barrel and $59 per barrel respectively in 2019, and $65 per barrel and $60 per barrel in 2020.”
(Reporting by Henning Gloystein; Editing Joseph Radford and Louise Heavens)
FILE PHOTO: A trader passes by screens showing Spotify on the floor at the New York Stock Exchange (NYSE) in New York, U.S., March 13, 2019. REUTERS/Brendan McDermid
March 19, 2019
By Medha Singh
(Reuters) – U.S. stock futures rose slightly on Tuesday as investors anticipated a more accommodative policy stance from the U.S. Federal Reserve in a two-day policy meeting this week.
A flurry of downbeat economic data this month has supported market expectations that the Fed may reinforce a halt to further rises in interest rates.
The Fed concludes its deliberations with a news conference on Wednesday.
Investors will also be watching out for the central bank’s “dot plot,” a diagram showing individual policymakers’ rate views for the next three years, along with details on its plan to reduce holdings in bonds.
Traders currently expect no rate hikes this year, and are even building in bets for a rate cut in 2020.
Optimism that the Fed will remain less aggressive in raising rates and hopes of a resolution to a bitter trade dispute between the U.S. and China helped the markets claw back most of their losses from late last year.
The benchmark S&P 500 hovers at a five-month high and is just 3.5 percent away from its September record closing high.
At 7:04 a.m. ET, Dow e-minis were up 102 points, or 0.39 percent. S&P 500 e-minis were up 11.25 points, or 0.4 percent and Nasdaq 100 e-minis were up 27 points, or 0.37 percent.
Technology and financial stocks helped Wall Street’s three main indexes rise on Monday, the benchmark index and the tech-heavy Nasdaq’s fifth rise in last six sessions.
The blue-chip Dow’s advance has been hindered by Boeing Co as the world’s largest planemaker faces increased scrutiny in the wake of two deadly crashes of its 737 MAX aircraft in five months.
Boeing shares slipped 0.6 percent in premarket trading on Tuesday after shedding about 12 percent since the March 10 plane crash in Ethiopia.
Chip designer Nvidia Corp jumped 1.6 percent on partnering with Softbank Group Corp and LG Uplus Corp to deploy cloud gaming servers in Japan and Korea later this year.
In economic news, data at 10 a.m. ET is expected to show new orders for U.S.-made goods rose 0.3 percent in January after edging up 0.1 percent the month before.
(Reporting by Medha Singh in Bengaluru; Editing by Shounak Dasgupta)
FILE PHOTO: People walk past a Xiaomi store in Shenyang, Liaoning province, China June 12, 2018. REUTERS/Stringer
March 19, 2019
SHANGHAI (Reuters) – Chinese smartphone maker Xiaomi Corp said on Tuesday its fourth-quarter net profit more than tripled to 1.85 billion yuan ($275.59 million), on stronger revenue.
That profit exceeded the 1.7 billion yuan average estimate of 10 analysts, according to Refinitiv data.
Revenue for the period increased 27 percent to 44.4 billion yuan, lower than the 47.4 billion yuan average estimate of 13 analysts, according to Refinitiv data.
For the full 2018 calendar year, Xiaomi brought in revenue of 174.9 billion yuan and made a net profit of 8.6 billion yuan.
This marks the third set of financial results for the company since its IPO in Hong Kong. Xiaomi shares have rallied nearly 30 percent since early January, though they remain well below their July listing price.
(Reporting by Josh Horwitz; Editing by Muralikumar Anantharaman)
FILE PHOTO: Italian Prime Minister Giuseppe Conte presents plans on how the 500th anniversary of Renaissance master Leonardo da Vinci’s death will be marked in Italy, in Rome, Italy March 13, 2019. REUTERS/Yara Nardi
March 19, 2019
ROME (Reuters) – Italian Prime Minister Giuseppe Conte said on Tuesday that commercial and economic deals he will seal with China have no implications for Italy’s geo-political position, in a bid to reassure the European Union and the United States.
Conte told parliament that a Memorandum of Understanding to be signed with President Xi Jinping hooking Italy up to China’s Belt and Road infrastructure initiative “do not remotely put into doubt our euro-Atlantic alliance”.
The United States has warned Italy against signing the MOU on what it calls a Chinese “vanity project”, but Conte, speaking ahead of an upcoming EU summit, left no doubt that the deal would go ahead.
The MOU “is fully in line with the strategy of the EU and in fact it promotes it as no other member state has done so far in its dealings with Beijing,” he said.
(Reporting by Giuseppe Conte, writing by Gavin Jones; editing by Agnieszka Flak)
FILE PHOTO: Container cranes are pictured at the Port of Singapore, June 10, 2018. REUTERS/Feline Lim
March 19, 2019
By Jonathan Saul and Nina Chestney
LONDON (Reuters) – More ports around the world are banning ships from using a fuel cleaning system that pumps waste water into the sea, one of the cheapest options for meeting new environmental shipping rules.
