International News 20 January 2025
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Chinese car investor seeks to acquire shuttered German car plant
Reports indicate that Chinese automotive manufacturers are expressing interest in acquiring German manufacturing facilities, including those owned by Volkswagen, which are scheduled to be closed. This strategic move is intended to enhance China's presence in the German automotive sector and circumvent the European Union's (EU) import tariffs on electric vehicles (EVs). By producing EVs locally in Germany, Chinese manufacturers can bypass the high import duties and benefit from the growing demand for EVs in the country. In response to the EU's decision to increase import duties on Chinese EVs to over 45% in 2024, China has taken measures including the imposition of temporary tariffs on EU brandy products and the threat of increased tariffs on fossil-fuelled cars. The presence of Chinese investment in Germany is not a recent development, with Chinese shareholders already holding stakes in Mercedes-Benz. In addition, China has initiated legal proceedings at the World Trade Organization (WTO) to challenge what it sees as the EU's protectionist trade policies.
Oil Prices Slightly Fall After Surge on Drop in US Stockpiles and Russia Sanctions
Following the announcement of new sanctions against Russia by US President Joe Biden and a larger-than-expected decline in US crude stockpiles, world crude oil prices dipped slightly after reaching their highest levels in months. Brent crude futures fell by 0.8% to $81.35 a barrel, while US West Texas Intermediate (WTI) crude fell by 0.9% to $79.35 a barrel. On the previous day, Brent crude had surged by 2.6% to its highest level since July 2020, and WTI crude had soared by 3.3% to its highest level since July 2019. The US sanctions imposed on Russia have prompted the country's major oil customers to seek alternative suppliers, resulting in increased shipping rates. Despite the rise in oil prices, analysts anticipate that the OPEC+ group of oil producers will remain cautious about increasing production. Additionally, data from the US Energy Information Administration revealed a decline in US crude oil stockpiles.
US Import Prices Rise Slightly in December, American Inflation Still Under Control
US import prices rose slightly in December for the third consecutive month, driven by higher fuel and food prices. However, price declines in other sectors offset some of the gains. This is seen as a positive sign for future inflation prospects. The 0.1% rise in import prices last month was in line with economists' expectations. On an annualised basis, US import prices rose 2.2% in December, up from a 1.4% increase in November. While consumer inflation rose on the back of higher energy and food prices, the overall trend of decelerating inflation is still evident, with prices outside these volatile components rising only marginally. On the monetary policy front, the Federal Reserve is expected to leave its key interest rate unchanged at its upcoming meeting, with financial markets expecting a rate cut in June. The US central bank has already cut its benchmark rate by 100 basis points since September.Medco Energi has provided an interest-free loan of USD 435.28 million to a business unit. The loan will be used to refinance the subsidiary's debt and has no impact on the company's financial position or operations.