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The nascent German economic recovery is threatened by low Rhine water levels
Analysts warned on Monday that the Rhine's record low water levels could halt German growth and drag Europe's largest economy back into stagnation, just as it was showing signs of a much-anticipated recovery. Germany and much of Europe have experienced successive heatwaves with little rain this summer. This has led to low water levels in waterways such as the Rhine. The Rhine is an important shipping route, especially for grains, minerals, refined oil products, and coal. The shallow water makes it difficult for cargo ships to carry more than 20% of their load. This forces them to ship multiple shipments, which is costly and unwelcome. Data released last week showed that the German Gross Domestic Product grew faster than anticipated in the second quarter. The low water levels could reduce the third quarter GDP growth by 0.1% to 0.2% according to economist Stefan Kooths, of the Kiel Institute for the World Economy. He warned that they would not quickly return above the critical threshold. He said that the low water levels would continue to affect transport capacity for some time in the next month. THE DROUGHT IS WORSENING A LONG-TERM TREND OF WATER LOSS According to the Environment Ministry, the lack of rain this summer has exacerbated a trend that has been in place for 25 years. Germany has lost 60 billion cubic meters of water due to climate changes. Carsten Schneider, the German Environment Minister, warned that if nothing is done, water shortages could cost Germany EUR625billion ($714billion) by 2050 or EUR25billion annually. Carsten Brzeski is global head of macro - at ING. He said that the warm, dry weather of summer has caused water levels to drop to a record low in major transportation waterways. This could have an impact on industrial supply chains as well as activity in construction. According to data released by Germany's Federal Waterways and Shipping Administration on Monday, the water level at the Rhine river chokepoint in Kaub will fall to a new record low of 18.09 cm (7.09 inches) this Friday. Marc Schattenberg, an economist with Deutsche Bank Research, stated that the economic impact of this situation will be determined by 'how long transport costs remain high and whether there are extended shipping disruptions at places like Kaub. Thyssenkrupp Steel had already suspended the shipping of raw material to Duisburg, a western city in Germany, with its own vessels last month. The German chemical company BASF stated on Monday that while they have maintained waterway transport 'to date', isolated supply bottlenecks could occur if 'current weather conditions continue. The German economy is already very fragile, and if the drought persists, it will put even more strain on the German one, said Dirk Binding. He was an expert with the German chamber of commerce, DIHK. (Reporting and editing by Joe Bavier, Anastasiia Kozolova, Rene Wagner, Michael Hogan; additional reporting by Maria Martinez).
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WestJet Flight Attendants end their strike after tentative wage agreement
The union that represents?flight attendants for Canada's WestJet has reached a tentative?deal on Monday with the second largest carrier in the country, ending a striking which led to hundreds of cancelled flights during the busy summer travel season. The Canadian Union of Public Employees (CUPE), which represents 4,400 flight crew members at the carrier, wanted to pay them from the moment they check-in until the moment they clock out, rather than just for the time their aircraft is in motion. WestJet has not disclosed details about 'the tentative agreement', which will be presented to the cabin crew for a vote of ratification. The union stated that it would be sharing details of the contract with its members before the vote. This tentative agreement represents a significant progress. The agreement evolves the "flight credit" system, by recognising more of the cabin crew's work and increasing compensation for it, Alia Hussain said. After talks broke down, the flight attendants of this airline, with a 30% domestic market share, went on strike Sunday. This labour unrest followed on from a four-day flight attendant strike at Air Canada, which stranded 500,000 passengers last August. This is also the latest attempt by flight attendants in the U.S., Canada and other countries to challenge compensation structures that pay cabin crew primarily when the aircraft is in motion. Cirium, an aviation analytics company, reports that WestJet has cancelled 615 flights since August 4. Onex Corp., the majority owner of the company, offered to increase wages by 13% this year, followed by 2.5% increases every year until 2029. It also offered extra pay for all the hours worked, which is equivalent to another 12 percent salary increase. WestJet announced on Sunday that around 250,000 passengers had their flights "cancelled" during a three-day long holiday weekend in Canada. In a press release, the airline said that it would "share further details about the return of operations" as soon as they became available. WestJet has a fleet size of 200 aircraft. The majority are Boeing 737 single aisle jets. (Reporting and editing by Mrigank Dahniwala in Bengaluru, Nandan Mandayam)
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Mali: Mining-backed fund can unlock up to 800 million dollars for infrastructure projects
