Latest news with #USLiberationDay
The Citizen
4 days ago
- Business
- The Citizen
US tariff pause ends on 9 July: Tau says what happens now
South Africa, along with other African countries, is still seeking an extension beyond 9 July to submit a new deal proposal in response to US tariffs. With the United States (US) tariff pause of 90 days coming to an end on 9 July, there seems to be nothing happening now, but Minister of Trade, Industry and Competition Parks Tau says South Africa is one of the countries that is asking for an extension because there is so little time left. US President Donald Trump instituted tariffs on goods imported into the US in April, marking the day as 'US Liberation Day'. South Africa got slapped with a 30% tariff, but Trump decided to pause the tariffs for ninety days until 9 July. President Cyril Ramaphosa paid a quite acrimonious visit to the White House for a meeting with Trump, followed by trade talks between South African ministers and their US counterparts. Tau said afterwards that the South African delegation submitted a proposal to the US regarding a framework agreement, focusing on issues related to trade and investment. The proposal identified areas for increased trade and access to each party's markets, while illustrating the benefits of keeping channels as open as possible. ALSO READ: Will Trump's tariffs have major negative effect on South Africa's economy? Talks about US tariffs in Angola last week Last week, Zuko Godlimpi, deputy minister of trade, industry and competition (DTIC), met with the US trade representative responsible for Africa, Connie Hamilton, on the sidelines of the United States of America-Africa Summit in Luanda, Angola. According to a statement from the DTIC, the meeting followed South Africa's submission of a proposed Framework Deal with the US on 20 May 2025, which outlines measures to enhance mutually beneficial trade and investment relations with the US. The submission was immediately followed by Ramaphosa's meeting with Trump on 21 May. The Framework Deal addresses US concerns relating to issues such as non-tariff barriers, the trade deficit and commercial relations through two-way procurement or importing strategic goods. It also aims to resolve long-standing market access issues of interest to both sides and promote bilateral investments in a mutually beneficial manner. According to the DTIC, South Africa is also seeking, through the Framework Deal, to have some of the key export products exempted from the Section 232 duties, including cars and car parts, as well as steel and aluminium through tariff rate quotas. ALSO READ: Tariffs and Agoa: How Parks Tau summarised US-SA trade talks SA prepared to settle for maximum US tariffs of 10% South Africa is also seeking the maximum tariff application of 10% as a worst-case situation. The Framework also seeks exemption for small and medium enterprises, counter-seasonal products and products that the US cannot produce itself. The DTIC says South Africa used the meeting with Hamilton in Luanda to continue to raise its concerns about the impact of the reciprocal tariffs on African countries, especially. 'One of the key issues that emerged from the meeting is that the US is developing a trade-matters template, which will be the basis for its engagements with countries in sub-Saharan Africa. 'The template will be shared as soon as it has gone through the internal approval processes in the US administration. South Africa welcomed this indication and expressed a preparedness to engage with the template once it is finalised.' Considering this development, including the limited time between now and the deadline for the expiry of the 90-day pause, African countries, including South Africa, have advocated for the extension of the 90-day deadline to enable countries to prepare their proposed deals according to the new template. ALSO READ: South Africa faces 25% tariff on US car imports, Minister Parks Tau voices concern Tau says SA would like to resubmit deal for US tariffs 'We believe that South Africa may need to resubmit its Framework Deal in accordance with the new template, and therefore, we expect that the deadline may be shifted,' Rau says. 'We urge the South African industry to exercise strategic patience and not take decisions in haste, and that government will continue to use every avenue to engage the US government to find an amicable solution to safeguard South African interests in the US market.'
