Turkey is internet hosting talks on Wednesday to try to break the impasse surrounding the export of grain shipments from Ukraine.
Navy representatives from Turkey, Russia and Ukraine are assembly with a UN delegation to debate the “secure cargo of grain ready in Ukrainian ports to worldwide markets by sea,” Turkish Minister of Nationwide Protection Hulusi Akar stated on Tuesday.
Europe’s breadbasket
Whereas the battle stays confined to inside Ukraine’s borders, the affect it’s having on meals safety is actually world.
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The Black Sea basin is without doubt one of the world’s most essential areas for grain and agricultural manufacturing, in response to the World Meals Programme. As such the results of the battle have elevated stress on assets and entry to meals for international locations all around the world.
Generally known as the “breadbasket of Europe,” Ukraine was the fifth largest exporter of wheat onto the worldwide market final yr. Based on a report printed by the World Meals Programme (WFP) earlier this month, Ukraine’s export capability is now round a sixth of what it was earlier than the battle.
The WFP stated it’s “carefully coordinating with key actors (EU member states and IFIs) on methods to optimize the export of grain from Ukraine utilizing all choices: street, rail, river and sea.”
Final month the WFP warned that the “ripple results” of the battle would “push hundreds of thousands of individuals in international locations internationally into poverty and starvation.”
The disaster is having a devastating affect on impoverished international locations resembling Egypt and Somalia, which get round 80% and 90% respectively of their wheat from Russia and Ukraine and have seen large worth will increase for the reason that begin of the battle.
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The report printed by the WFP and United Nations Meals and Agriculture Group (FAO) on June 6 stated that “the battle in Ukraine has exacerbated the already steadily rising meals and vitality costs worldwide, that are already affecting financial stability throughout all areas.”
The invasion
Russia’s invasion on February 24 got here after the winter crop of wheat was planted, that means it’s now prepared to reap. However the agricultural business has been crippled by quite a few elements.
Hundreds of thousands of Ukrainians have been displaced by the battle, which has large implications for manpower. In the meantime the farmers that stay face quite a few challenges. Ukraine has repeatedly accused Moscow of partaking in scorched earth techniques which have destroyed huge portions of crops, storage and equipment, whereas there’s additionally the hazard of unexploded missiles and ordnance that scatter the fields.
Dozens of silos and among the largest export terminals have been destroyed by Russian bombardment. One of many largest — within the southern metropolis of Mykolaiv — contained some 250,000 tons of grain earlier than being burned in June.
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Moreover, some analysts say there are challenges in acquiring diesel gasoline due to the destruction of refineries, that means some crops can’t be harvested.
Russia has blockaded Black Sea ports, that means grain already harvested can’t be exported internationally. The UN has stated that the blockade has already raised world meals costs and threatens to trigger a catastrophic meals scarcity in elements of the world.
Based on the Ukrainian Infrastructure Ministry, round 80% of Ukraine’s grain was exported from its Black Sea ports earlier than the invasion. Now exports exit the nation completely by the Danube River, entry to which was made doable after Ukrainian forces retook Snake Island from Russian forces in June. Ukraine is hoping to hurry up exports through this route.
Ukraine has additionally accused Russia of eradicating provides by stealth and passing them off as Russian grain. Russian operators are transferring grain at sea in an obvious effort to disguise its origin, in response to satellite tv for pc imagery reviewed by CNN, and service provider ships are turning off their transponders. Russia has repeatedly denied stealing grain or blocking ports.
A few of what would have been Ukrainian produce is now in territory held by the Russians and their allies within the self-declared Donetsk and Luhansk Folks’s Republics (DPR and LPR). The chief of the DPR, Denis Pushilin, stated not too long ago that the wheat harvest there could be a lot increased than in 2021.
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What are the goals of the talks?