Mali's finance minister has said that it could use the revenues generated by recent reforms in the mining sector to raise as much as 500 billion CFA Francs ($883.1m) to fund energy, water, and transport projects. This is part of an effort to convert higher mining revenue into infrastructure funding. The comments are the first sign of how the Mali military government plans to use the windfall it will receive from the overhaul of its mining code in 2023. This new code increased royalties and state stakes for mining projects, causing disputes with mining operators such as Canada's Barrick. In December, officials said that a government audit recovered 761 billion CFA?francs of alleged arrears owed by mining companies. Sources of funding Alousseni Sanou, Mali's finance minister, said on state television that the Energy, Water and Transport Infrastructure Development Fund had raised 109.14 Billion CFA Francs between January 1, 2020 and June 30, 2026. Sanou stated that the fund will be created in 2023 and funded exclusively by large-scale and small-scale mining permit holders. Contributions include 1% of quarterly revenue and 10% of ad valorem taxes for the first five years of operation, and then 2% thereafter. He said that the fund generates 50 billion CFA francs a year and could be leveraged in order to secure much larger financing for infrastructure. Dembele Madina Sissoko, Mali's Minister of Infrastructure and Transport, said that projects submitted to the fund include railway development, road construction, boat acquisitions, and projects related to state-owned Mali Airlines SA. Lately, resource producers in Africa have sought a greater share of mining profits. Ghana's Parliament approved last year the use of minerals revenues to fund an infrastructure program known as Big Push.
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Planemakers, repair shops and other businesses take measures to conserve aircraft window in a tight market
Companies and industry sources said that planemakers, airlines, and repair shops were conserving aircraft glass after an incident occurred at a California factory. The incident 'worsened shortages for a part required for both new aircraft and regular maintenance. GKN Aerospace, a leading supplier of cockpit and passenger window products in the world, stopped production at its Los Angeles suburb factory late in May after an overheating fuel tank caused fears of explosion, forcing 50,000 residents to evacuate for several days. Sources and executives stated that the incident did not affect new plane production or airline operations but it caused delays in parts and concerns about the supply of passenger and cockpit windows. Boeing, a U.S. aircraft manufacturer, said that it had informed operators of steps to be taken in order to manage the window inventory after the incident. Boeing told airlines to only replace windows when they are necessary, and not for aesthetic reasons. Boeing stated in a press release that it "continues to work with our suppliers and is taking steps to mitigate any possible impacts." GKN is owned by Melrose Industries of London, which produces windows for a number of Boeing models, including the 737 MAX and rival Airbus A220 or A350 jets. Melrose announced on Friday that it was working to bring the partially open window factory back to full production before the end of 2026. These shortages are a sign of lingering post-pandemic weaknesses within the supply chain, despite noticeable improvements in part availability this year. Analysts and companies say that the demand for replacement windows from aircraft maintenance shops is increasing as planemakers increase production, echoing the engine shortage. Matteo Peraldo is an aerospace and defense partner with AlixPartners. He said, "There's a large aftermarket for window products." "The demand is not only production, but also the aftermarket." Airbus experienced A220 windows shortages but this did not delay production, according a source familiarized with the program. A spokesperson for A220 said that GKN Aerospace has restarted production and they have "seen positive progress to date toward a return of normal." The maintenance provider Lufthansa Technik stated that the supply of aircraft window for both major aircraft manufacturers has been stretched since a long time. Lufthansa Technik reported that "lead times?have increased substantially, while procurement costs are up markedly." Lufthansa Technik stated that the supply of windows for most Boeing aircraft is limited to "cases where the part?is absolutely necessary to fix an aircraft grounded." Private Jets Window shortages have also affected private jet manufacturers, including Bombardier Canada and Embraer Brazil. Repair shops are also affected. Eric Martel, CEO of Bombardier, told reporters on Thursday that the impact of the incident on window supply was one of the challenges in the supply chain "we had to manage." GKN Aerospace manufactures windows for Global 8000, the company's flagship jet. Source: Embraer, the private and commercial jet manufacturer, had already experienced supply issues for aircraft windows. The GKN incident is causing "fresh concern", according to a source. Kenn Ricci is the chairman of Flexjet, a private jet operator that flies Embraer Phenom?jets and Praetor?jets. He told a U.S. podcast Technology Business Programming Network, in February, that Embraer had stumbling blocks with windows. Ricci stated, "If you ask Embraer or (Executive Jets president) Mike Amalfitano why your deliveries are slipping, they will say that it is the windows." Flexjet declined comment. Embraer has not responded to multiple requests for comment. (Reporting and editing by Jamie Freed in Montreal, Allison Lampert)
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The war between Iran and ROI ushers in a golden age of oil refining. Bousso: It won't be long.
