US economy contracts for 2nd consecutive quarter
The US economy contracted at an annual rate of 0.9pc in the second quarter, marking a second consecutive quarter of contraction and signaling the economy may be in a recession by a commonly viewed measure.
The contraction in the second quarter, according to the "advance estimate" from the Bureau of Economic Analysis (BEA), followed a 1.6pc annual contraction in the first quarter. A second estimate, with more complete data, will be released on 25 August.
The decrease in GDP reflected decreases in private inventories, home construction and federal, state and local government spending. These decreases were partly offset by increases in exports as well as slowing, but still positive, personal consumption. Imports, which subtract from GDP, increased.
Today's report comes as the Federal Reserve has embarked on its steepest course of rate hikes in decades to curb inflation that spiked at 9.1pc in June. The Fed yesterday hiked its target rate by 75 basis points, its second such consecutive increase, and Fed chairman Jerome Powell reiterated that the Fed could achieve its goal of slowing the economy without inducing a recession.
Two consecutive quarters of economic contraction are frequently viewed as technically signaling a recession, even as the official arbiter of recessions, the National Bureau of Economic Research, adheres to a definition of recessions that is broader. Its definition reflects a significant decline in activity over more than several months encompassing measures of personal income, nonfarm payroll employment, personal consumption, wholesale-retail sales and industrial production.
Residential investment fell at a 14pc pace in the quarter, reflecting the downturn in home building on the heels of the Fed's recent rate increases. Federal government spending fell by 3.2pc, with nondefense spending off by 10.5pc, reflecting the end of Covid-19 stimulus to individuals and companies.
Offsetting the declines, exports rose by 18pc and imports climbed by 3.1pc. Personal consumption rose by 1pc after a 1.8pc annual gain in the first quarter.
The resilience of the labor market is the main stalwart against arguments for recession as the unemployment rate holds at 3.6pc, near the pre-pandemic low, and job growth averaged about 455,000/month in the first half of the year.
"I don't think it's likely that the US economy is in a recession because we do see a very strong labor market," Fed chair Powell said yesterday in a press conference.
Related news posts
China raises EV, ICE vehicles trade-in subsidies
China raises EV, ICE vehicles trade-in subsidies
Beijing, 25 July (Argus) — The Chinese government has raised subsidies to boost trade-in of old internal combustion engine (ICE) vehicles with new energy vehicles (NEV). The subsidy for consumers who trade in an old NEV registered before 30 April 2018 or an ICE vehicle that meets or is below China's national 3 emission standard for a new NEV has doubled to 20,000 yuan from a previous subsidy announced in May . Electric vehicles cost anywhere between Yn50,000 to Yn1mn, with consumers mostly purchasing those in the Yn100,000-200,000 range, according to industry participants. The government is also offering a Yn15,000 subsidy for consumers who trade in an old NEV registered before 30 April 2018 or an ICE vehicle that meets or is below China's national 3 emission standard, and purchase a new ICE vehicle with the displacement below 2.0 litre. Beijing in early March announced a plan to promote the replacement of industrial equipment and consumer goods through large-scale trade-ins, with NEVs making up the main part of the scheme, as part of Beijing's efforts to meet its annual economic growth target of 5pc. China's ministry of finance announced on 3 June that it will allocate Yn6.44bn to local governments to pay the subsidies for vehicle trade-ins in 2024, including Yn107mn to Tianjin, Yn90.81mn to Shanghai, Yn74.61mn to Beijing and Yn66.49mn to Chongqing. The central government announced on 29 May that it will remove purchase restrictions for NEVs during 2024-25, with the capital city Beijing allocating 20,000 additional purchase quotas for NEVs to families without a car. China produced 1.003mn NEVs in June, up by 28pc from the previous year and by 6.7pc from May, with sales increasing by 30pc from a year earlier and by 9.8pc from the previous month to 1.049mn, partly driven by the country's supportive measures, especially the trade-in subsidies. Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Refining, LNG segments take Total’s profit lower in 2Q
Refining, LNG segments take Total’s profit lower in 2Q