Particular particulars haven’t but been launched. Nonetheless Reuters has spoken to unnamed diplomats who’ve recommended that components of the plan underneath dialogue embody Ukrainian vessels guiding grain ships out and in by mined port waters; Russia agreeing to a truce whereas shipments transfer; and Turkey — supported by the United Nations — inspecting ships to allay Russian fears of weapons smuggling.
Ukraine’s international ministry on Tuesday burdened the function of the United Nations within the talks and the necessity for “an answer that may assure the safety of the southern areas of our nation,” spokesperson Oleg Nikolenko instructed Reuters.
Reporting from Tim Lister, Petro Zadorozhnyy, Vasco Cotovio and Isil Sariyuce
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Macy’s has delayed the release of its third-quarter results after the US retailer revealed that an employee had hidden more than $132mn of delivery expenses since late 2021.
The group said in a securities filing on Monday that an employee had “intentionally made erroneous accounting accrual entries” to hide $132mn to $154mn of cumulative delivery expenses between its fourth quarter of 2021 and the quarter ended November 2 2024.
It said it had launched an independent investigation. There was “no indication” of any adverse effect on its cash management or payments.
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The individual was no longer at the company, Macy’s added.
Macy’s was due to report results on Tuesday, but, owing to the expenses issue, instead released preliminary results on Monday morning. Its third-quarter sales fell slightly more than analysts expected to $7.74bn in the three months ending on November 2.
Macy’s shares were down more than 3 per cent in pre-market trading.
Scott Bessent speaks at the National Conservative Conference in Washington D.C., Wednesday, July 10, 2024.
Dominic Gwinn | Afp | Getty Images
Financial markets on Monday welcomed President-elect Donald Trump’s pick for U.S. Treasury secretary, with currencies across the globe rallying on hopes that hedge fund manager Scott Bessent can take some of the sting out of Trump’s more extreme economic views.
The U.S. dollar index, which measures the greenback against six major currencies, fell 0.5% to 107.01 on Monday, paring some of its recent gains after a remarkable rally since late September.
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The euro was a top performer, rising 0.7% to trade at $1.049 at 12:50 p.m. London time. The Japanese yen, pound sterling and Antipodean currencies were also trading higher against the dollar.
The moves come as global investors reacted to news from late Friday that Trump signaled his intention to nominate Bessent to lead one of the most influential roles in U.S. government. The Treasury Department has broad oversight of tax policy, public debt and international finance.
Strategists regard Bessent, the founder of Connecticut-based investment firm Key Square Group, as a “safe pair of hands,” a well-known market participant and a more moderate pick compared to some of his rivals.
It is expected the 62-year-old will push for Trump to consider a softer approach to tariffs, strip back regulation to boost growth and target a reduction in deficit spending.
“Trump’s pick for Treasury Secretary has swelled investor sentiment further with stocks on Wall Street looking set for another flurry of gains,” Susannah Streeter, head of money and markets at Hargreaves Lansdown, said in a research note.
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“Hedge fund manager Scott Bessent’s long career of navigating the twists and turns of markets, has boosted confidence about incoming pro-business policies and lifted hopes that any tariffs would be highly targeted and potentially less inflationary in nature,” she added.
A ‘layered’ approach to tariffs
Trump’s historic election victory earlier this month ratcheted up concerns about the prospect for higher prices, prompting strategists to rethink the outlook for global bond yields and currencies.
It is widely thought that Trump’s pledge to introduce tax cuts and steep tariffs could boost U.S. economic growth — but widen the fiscal deficit and refuel inflation.
An employee sorts navel oranges at a fruit processing factory of Nongfu Spring on November 23, 2024 in Xinfeng County, Ganzhou City, Jiangxi Province of China.
China News Service | China News Service | Getty Images
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In an effort to raise revenues, Trump has suggested he could impose a blanket 20% tariff on all goods imported into the U.S., with a tariff of up to 60% for Chinese products and one as high as 2,000% on vehicles built in Mexico.