The Iran war has triggered record oil refining earnings that have boosted Big Oil's profits, giving new life to a business which many investors had written off. Refining is expected to produce strong returns over the next few years. However, structural changes in oil demand will cause its star to fade. Refining is the least glamorous part of the oil industry, despite its critical role in the global energy chain. Western oil majors have been steadily retreating from the sector for the last two decades. They were 'deterred' by high operating expenses, notoriously volatile profit margins, increasing carbon costs, and a growing competition from state-backed refining companies in the Middle East. This retreat intensified in the late 2010s in Europe as companies and governments bet more on the rapid adoption of electric vehicles to curb fuel demand in 2030, thus reducing the need for refining investments. Western oil giants saw their refining capacities shrink dramatically as a result. According to calculations by Open Interest, the combined refining volume for BP and Chevron, Exxon Mobil Shell, TotalEnergies, and Exxon Mobil fell from 16,4 million barrels a day in 2005 (representing around 22%) to 10,4 million bpd, or approximately 13% of global crude processing. Shell led the retreat by reducing its refinery interests from 40 to seven in the last five years. The refining climate has improved in the last year due to the increase in conflict in oil-rich areas. First, there's Iran. Refinery margins have reached record levels due to the combination of the effective closure of Strait of Hormuz for months, which has limited refiners access to crude oil and Tehran's attacks against refineries in the Middle East. Refineries in Asia were forced to reduce their operating rates due to the loss of Middle Eastern crude. China, which has huge crude stocks, chose to reduce its refining activities and stop fuel exports in order to compensate for the sharp drop in crude imports. These disruptions combined to remove around 5 million barrels a day, or 6% of global refining production before the war, in the second quarter. According to the International Energy Agency, global refinery runs averaged 78 million barrels per day, the lowest level since the COVID-19 Pandemic of 2020. The relentless drone attacks by the Ukrainians on Russian energy infrastructure has led to a sharp reduction in Russia's refinery output. This forced Moscow to ban exports of diesel. That announcement sent diesel prices soaring. Pricing Superpower The combined impact of both conflicts on the profitability of refining has been "dramatic". Big Oil has enormous pricing power due to the shortage of refined products and operators are encouraged to operate plants at full capacity. U.S. refineries - which became the world's biggest fuel suppliers during the war - operated at 97% capacity in the week ending July 24. This was well above the long-term average for around 90%. BP's refining indicator margin, a measure of global refining profit, climbed from $17 per barrel to $30 in the second quarter, up from $12 a quarter earlier and $17 during the first. Indicator has averaged 42 dollars per barrel in the third quarter. Exxon reported downstream profits of $5.5billion in the second quarter. This was its highest result since 2022. The record diesel production drove this. Chevron’s downstream earnings rose to $4.9billion, their highest level for the decade. Shell's products division reported an adjusted profit of $2.5 billion, its highest in a decade. Its refining network was operating at 102% utilisation during the second quarter. Patrick Pouyanne, the Chief Executive Officer of TotalEnergies, summed up it well when he told investors late last month that their refining division had performed "exceptionally." BP will report its earnings on Tuesday. CAN IT LAST? The question is when. The fuel market would be impacted by a sustainable solution to the U.S./Iran conflict, which includes reopening the Strait of Hormuz in its entirety and eventual recovery of Chinese refinery activity. But when this might happen is still unknown. It is clear that the problems of this industry cannot be fixed immediately. Repairing the damage to dozens refineries in Russia and the Middle East will take many months and even years. Global spare refining capacity is extremely low. Demand is also a positive factor. Concerns about energy security have been rekindled by the Iran war. To protect themselves from future supply shocks, many governments are expanding their strategic storage facilities. The first step for governments is to replenish the stocks that were depleted by the conflict. According to estimates by the U.S. Energy Information Administration, global oil stocks dropped by 5.1 millions barrels per day during the second quarter. They are expected to drop by another 2.2 million bpd by the third quarter. The rebuilding of diesel, gasoline, and jet fuel inventories will take years, creating a persistent demand. Alan Gelder is the senior vice president of refining for Wood Mackenzie. He expects that refining margins will remain high and utilisation rates will be high through the end decade. This is due to the continued growth of?oil and the limited pipeline of refining projects. The party won't last The boom is a symptom of underlying fragility. War, damaged infrastructure, and scarcity are the main reasons for today's windfall profits, not a structural improvement of industry fundamentals. The world's capacity has been reduced faster than the demand. This?might?not be the case forever. Many countries that have limited refining capacity are now re-evaluating whether they require more local processing capability. Australia is one country that has already begun to consider such plans. Over time, these investments could lead to a new surge of capacity that would eventually lead a surplus. Oil majors are aware of this fact. The decline of the refinery sector may be slowed by a few years of high margins. They are unlikely to reverse the decline. You like this column? Open Interest (ROI) is your new essential source of global financial commentary. Follow ROI on LinkedIn and X. Listen to the Morning Bid podcast daily on Apple, Spotify or the app. Subscribe to the Morning Bid podcast and hear journalists discussing the latest news in finance and markets seven days a weeks.