London, 25 July (Argus) — TotalEnergies said today that a worsening performance at its downstream Refining & Chemicals business and its Integrated LNG segment led to a 7pc year-on-year decline in profit in the second quarter. Profit of $3.79bn was down from $5.72bn for the January-March quarter and from $4.09bn in the second quarter of 2023. When adjusted for inventory effects and special items, profit was $4.67bn — slightly lower than analysts had been expecting and 6pc down on the immediately preceding quarter. The biggest hit to profits was at the Refining & Chemicals segment, which reported an adjusted operating profit of $639mn for the April-June period, a 36pc fall on the year. Earlier in July, TotalEnergies had flagged lower refining margins in Europe and the Middle East, with its European Refining Margin Marker down by 37pc to $44.9/t compared with the first quarter. This margin decline was partially compensated for by an increase in its refineries' utilisation rate: to 84pc in April-June from 79pc in the first quarter. The company's Integrated LNG business saw a 13pc year on year decline in its adjusted operating profit, to $1.15bn. TotalEnergies cited lower LNG prices and sales, and said its gas trading operation "did not fully benefit in markets characterised by lower volatility than during the first half of 2023." A bright spot was the Exploration & Production business, where adjusted operating profit rose by 14pc on the year to $2.67bn. This was mainly driven by higher oil prices, which were partially offset by lower gas realisations and production. The company's second-quarter production averaged 2.44mn b/d of oil equivalent (boe/d), down by 1pc from 2.46mn boe/d reported for the January-March period and from the 2.47mn boe/d average in the second quarter of 2023. TotalEnergies attributed the quarter-on-quarter decline to a greater level of planned maintenance, particularly in the North Sea. But it said its underlying production — excluding the Canadian oil sands assets it sold last year — was up by 3pc on the year. This was largely thanks to the start up and ramp up of projects including Mero 2 offshore Brazil, Block 10 in Oman, Tommeliten Alpha and Eldfisk North in Norway, Akpo West in Nigeria and Absheron in Azerbaijan. TotalEnergies said production also benefited from its entry into the producing fields Ratawi, in Iraq, and Dorado in the US. The company expects production in a 2.4mn-2.45mn boe/d range in the third quarter, when its Anchor project in the US Gulf of Mexico is expected to start up. The company increased profit at its Integrated Power segment, which contains its renewables and gas-fired power operations. Adjusted operating profit rose by 12pc year-on-year to $502mn and net power production rose by 10pc to 9.1TWh. TotalEnergies' cash flow from operations, excluding working capital, was $7.78bn in April-June — an 8pc fall from a year earlier. The company has maintained its second interim dividend for 2024 at €0.79/share and plans to buy back up to $2bn of its shares in the third quarter, in line with its repurchases in previous quarters. By Jon Mainwaring Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Mercado mexicano de turbosina evalúa cambios de Pemex
Mercado mexicano de turbosina evalúa cambios de Pemex
Mexico City, 24 July (Argus) — La cadena de valor del mercado de turbosina en México podría sufrir cambios drásticos, luego de que la empresa estatal mexicana Pemex eliminara su programa de descuentos por volumen para las ventas de turbosina. Los precios de turbosina a partir del 1 de julio se determinan bajo el esquema de "precio único" anunciado por Pemex mediante un aviso oficial el 28 de junio, según una nota de Aeropuertos y Servicios Auxiliares (ASA), el mayor cliente de turbosina de Pemex y el principal proveedor de combustible de aviación en México. Pemex afirmó en su aviso del 28 de junio que el cambio tiene como objetivo mejorar su oferta para el consumidor final y proporcionar "un precio competitivo" para todos sus clientes. La empresa no ha respondido a una solicitud de comentarios de Argus desde el 12 de julio. El programa de descuentos por volumen, activo hasta junio, permitía a los grandes participantes del mercado reducir los costes de la turbosina a través de grandes volúmenes de compra. Este cambio, junto con un peso mexicano más fuerte frente al dólar estadounidense, probablemente provocó una disminución considerable de los precios de turbosina en los principales aeropuertos de México, a pesar de la subida de los precios internacionales. El precio promedio de la turbosina en los cinco principales aeropuertos de México cayó en 5pc a Ps13.23/l ($2.75/USG) durante la semana del 2 al 8 de julio, desde Ps13.87/l la semana anterior, según cálculos de Argus basados en las tarifas de ASA. Sin embargo, el 1 de julio, los precios de la turbosina entregada en la costa este de México desde la costa del Golfo de EE. UU. habían aumentado en 6pc. Los precios cayeron aún más en esos aeropuertos durante la semana del 16 al 21 de julio, alcanzando su punto más bajo en cinco semanas, con un promedio de Ps12.96/l. Los precios al mayoreo de Pemex no incluyen costes logísticos ni impuestos. Los principales aeropuertos de México por número de pasajeros son Ciudad de México, Cancún, Guadalajara, Monterrey y Tijuana. Los principales distribuidores de turbosina en los aeropuertos, incluyendo a ASA y algunas empresas del sector privado, ya no mantendrán su ventaja competitiva como grandes compradores bajo el nuevo régimen de precio único, lo que podría abrir de forma abrupta el mercado mexicano de turbosina a una mayor competencia. El nuevo régimen de precios podría favorecer a la empresa militar Gafsacomm, que comenzó a vender combustible para aviones en algunos aeropuertos menores este año. Los volúmenes de ventas de Gafsacomm no cumplían los requisitos para recibir descuentos, lo que colocó a la compañía en desventaja frente a los competidores más grandes. Gafsacomm se creó en abril de 2022 y está a cargo de la secretaría de defensa (Sedena). La empresa también opera una docena de aeropuertos y la aerolínea