The growing number of destinations imposing stricter regulations than those set by the International Maritime Organization (IMO) are expected to be a costly headache for cruise and shipping firms as they face tough market conditions and slowing world trade. They might have to pay for new equipment and extra types of fuel and adjust their routes.
Singapore, China and Fujairah in the United Arab Emirates have already banned the use of the cleaning systems, called open loop scrubbers, from the start of next year when the new IMO rules come into force.
Reuters has learned that individual ports in Finland, Lithuania, Ireland and Russia, have all banned or restricted such equipment, according to interviews with officials and reviews of documents by Reuters. One British port has occasionally imposed restrictions.
Norway is also working on open loop scrubber bans around its world heritage fjords, an official with the climate and environment ministry told Reuters. A ban on all types of scrubbers is also proposed, the official added.
The IMO rules will prohibit ships from using fuels with sulfur content above 0.5 percent, unless they are equipped with exhaust gas cleaning systems. The open loop scrubbers wash out the sulfur and some industry experts believe they are the cheapest way to meet the new global rules.
Companies that invested in open loop scrubbers will be unable to use them while sailing through those port waters. They also fear the IMO rules could change again and ban open loop scrubbers altogether.
The world’s top cruise operator Carnival Corporation has invested over $500 million to deploy the devices.
Carnival’s Mike Kaczmarek, senior vice president for marine technology and refit with oversight of the group’s scrubbers program, said the port moves were “very troubling”.
“The more ports that participate in this, the greater the (economic) impact,” he said.
“A lot of people out there…in good faith have made significant investments.”
Ships with open loop scrubbers docking or sailing through those ports would need to store waste in tanks until it could be discharged elsewhere or avoid the ports.
The other option is to use a scrubber with a “closed loop”, which stores the waste until it can be treated on land. There are also hybrid scrubbers with a loop that can be open or closed.
Ship owners could also choose another energy source such as low sulfur fuel or liquefied natural gas (LNG). Some experts say there will be enough low sulfur fuel available to avoid fitting scrubbers.
Data from Norwegian risk management and certification company DNV GL shows there will be a total of 2,693 ships running with scrubbers by the end of 2019 – based on current orders – and over 80 percent of them will be open loop devices, compared with 15 percent using hybrid scrubbers and 2 percent opting for closed loop scrubbers.
Initial research to date into the environmental impact of open loop scrubbers has produced a range of results. The ports and authorities that have banned them have acted in anticipation of studies that conclusively show the discharge is harmful, environmental groups say.
International regulation often lags local action and the IMO rules were agreed in 2016 after years of tense discussions.
An official with Sweden’s Gothenburg port said it recommended shipowners in their waters not to use open loop scrubbers as a precautionary principle to “avoid discharges of scrubber wash water in coastal waters and port areas”.
Businesses are waiting to see if the IMO rules will change.
“What is terrible for business is uncertainty in regulation and changes which are not broadcast well in advance,” said Hamish Norton, president of dry bulk shipping group Star Bulk Carriers, among the biggest investors in scrubbers.
Jurisdictions that have not imposed restrictions are also watching closely.
The IMO encouraged member states in February to research the impact of scrubbers on the environment. An IMO spokeswoman said it was up to countries to make any proposal to tighten scrubber regulation, which would need consensus approval by its 174 member states.
The 28 European Union countries submitted a paper to the IMO which said the use of open loop scrubbers was “expected to lead to a degradation of the marine environment due to the toxicity of water discharges”. It said it wanted to see “harmonization of rules and guidance”.
A separate paper submitted to the IMO, commissioned by Panama – the world’s top ship registration state – and conducted by the Massachusetts Institute of Technology, said more scientific investigation was needed.
THE FRONT PAGE TEST
A number of jurisdictions without bans, including Gibraltar, South Korea and Australia said they were investigating.
“We will study to find out how harmful it is to oceans and then consider what actions we can take,” said an official with South Korea’s Ministry of Oceans and Fisheries.
“If the IMO sets out a guideline on this, we will comply.”
Others are pushing back. Japan’s Ministry of Land, Infrastructure, Transport and Tourism, said it concluded in research last year that there was little impact on the marine environment from scrubber water discharges.
Carnival said a study it commissioned concluded that scrubbers were safe and discharges were over 90 percent lower than maximum allowable levels in various waters.
Nevertheless, many in the industry expect the rules to change.
Ivar Hansson Myklebust, chief executive with Hoegh Autoliners, said at a recent Marine Money conference the vehicle transporter was not ordering any scrubbers.
“The (open loop) scrubbers have a hard time passing the front page test taking pollutants from the air and dumping it into the sea,” he said.
(Additional reporting by Gary McWilliams in Houston, Gederts Gelzis in Riga, Andrius Sytas in Vilnius, Rod Nickel in Winnipeg, Roslan Khasawneh in Singapore, Esha Vaish in Stockholm, Jane Chung in Seoul, Yuka Obayashi in Tokyo, Gus Trompiz in Paris, Gleb Stolyarov in Moscow and Anne Kauranen in Helsinki; editing by Anna Willard)
FILE PHOTO: An exterior view of China Evergrande Centre in Hong Kong, China March 26, 2018. Picture taken March 26, 2018. REUTERS/Bobby Yip
March 19, 2019
BEIJING (Reuters) – Chinese property firm Evergrande Group will start producing its first electric vehicles in June as part of a goal to become the world’s largest new energy vehicle (NEV) company within the next three to five years, according to its chairman.