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Shein offers cash payments and more shares to late-stage investors before the IPO
Shein may lower the cost of investing for 'late-stage investors' as it pursues a lower valuation in its IPO, according to documents filed with the HKSE. Public filings revealed that the?company could offer payouts to?early?investors and more shares at a lower conversion price in exchange for their holdings. The plans confirmed in the public disclosure confirm a report from July in which a direct source said that the company would?compensate its investors for the decrease in valuation including cash payment. Shein's valuation dropped from $98.2?billion in a fundraising round of 2022 to $64?billion in a round of 2023. Sources told us that the firm is looking for a valuation of up to $50 billion at its upcoming IPO. According to filings, the firm has promised to pay investors who invested in its Pre-D and D+ rounds of funding a guaranteed payout equal to an annual return of 8%, or $1.1 billion total. This payment is calculated from the date they bought up to March 4, 2026. It will be paid in three equal payments by cash due at the end of June, March and September 2026. Investors are protected if the company is listed at a lower price than they paid. Investors who own preferred shares will automatically be converted into regular Class B Shares upon listing. Their conversion price is then lowered so that they receive more shares as compensation. Shein didn't immediately respond to an inquiry for comment?on the cash-and-share offer plans. Investors will be looking to see if Shein can justify its $40-$50 billion valuation in an IPO in Hong Kong. The filings on the exchange revealed a slowing of growth, a sharp decline in profits, and a rise in regulatory and legal uncertainty. Reporting by Anjali Sing in Bengaluru, Selena Li and Yantoultra NGi in Sigapore and Nivedita Battacharjee in Singapore; Editing and proofreading by Nivedita Battacharjee & Louise Heavens
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Europe's shrinking river systems reduce power production, transport and company profits
Low water levels have impacted the transport of goods in Europe's rivers, slowed down electricity production and reduced company earnings. This has stoked fears over the impact of extreme heat and unpredictable rainfall on Europe's economy. Europe is experiencing the fastest climate change of any continent, with record-breaking heatwaves. The drought has forced businesses to rethink their business practices. Waterways are becoming less reliable for transporting goods like grains and oil or producing electricity, which is needed by millions of people to cool their homes. Alessandro Armenia is a power analyst with commodities data and analysis firm Kpler. The current dynamic means that either we will see blackouts, or we must invest more. HYDROPOWER & NUCLEAR OUTPUT CUTS Production of nuclear energy in Hungary and hydropower has fallen in Serbia due to record?low levels of water along the Danube. The Danube passes major cities such as Vienna, Budapest, and Belgrade, on its route between Germany and the Black Sea. Paks, a nuclear power station that generates about half of Hungary's electricity will shut down Monday and possibly for several weeks, because the water levels in the river, the cooling water source for the plant, are expected to remain too low to allow it to function safely. Davor Maljokovic, production director at Djerdap?1, Serbia’s largest hydropower station, said that output had fallen to just 20% of its capacity. The once wide shipping channel next to it has now shrunk, exposing sandbanks, gravel bars, and other debris. Serbia's EPS state power utility reported that the lack of water had also?disrupted cooling system at Serbia's Kostolac co-fired power plant, forcing it to reduce output. Both Serbia and Hungary claim they will import electricity to make up for the 'losses,' a costly move when demand is high on the spot market. The state-owned nuclear power company Nuclearelectrica in Romania also shut down one of its reactors this week due to the same issue. A second reactor is expected to follow soon, potentially depriving Romania of a fifth its electricity requirements. France also reduced nuclear power production due to low water levels and rising river temperatures. WATER LEVELS CAN ALSO DELAY TRANSPORTATION The energy industry is not the sole loser. Cezar Gheorghe, consultant AGRIColumn in Romanian grain markets, told farmers on the Danube that they were having difficulty shipping their crops due to low water levels. Only the