US services sector expanded in July, jobs grew: Survey
A measure of US services sector activity grew in July, showing the largest part of the economy expanded last month even as manufacturing contracted.
The services purchasing managers index (PMI) rose to 51.4 in July from 48.8 in June, the Institute for Supply Management (ISM) said today. Readings above 50 signal expansion while those under that threshold signal contraction. Services, which account for more than two thirds of the economy, have contracted twice in the last four months, but only three times since early in the Covid-19 pandemic.
The report, showing the largest part of the US economy has continued to expand, follows a report on 2 August from the Labor Department that showed only 114,000 jobs were generated in July, much fewer than expected, which sparked a sharp selloff in global stocks, oil and other commodities amid concerns of possible recession. Also last week, the Federal Reserve kept its target rate unchanged, but signaled a cut was likely in September.
The business activity/production index in today's report registered 54.5 in July, compared with the 49.6 recorded in June. The new orders index expanded to 52.4 in July, from 47.3 the prior month. The employment index expanded for just a second time in 2024, rising to 51.1 in July from 46.1 the prior month. The report appeared to counter some of the concerns stemming from the July employment report.
The prices index rose to 57 from 56.3.
"Survey respondents again reported that increased costs are impacting their businesses, with generally positive commentary on business activity being flat or expanding gradually," ISM said. "Comments continued to express a wait-and-see attitude regarding the upcoming presidential election."
The ISM services report today follows an ISM report last week showing manufacturing PMI for July fell to 46.6, the deepest contraction in manufacturing since last November, from 48.5 in June. It was the 20th contraction in 21 months.
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India faces tricky decision on steel imports
India faces tricky decision on steel imports
Mumbai, 5 August (Argus) — Indian steelmakers have ratcheted up calls for restrictions on imports from China and Vietnam to shield domestic industry from significant harm. But the decision on whether to impose anti-dumping duties or other curbs is likely to be a challenging one for the government, industry sources said. Major domestic mills have urged the government to limit flows from China, as elevated production levels and low local demand prompt the country's mills to keep exporting finished steel at prices significantly below those of domestic Indian material. India became a net importer of finished steel in the April 2023-March 2024 fiscal year, with shipments from China rising by 91pc on the year to 2.7mn t. In April-June this year, China shipped 572,000t of finished steel to India, an increase of 40pc on the year, according to data from the steel ministry's joint plant committee. The Argus fob China hot-rolled coil (HRC) index fell to a four-year low of $476/t at the end of July. HRC offers from China were last reported at $520/t cfr India, although trading firms said there was no buying interest yet at these levels. "China is not competitive. They lose money at these prices. It's predatory pricing, which is detrimental to the future of the industry in India," said Tata Steel's chief executive, TV Narendran, during the company's earnings call. JSW Steel and Jindal Power & Steel have also highlighted pressure from rising Chinese imports, as well as inflows from countries with which India has a free-trade agreement (FTA), such as Vietnam. Vietnam has been a main market for Chinese exports, and a dumping investigation could also be on the cards here. After rising in April and May, domestic Indian HRC prices have been on a downward trajectory, largely because of import bookings. The Argus weekly Indian domestic HRC assessment for 2.5-4.0mm material was 50,800 rupees/t ($603/t) ex-Mumbai on 2 August, excluding goods and services tax, a fall of Rs2,950/t compared with the end of May. No losses for steelmakers While domestic steelmakers' profits have come under pressure, sources say they have not been running into losses yet. JSW Steel's profit fell by 64pc on the year in the quarter ending 30 June, while Tata Steel's first-quarter profit after tax from its India operations declined by 33pc on the year. "The government should not wait for steelmakers to run into losses. Some action must be taken before that happens," an executive at a major Indian steel mill said. The Indian government last imposed anti-dumping duties on imported steel in 2017 , with the threshold for the landed cost of HRC at $489/t. This netted back to $430-440/t fob, an industry source said, adding that Chinese prices still have not fallen to this level yet. "If prices come precipitously close to the levels seen in 2016-17, there would be a definite problem," the source said. While imposing restrictions on imports could benefit Indian mills, any increase in steel prices would also mean additional costs for the infrastructure sector, sources said. The Vietnam question Several sources suggested that restrictions on Vietnamese steel would have a larger impact on domestic prices than curbs on China. Importers of Vietnamese steel do not incur additional duties on the landed price, unlike buyers of Chinese steel, because of India's FTA with ASEAN countries, including Vietnam. There is also talk that Chinese steel is rerouted to India through Vietnam. Finished steel exports from Vietnam to India more than doubled on the year to 737,000t in the 2023-24 fiscal year. Import bookings have increased since Vietnamese steelmaker Formosa Ha Tinh's export licence was renewed by the government's Bureau of Indian Standards (BIS) in May. Latest offers from Formosa were heard at $550/t cfr India. By Amruta Khandekar Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Iran gathers envoys to lay ground for Israel response