Hui Ka Yan made the comments at a conference in the eastern city of Tianjin over the weekend, according to a statement published on the company’s website on Tuesday.
“The new energy automobile industry has a huge market prospect. Evergrande has completed the entire industrial chain layout in the field of new energy vehicles,” Hui said.
He also said that Evergrande plans to start selling its first electric vehicle model globally “soon”, which will use electric car production technology from Swedish car makers Saab and Koenigsegg, and drive systems from Netherlands’ e-Traction, according to the statement.
Evergrande, China’s second-largest property developer by sales, has been aggressively expanding into the automotive space in search of new areas of growth as the Chinese property market slows.
Its subsidiary, Evergrande Health, invested in vehicle manufacturer National Electric Vehicle Sweden AB and Chinese auto battery maker Shanghai CENAT New Energy Co this year. It is also the majority investor in Swedish super car brand Koenigsegg.
Not all of its investments have gone smoothly, however.
Last year, Evergrande Health bought 45 percent of Chinese electric vehicle firm Faraday Future as part of a $2 billion plan but the deal eventually turned sour. The companies have since ended their legal fight.
Sales of NEV vehicles have remained a bright spot in China’s car market, jumping 61.7 percent in 2018 to 1.3 million vehicles even as the overall car market contracted for the first time since the 1990s. China’s biggest auto industry association predicts NEV sales to hit 1.6 million this year.
(Reporting by Yilei Sun and Brenda Goh; Editing by Muralikumar Anantharaman)
FILE PHOTO: Aerial view of containers at a loading terminal in the port of Hamburg, Germany August 1, 2018. REUTERS/Fabian Bimmer
March 19, 2019
BERLIN (Reuters) – A panel of advisers to the German government slashed its growth forecast for this year to 0.8 percent and warned risks related to Britain’s departure from the European Union, trade disputes and a sharper than expected slowdown in China remained high.
The group that advises the German government on economic policy had in November forecast that Europe’s largest economy would expand by 1.5 percent this year.
The panel said on Tuesday economic growth had slowed significantly, partly due to problems in the chemical and auto sectors and warned that a spiral of protectionist measures had the potential to push the economy into recession.
But Christoph Schmidt, one of the advisers, said: “The German economic boom is over but a recession is not currently expected due to the robust domestic economy.”
The group predicted the economy would grow by 1.7 percent in 2020.
(Reporting by Michelle Martin; Editing by Madeline Chambers)
A journalist uses his mobile phone to take a picture of the 5G logo prior to the auction of spectrum for 5G services at the Bundesnetzagentur head quarters in Mainz, Germany, March 19, 2019. REUTERS/Kai Pfaffenbach
March 19, 2019
MAINZ, Germany (Reuters) – Germany launched its 5G mobile spectrum auction on Tuesday, finally going ahead after a court threw out legal challenges and regulators resisted U.S. pressure to ban Chinese network vendors from building out next-generation networks.
Four firms are vying for 41 blocks of spectrum in the 2 GHz and 3.6 GHz bands that are suited to running ‘connected’ factories – a priority for Europe’s largest economy as it seeks to remain competitive in the digital age.
“It is important for us that we have a focus on industry, and on better coverage,” Jochen Homann, head of the Federal Network Agency (BNetzA) said ahead of the auction.
Germany’s three network operators – Deutsche Telekom, Vodafone and Telefonica Deutschland – have been admitted into the auction.
Also participating is 1&1 Drillisch, a virtual mobile operator controlled by United Internet that wants to run a fourth network.
Bid teams surrendered their smartphones on entering the former army barracks in the southwestern city of Mainz where the auction is being held. They are bidding via a secure network from separate rooms and can only discuss strategy with their head offices via fax.
All 41 blocks will be auctioned simultaneously, with results posted online after each round. The government hopes to raise billions from the auction – a 4G auction in 2015 collected 5.1 billion euros ($5.8 billion) – which is likely to go on for weeks.
After months of uncertainty, the auction went ahead after a court last week threw out lawsuits from the operators, who had complained that a requirement to provide high-speed coverage to 98 percent of households by 2022 was too onerous.
Regulators also clarified ground rules applying to network equipment vendors following U.S. pressure on its allies to ban China’s Huawei Technologies on national security grounds.
Germany opted instead to impose tighter compliance requirements on all vendors, creating a level playing field and allaying the concerns of the operators – all of which already use Huawei equipment – that they would have to replace parts of their networks at great expense.
“The same rules apply, whether you are from Sweden or China,” Homann told reporters.
(Reporting by Douglas Busvine; Editing by Kirsten Donovan)