Focus Malaysia
4 days ago
- Business
- Focus Malaysia
Oil market reacts mildly to geopolitical de-escalation
FOLLOWING almost two weeks of mutual missile strikes, the US President last week announced that Israel and Iran have agreed to a ceasefire, sending Brent oil prices to below USD70/bbl and effectively erasing gains driven by geopolitical tensions. The oil price pullback is not entirely surprising as the conflict had minimal impact on the physical oil market. We reiterate our view that the oil demand-supply fundamentals remain unexciting in view of rising barrels production from OPEC+ by 411kbpd in May and June, which would likely continue in 2H25. We expect the planned production hikes by OPEC+ to tilt the oil market towards oversupply territory in 2025, aggravated by wobbling oil demand, as US Liberation Day tariffs dampen global economic growth. EIA in its Short-Term Energy Outlook (June) forecasted an oil oversupply of 820kbpd in 2025, which may cap oil price upside in the near-term due to stock build over the course of the year. We do not rule out any further oil price spike in the event of an escalation in geopolitical conflict, especially in the Middle East region. However, judging by the fundamentals, we reckon that Brent oil prices may see strong resistance to sustain at above USD70/bbl. Given their high earnings sensitivity to oil prices, companies with substantial upstream E&P exposure could see earnings contraction due to lower average realised oil prices (2025e: USD67/bbl) when compared to a high base of USD80/bbl in 2024. The reduced exploration works as a result of dwindling oil prices and lingering Petronas-Petros debacle will continue to put drilling demand under pressure. According to Wood Mackenzie, the oil industry is likely to delay growth capex and discretionary spending in view of softening oil prices and macro uncertainties, especially for major projects, given that US' tariffs may inflict decision paralysis for some. That said, oil prices of USD65/bbl may dent margins but unlikely to warrant significant budget cuts and development plan changes. Our channel checks also indicate that the global O&G project pipeline remains largely intact but merely seeing some deferrals in contract award. As such, the temporary pullback on development projects may, in our view, slowdown new FPSO project awards from oil majors. The petrochemicals sector is still in the doldrums with a prolonged downcycle perpetuated by persistent demand weakness and global petrochemicals overcapacity. Overall, the petrochemicals sector will remain in the woods in the coming years as global capacity addition will continue to outstrip demand growth, which will in turn weigh on global utilisation rate. We retain our Brent oil price forecasts for 2025/2026 at USD67/bbl and USD70/bbl, with the view that oil prices will continue hovering at USD60-65/bbl in 2H25, barring escalation in geopolitical conflict. On a macro level, we view that oil prices are skewed to the downside from current levels due to (i) dissipating geopolitical premiums given Middle East conflict de-escalation, (ii) increasing output from OPEC+ and (iii) potential demand slowdown induced by US Liberation Day tariffs. However, our OVERWEIGHT rating is based on a bottom-up view of the sector as most of our stock recommendations are BUYs due to favourable fundamentals and earnings profile of the respective stocks, along with undemanding valuation across the sector. —July 1, 2025 Main image: Siemens
New Straits Times
4 days ago
- Business
- New Straits Times
OPEC+ output hikes set to tip oil market towards oversupply in 2H25, says HLIB
KUALA LUMPUR: The oil demand-supply fundamentals are expected to remain unexciting in view of rising barrel production from OPEC+ in May and June, which would likely continue in the second half of 2025 (2H25). Hong Leong Investment Bank Bhd (HLIB) expects the planned production hikes by OPEC+ to tilt the oil market towards oversupply territory in 2025. The firm said this will be aggravated by wobbling oil demand, as US Liberation Day tariffs dampen global economic growth. HLIB does not rule out any further oil price spike in the event of an escalation in geopolitical conflict, especially in the Middle East region. However, judging by the fundamentals, the firm reckons that Brent oil prices may see strong resistance to sustaining above US$ 70 per bbl. "Given their high earnings sensitivity to oil prices, companies with substantial upstream exploration and production (E&P) exposure (e.g., Hibiscus Petroleum Bhd) could see earnings contraction due to lower average realised oil prices in 2025 when compared to a high base of US$80 per bbl in 2024," it said. On the petrochemical sector, HLIB said the sector is still in the doldrums with a prolonged downcycle perpetuated by persistent demand weakness and global petrochemicals overcapacity. According to Bloomberg's data, polymer and aromatic prices continued to moderate in 1H25, driven by falling oil prices (lowered naphtha feedstock costs and dragging downstream average selling prices) and uncertain downstream demand amidst tariff woes since the "US Liberation Day". "As such, we expect continued margin erosion for Petronas Chemicals Group Bhd due to narrowing spreads between its polymer products and fixed ethane gas feedstock pricing. "The petrochemicals sector will remain in the woods in the coming years as global capacity addition will continue to outstrip demand growth, which will in turn weigh on the global utilisation rate," it said. Overall, HLIB retained its Brent oil price forecasts for 2025/2026 at US$67 per bbl and US$70 per bbl, with the view that oil prices will continue hovering at US$60-65 per bbl in 2H25, barring escalation in geopolitical conflict. Nonetheless, the firm reiterates its overweight rating, premised on a bottom-up view of the sector, as most of its stock recommendations are "buys". "This is due to favourable fundamentals and earnings profiles of the respective stocks, along with undemanding valuations across the sector. "Our top picks are Dialog Group Bhd, Dayang Enterprise Holdings Bhd and Deleum Bhd," it added.