comercial Mexicana de Aviación, que comenzó operaciones a finales de diciembre. La creciente implicación de Sedena y la marina en el sector de aviación bajo el presidente Andrés Manuel López Obrador ha puesto en desventaja a otras empresas, incluidas las aerolíneas comerciales, según Cofece, el vigilante de la competencia de México. Gafsacomm comenzó a vender turbosina en el nuevo aeropuerto de Tulum este año y en el aeropuerto internacional Felipe Ángeles (AIFA) en mayo. Por el contrario, el refinador estadounidense Valero, la única empresa del sector privado que tiene un permiso válido de importación de turbosina en México, podría ampliar su negocio, ya que el nuevo esquema de precios de Pemex podría abrirle oportunidades en algunos aeropuertos. Mientras tanto, la eliminación del régimen de descuentos podría obstaculizar a las tres principales aerolíneas comerciales de México, que ya no recibirán descuentos por volumen y perderán competitividad frente a las aerolíneas regionales más pequeñas, además de las aerolíneas extranjeras. Pero el impacto en las aerolíneas podría no ser significativo, ya que algunas tienen contratos de suministro directo con Pemex, según fuentes del mercado. El gobierno tiene un monopolio sobre el mercado de turbosina de México, con Pemex suministrando gran parte del mercado. La turbosina fue el último de los productos petrolíferos en abrirse a una mayor competencia en México después de los cambios constitucionales en 2014, pero el progreso de la reforma se detuvo bajo la administración de López Obrador, que ha impulsado una política de soberanía energética. Por Antonio Gozain Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Bangladesh scrap activity slowly resumes after curfews
Bangladesh scrap activity slowly resumes after curfews
Pittsburgh, 24 July (Argus) — Industrial activity across Bangladesh has begun to slowly resume today following a slight easing in government curfews, but spotty communications networks remain a hurdle to the full resumption of business in the steel and ferrous scrap sector. The Bangladesh government began to relax curfews today following a near nationwide curfew, communications blackout and deployment of the national army on 19 July , as it attempted to quell demonstrations and violent clashes across the capital, Dhaka, and the broader country. More than 27,000 army personnel across 57 districts were deployed to stem clashes between protestors and police centering on quota reform for the allocation of government jobs, according to Bangladeshi state-controlled media. The government officially amended the quota allocation on Tuesday, according to an official gazette issued by the Ministry of Public Administration on 23 July. Curfews have been lifted in the Dhaka district to between 10am and 5pm and to 9am to 6pm in the Sylhet district on 24 and 25 July, according to the UK Foreign Office. Communications networks have also begun to slowly be restored, but market participants noted that for now networks and internet availability remain spotty which has hampered a return to normalcy. Broadband internet was restored to specific areas, including diplomatic and commercial zones, on Tuesday after five days of outage, but social media remain restricted, according to state-controlled media. Steelmaking operations were broadly not impacted by the escalation in events in recent days, one major regional steelmaker told Argus , noting that mills were able to run without interruption during this period. The largest and most direct impact was on sales and deliveries, but that impact is likely to be short lived as shipments have begun to gradually improve today with conditions expected to be much smoother next week, the mill added. Home minister Asaduzzaman Khan Kamal said today in state-controlled media that the situation will be under control in the next 3-4 days but did not offer details on when the curfew would fully be lifted, while the railway ministry secretary Humayun Kabir said the Bangladesh Railway would resume limited passenger train operations beginning tomorrow. The US State Department still advises against travel to the country and the UK Foreign Office advises against all but essential travel. Import/export clearing activities were temporarily halted at various port across the country because of the situation, the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) said in state-controlled media. Activity at the port of Chittagong has remained ongoing but slow, according to market participants. Dozens of vessels are still situated on the water outside the port of Chittagong, vessel tracking data shows. Three deep-sea ferrous scrap bulk vessels — Ken Ei, DL Lavender , and Liberty C — also remain outside the port. But DL Lavender , a vessel from the US, has repositioned itself outside the dock. The FBCCI has appealed to the government to waive any port or shipping charges for importers and exporters and has sought for charges not to be imposed until 15 days after operations at ports have normalized. By Brad MacAulay and Corey Aunger Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Business intelligence reports
Get concise, trustworthy and unbiased analysis of the latest trends and developments in oil and energy markets. These reports are specially created for decision makers who don’t have time to track markets day-by-day, minute-by-minute.
Learn more