ports closest to the Black Sea are still operational. Gheorghe stated that barges cannot pass through other ports. "Crops purchasers could offer lower prices to farmers and load them into trucks. However, there may also be a lack of trucks." A port spokesperson said that the amount of cargo being transported from and to Rotterdam, Europe's biggest sea port, to the Rhine is about 10% less than usual. This has been happening every week since July began. Chemical and oil products tankers, and dry bulk carriers in particular are affected by the?larger draught of container barges. This means that they need to be positioned deeper and at greater depths. The drought has reduced company earnings. Apart from the devastation caused by wildfires, and the temperatures that have led to thousands of deaths in excess, the climate change has also affected the balance sheets of companies. Austrian utility Verbund said that the drought conditions in the first half of last year reduced earnings by EUR370 million compared to a year with normal hydrological conditions. French utility EDF announced on Friday that earnings for the full year before interest, taxes, depreciation, and amortization in 2026 would be down by 10% due to low market prices, and heatwaves reducing power output. The Po River basin in Italy has reached a high level of water scarcity. This is threatening the rice crops and water supply for drinking throughout the north. Renato Mazzoncini is the Chief Executive Officer of A2A regional utility. He expects hydropower production to be 3.9 TWh this year, compared with a historical average. He said that "some of our reservoirs were under pressure." "We need to do a rain dance." (Additional reporting from Inti Landauro, Brussels; Giancarlo Navach, Milan; Danny Callaghan, Gdansk; Marleen Kasselbier, Zurich; Rene Wagner, Berlin; Writing and editing by Edward McAllister)
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Data shows that Russian pipeline gas exports into Europe fell by 5.2% year-on-year in July.
Calculations showed that the average daily natural gas supply to Europe by Russian energy giant Gazprom via TurkStream's undersea pipe fell 5.2% compared to a year earlier, falling from 48.8 million cubic meters in July. The only remaining transit route for Russian gas into Europe is through Turkey after Ukraine did not extend the five-year transit agreement with Moscow that expired in January of 2025. According to calculations based on data from the European Gas Transmission Group Entsog, total Russian gas supplies via TurkStream were?at 1,51 billion cubic metres in July last year. This is down from 1,59 bcm. The first seven months of this year saw a 3.5% increase in supplies to approximately 10.25 bcm?year-onyear. Gazprom has not responded to a request for comment. It hasn't published its own statistics every month since?2023. According to calculations, the company's exports of gas to Europe dropped by 44% in the past year,?to only 18 bcm. This is the lowest since the mid-1970s, following the closing of the Ukrainian transit route. calculations. In 2018-2019, Russian pipeline gas exports to Europe reached a peak of around 180 billion cubic meters per year. (Reporting and editing by Andrew Osborn.)
Data shows that Russia's LNG imports from January to July were up by 11% on a year-over-year basis.
The LSEG preliminary data on Monday showed that Russia's exports grew by?11% from January to July compared with the corresponding period in the previous year. This was due to?supplies?from the Arctic LNG 2 Project.
In the first seven months of this year, the same data shows that Arctic LNG 2 has supplied a total of 2.0 million tonnes.
Total Russian LNG exports rose by 5% in July compared to the same period last year, to a total of?2.1million tons.
Data also revealed that Russian LNG exports into Europe from January to July increased by 11% on an annual basis to?9.8 millions tons. In July, they fell to 0.81 million tonnes from 0.9 millions tons a year ago.
The EU approved the final ban on Russian gas imports in January.
Data showed that the total exports of Novatek's Yamal LNG Plant in the period from January to July were?11,0 million tons. This was the same amount as the previous year.
Sakhalin-2, which is?controlled? by Gazprom?, exported 5.5 millions tons in the first 7 months of the year?, down from 5.6million tons?in the same time period last year?
Gazprom delivered a?LNG cargo to China in July from its Portovaya LNG plant on the Baltic Sea. This was the third shipment to China from the plant since the start of the year. Andrew Osborn, Editor (Reporting)
(source: Reuters)