New Straits Times
16-06-2025
- Business
- New Straits Times
Oil prices to rise amid escalating Middle East tensions
KUALA LUMPUR: Oil prices are expected to trend higher in the near term amid growing geopolitical risks, particularly fears of escalating attacks on Iran's oil fields and refinery infrastructure. Hong Leong Investment Bank Bhd (HLIB) said the extent of Iran's crude oil supply disruption is still not yet ascertained, as the firm understood that the facilities under attack were mainly downstream refineries and gas-related facilities. Although Iran's crude supply should remain intact for now, HLIB believes oil prices are skewed to the upside in the near term, given rising fear of more widespread attacks on Iran's oil fields and refinery facilities. "This could portend a higher geopolitical premium on crude oil," it said in a note. The Middle East geopolitical unrest caused Brent oil prices to surge seven per cent, settling at US$74 per barrel last Friday. Over the weekend, tensions intensified as Israel expanded its strikes to Iran's critical oil and gas infrastructure. Although the oil price recovery may not be sustainable, HLIB said it could offer some respite to upstream producers such as Hibiscus Petroleum Bhd, given that it has been suffering from depressed realised oil prices since the US Liberation Day announcement in early April. Should oil prices prove able to sustain above US$70 per barrel in the medium term, the firm believes Velesto Energy Bhd could benefit from better drilling activity as higher oil prices encourage exploration and production works. "We slightly increase our average Brent oil price forecasts for 2025 to US$67 per barrel, but retain our 2026 assumption at US$70 per barrel to reflect a higher geopolitical risk premium in the near term," it said. Overall, HLIB has upgraded the oil and gas (O&G) sector to tactical 'Overweight' from 'Neutral' in light of the sharp rebound in oil prices, driven by heightened geopolitical risk. In its view, the firm said sustained Brent prices above US$70 per barrel could catalyse a short-term re-rating across the O&G space, particularly for upstream and service-related names. "We see compelling risk-reward in select counters trading at undemanding valuations and offering attractive dividend yields of more than five per cent, such as Dayang Enterprise Holdings Bhd, Velesto Energy and Deleum Bhd," it added.
New Straits Times
30-05-2025
- Business
- New Straits Times
HLIB drops DNeX coverage, flags softer outlook for energy segment
KUALA LUMPUR: Hong Leong Investment Bank Bhd (HLIB Research) has ceased coverage of Dagang NeXchange Bhd (DNeX) due to internal resource reallocation. The firm said as such, its previous forecasts, recommendations and target price should no longer be relied upon as a reference going forward. On outlook, HLIB Research said DNeX's energy segment is expected to record a sequential earnings decline in the second quarter of 2025 (2Q25), due to easing crude oil prices, driven by US Liberation Day tariffs and OPEC's aggressive output expansion. It added that the group's subsidiary, SilTerra Malaysia Sdn Bhd, returned to positive Ebitda this quarter, driven by improved wafer shipments and blended average selling prices in the emerging technology segment. This was underpinned by efforts in staff rationalisation and the growing contribution from emerging technology, particularly silicon photonics, which typically yields higher margins. "Nonetheless, we believe SilTerra will remain in red in the near-term as its utilisation rate is unlikely to go above 80 per cent, given the cloudy semiconductor outlook due to the rising trade tensions," it noted. For the first quarter ended March 31, 2025 (1Q25), DNeX registered a core net profit of RM17.8 million, which HLIB Research deemed broadly in line with its FY25 forecasts, accounting for 22 per cent of the full-year estimate. However, the group posted a net loss of RM79.04 million for the quarter, compared with a net profit of RM14.46 million a year earlier, mainly due to higher interest expenses. Quarterly revenue declined by 4.19 per cent to RM296.83 million, from RM309.82 million in 1Q24. The decrease was primarily attributed to weaker contributions from the energy and information technology segments, which offset gains in the technology segment.