While many economists are skeptical about the effectiveness of tariffs, Bessent has defended them as “a useful tool for achieving the president’s foreign policy objectives.” He has also, however, called for tariffs to be “layered in” gradually.
“News that Scott Bessent is the top choice for incoming US Treasury Minister has raised the possibility that some ‘Trump trades’ may be watered down,” analysts at Rabobank said in a research note.
“Bessent, a successful macro hedge fund manager, is associated with a preference to reduce the US budget deficit to 3% of GDP, which clearly suggests less appetite for deficit spending,” they added.
Bessent, who once worked for billionaire philanthropist and investor George Soros, has advocated for a so-called “3-3-3” target, which refers to a plan to cut the deficit to 3% by 2028, achieve 3% economic growth and add 3 million new barrels of oil per day.
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Business as usual?
Some strategists expect Trump’s Treasury chief pick to be welcomed as good news for Asian currencies over the coming months.
“The market view that Bessent is a ‘safe hands’ candidate, may see some relief rally in Treasuries from the open on Monday, as the risk of a more unorthodox candidate is priced out,” Scott Spratt, strategist at Societe Generale Corporate and Investment Banking, said in a research note.
“We suspect his view that tariffs should be ‘layered’ and that initial levels being discussed are ‘maximalist’ positions, should also provide an opening boost to Asia FX and [the Chinese yuan],” he added.
U.S. President-elect Donald Trump prepares to exit after viewing the launch of the sixth test flight of the SpaceX Starship rocket in Brownsville, Texas, U.S., November 19, 2024.
Brandon Bell | Via Reuters
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Tesla CEO Elon Musk suggested that nominating Bessent as Treasury chief would be a disappointment. In a social media post via X on Nov. 16, Musk described Bessent as a “business-as-usual choice,” adding that “business-as-usual is driving America bankrupt.”
Bessent has also been an advocate of Trump’s embrace of the crypto industry, which means he could soon become the first Treasury chief openly in favor of crypto assets. Trump has previously pledged to make America “the crypto capital of the planet.”
Bitcoin breached the $99,000 level for the first time last week as investors continue to price in Trump’s return to the White House.
Two months before Northvolt filed for bankruptcy in the US, Robin Zeng, known as China’s “battery king”, had a quick but grim answer as to why European battery makers were struggling to make good products.
“They have a wrong design . . . they have a wrong process . . . and they have the wrong equipment. How can they scale up?” the chief executive of CATL told Nicolai Tangen, the head of Norway’s $1.8tn oil fund. “So almost all mistakes together.”
The bleak assessment from the world’s biggest electric vehicle battery manufacturer captures the scale of the failure for the industries behind the critical technology for Europe’s decarbonisation, leaving governments, companies and investors at a loss as to how to recraft the continent’s strategy to compete with China.
“How are we not taking this more seriously? The European car industry is the heartland of European industry’s supposed prowess,” said one long-standing investor in Northvolt after the collapse into US bankruptcy last week of Europe’s biggest battery hope. “The depth of the crisis for the European car industry is almost unlimited. It’s incredibly grim.”
Brussels took its first steps to establish a battery supply chain across Europe in 2017, with Northvolt at the heart of its ambitions. The bloc has since increased its share of the global battery market from 3 per cent to 17 per cent with annual turnover of €81bn in 2023 after spending more than €6bn of the EU budget to support cross-border battery projects and research and innovation.
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But in terms of EV batteries, Asian participants including CATL, BYD, and LG Energy Solution and SK On of South Korea, control about 70 per cent of the global market. Many of the 30 gigafactory projects in Europe have also been designed and built with the help of Chinese and Korean companies.
As the EU’s ambitions have faltered, the struggles of Northvolt have come to embody the challenge the continent faces. The bloc wants to continue encouraging costly investments in the clean technologies needed to meet its ambitious climate goals, while at the same time stemming the wave of plant closures and job cuts that are already spreading across the automotive sector and heavy industries.