Iran gathers envoys to lay ground for Israel response
Dubai, 5 August (Argus) — Iran's foreign ministry on Monday convened a meeting of foreign ambassadors and representatives to lay down a "legal case" for retaliation it is planning against Israel for the assassination of Palestinian group Hamas' chief in Tehran last week, according to a source with knowledge of the matter. Iran's acting foreign minister Ali Bagheri-Kani "was mostly trying to lay down the case that would justify Iran's response [to the assassination of Ismail Haniyeh]," the source said. "He said the response would be definite and decisive, but did not say when it would come or how." The meeting came as numerous countries, in the Mideast Gulf and elsewhere, pressed on with round-the-clock efforts to try to contain the situation. Haniyeh was killed on 31 July while in Tehran for the inauguration of Iran's new president, Masoud Pezeshkian, the day prior. State television had shown him present at the ceremony. Israel has not explicitly acknowledged its involvement. But Iranian officials have little doubt that Israel was behind the hit, particularly given rising tensions emanating from the war between Israel and Hamas in Gaza. "All the evidence and indications clearly show that the Zionist regime is behind this vile and despicable act," foreign ministry spokesman Nasser Kanaani said today at his weekly press briefing, referring to Israel. Jordan's foreign minister Ayman Safadi was in Tehran on Sunday, 4 August, to discuss escalating regional tensions with Bagheri-Kani. "We want our region to live in security, peace and stability, and want the escalation to end," Safadi said. Prior to the visit, Safadi had said Jordan would not accept being dragged into the escalation. "If there is any escalation, our first priority is to protect Jordan and the safety of Jordanians," he said. "Anyone who wants to violate our skies, we will confront that." Relations between Amman and Tehran have soured since Iran launched its first ever direct attack on Israel on 13 April , a response to an Israeli attack on an Iranian diplomatic compound in Syria. Jordan, which borders Israel, helped shoot down at least some of the more than 300 Iranian missiles and drones that had entered its airspace, headed for Israeli targets. When and how? Iranian officials are adamant that the country will retaliate for the assassination in Tehran, and will do so in a serious manner. "When the Zionists receive a strong and decisive response, they will know that they made a mistake in their calculations," Islamic Revolutionary Guard commander in chief Hossein Salami said today. There has been no clear indication from Iran about when it will carry out any retaliation, or what form this would take. "The Zionist entity will receive a strike at the appropriate place and time to understand that what it has done is foolish," Salami said. By Bachar Halabi and Nader Itayim Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Market sweats potential EU HRC retroactive duties
Market sweats potential EU HRC retroactive duties
London, 5 August (Argus) — The potential imposition of retroactive anti-dumping duties on hot-rolled coil (HRC) imports into the EU could affect trade sooner than anticipated. The European Commission will formally announce its anti-dumping case on Egypt, Japan, India and Vietnam this week, after Egypt — the final country to receive diplomatic notice of the case — received its note over the weekend. The formal announcement will probably be made in the EU's official journal on 8 August, sources in Brussels said. European steel association Eurofer has pushed for imports from the four countries to be registered and for retroactive duties to be imposed. Retroactive duties have rarely been imposed in EU steel trade cases, although the commission did take this path in its case against Russian and Chinese cold-rolled coil imports in 2015-16. Retroactive duties are typically imposed 90 days prior to provisional measures taking effect, but this is only possible if imports are registered. The final decision over retroactive duties will be taken at the definitive stage of the investigation. Should the case start on 8 August and provisional duties be imposed after eight months — as is typically the case where dumping is proven — retroactive definitive duties could be imposed on imports dating back to January 2025. This would mean material from these countries clearing customs on 1 January are unlikely to face anti-dumping duties, but imports clearing customs after this date carry the risk of definitive duties, should dumping be proven and retroactive duties are imposed. HRC trade has been slow in recent weeks, owing to a seasonal slowdown in demand. Service centres are opting to manage their inventories and preserve cash flow, rather than restocking. But this could be the best time to make purchases, given the potential impact to imports the possible duties may bring, sources suggest. The countries covered in the case represent more than 50pc of EU HRC imports this year so far . "At this price level... the risk of increases is far higher than the risk of going down," one trading firm said. Another trading source did not understand why EU mills were not being firmer on pricing. Argus ' north European HRC index has fallen by €30.75/t ($34/t) since the start of June, to €604.75/t ex-works on 2 August, while the Italian index dropped by €29.75/t to €600.75/t over the same period. By Colin Richardson Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Israel versus Iran: Round two looming?