“It’s fair to say we’re at a pivotal moment right now,” said Wouter IJzermans, executive director at the Batteries European Partnership Association.
People involved in the Northvolt saga said options were narrowing for Europe to address its dependence on China and other parts of Asia for the technology and materials that will be critical as the automotive industry transitions to electric vehicles.
Efforts are still being made by other start-ups such as France’s Verkor and Volkswagen’s battery business PowerCo, but they are facing either diminished ambitions or tougher financing prospects.
PowerCo is considering building just one out of the two production lines previously planned for its plant in Salzgitter in Germany due to slowing market demand.
“There was a whole fresh round of audit work and validation of the set-up, our chemistry, the machines and all the equipment,” Lemaignan said. “It’s not something automatic, to find financing today. It’s an issue that goes well beyond Verkor, and affects the financing of all of the energy and climate transition industries.”
In France, there is also Automotive Cells Company, a venture backed by carmakers Stellantis and Mercedes-Benz, and oil major TotalEnergies, which started producing batteries in 2023. But this year ACC paused plans to expand further with plants in Germany and Italy as it considered switching to a lower-cost form of battery technology and adjusted to a slower EV adoption rate.
“There are expansion phases and crisis phases, if you draw a parallel with other industries. Perhaps we’re living through the first big challenges for Europe’s battery industry. But there will be factories and there will be clients, we’re seeing that more and more,” Lemaignan said.
Consequences from Northvolt’s US bankruptcy filing are already being felt, with carmakers being forced once again to turn to their Asian suppliers to reduce their exposure to its collapse.
Germany’s Porsche has never confirmed its relationship with Northvolt, but a person familiar with the agreement between the two companies said the Swedish start-up was contracted to make the batteries for the all-electric Porsche 718, scheduled for launch next year.
Northvolt’s demise means the battle for dominance of the European market is likely to play out between Asian battery makers.
LGES and SK On both have European plants, in Poland and Hungary respectively, while CATL has a factory in Germany and a second site in Hungary due to begin production next year.
But Tim Bush, a Seoul-based battery analyst at UBS, said there was little prospect at present that the Asian battery makers would be able to help the EU to meet its target for 90 per cent of the continent’s EV batteries to be produced locally by 2030.
Bush noted that Korean battery makers were already paring back their investments in Europe, having invested billions of dollars in plants in North America that have been running at low utilisation rates because of lower than expected consumer demand for EVs.
Potential Chinese battery investments on the continent were also likely to be complicated by the ongoing trade dispute between Brussels and Beijing over EU tariffs on Chinese electric vehicles, he added.
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“The Koreans are not expanding, the Chinese have suspended construction and Europe’s new entrants are dropping like flies,” said Bush.
Against such obstacles, the European Commission is weighing plans to require Chinese developers to have plants and bring their intellectual property to Europe in order to access EU subsidies, the FT has previously reported.
With European start-ups still behind in their ability to manufacture batteries at scale, industry executives say the only solution may be to continue their reliance on Asian participants until homegrown companies can absorb technology knowhow on battery chemistry, mass production and equipment manufacturing.
“We need to find a deal with China because we won’t be able to compete . . . without the support of the Chinese companies that control the mining industry, chemicals, refining and their capacity and competence,” Luca De Meo, Renault’s chief executive, told reporters last month.
But the dilemma is how long Europe needs to wait for the technology transfers to complete, and whether it would already have lost the race by then.
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“If you really zoom out, what does Europe want to be? I really question whether Europe wants to give up yet another industry like it did with solar panels. Europe is not a leader in AI. I want my kids to grow up somewhere where there are a lot of jobs,” said a Northvolt executive.
Reporting by Kana Inagaki and Harriet Agnew in London, Patricia Nilsson in Frankfurt, Sarah White in Paris, Alice Hancock in Brussels, Christian Davies in Seoul, and Richard Milne in Oslo
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