Israel versus Iran: Round two looming?
The region is braced for a possible rerun of Iran's April attack on Israel, writes Bachar Halabi Dubai, 4 August (Argus) — The confrontation between the Middle East's two leading military powers — arch-enemies Israel and Iran — has entered a new phase of escalation. Israel is taking the fight to Iranian proxies in Tehran's so-called "Axis of Resistance" as the Gaza campaign dials down, and the risk of a wider conflagration is rising. The conflict between Israel and Palestinian group Hamas has been regionalised from the start, but remained contained even when Iran and Israel traded direct blows for the first time ever in April. Lebanon's Iran-backed militia group, Hezbollah, joined the war on 8 October — the day after Hamas' attack on Israel — by opening what it called a "support front" for Hamas. Iraqi Shia militias and Yemen's Houthis followed suit by claiming to target Israel through a mix of drone and missile strikes, or by attacking global shipping lanes in the Red Sea. But, over the past few weeks, Israel has gone on the offensive against proxy group leaders. Hamas' chief political leader Ismail Haniyeh was killed in Tehran on 31 July. Israel neither denied nor confirmed responsibility, but Iran is pointing the finger.The attack in Tehran came only hours after Israel claimed responsibility for a strike in the suburbs of the Lebanese capital Beirut that targeted Hezbollah's most senior military commander and one of its founding fathers, Fuad Shukr. And Israel's military on 20 July struck Yemen's Houthi-controlled Red Sea port of Hodeidah, in a first-of-its-kind attack by the Israeli side, in retaliation for a drone attack by the Iran-backed militant group on Tel Aviv a day earlier. "I think when you put them all together, this is really a message to Iran, which has been operating more or less on seven fronts against Israel — Iraq, Iran, Yemen, Syria, Lebanon, the West Bank and Gaza," former US assistant secretary of state for near eastern affairs David Schenker tells Argus. But he also attributes Israel taking things into its own hands to the reticence of the US administration. "There is a division of labour [among Israel and the US] and the Israelis are responsible for their close enemies, while the US is responsible for the Houthis." Calculations trump ceasefire A regional diplomatic source sees a different impetus: "I think [Israel's] bold moves are the result of the withdrawal of President Biden from the presidential race" which frees him from electoral calculations. Israeli prime minister Benjamin Netanyahu "has no intention of reaching a ceasefire in Gaza before the outcome of the US election is known. He believes that a potential Trump administration would be more understanding of Israel's future plans for Gaza", the source says. The region is now bracing for a possible rerun of Iran's 13 April attack on Israel, except that the risk of miscalculation is higher, with the axis vowing revenge. "We are looking for a real response, not a performative response," Hezbollah's secretary general Hassan Nasrallah said on 1 August. The US, EU and many Mideast Gulf countries are trying to contain the situation. "Hezbollah and Iran want to avoid a full-scale war with Israel and their responses to the recent wave of assassinations will be measured to avoid dragging themselves into a situation of total regional war that could also drag in the US," the diplomatic source says. Iran, however, finds itself in a tough situation, with what happened in Tehran being "incredibly embarrassing for Iranian officials", according to Schenker. The questions now are when and how it might respond. With Israel also targeting Hezbollah in Beirut, the group might yet lead that response. "They're going to do something big… but they're going to try to calibrate [it] with not going for a full-scale war," Schenker predicts. The axis' retaliation could come within days, or it could take weeks. How Netanyahu then reacts to it could shape the regional confrontation for months or years to come. Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
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