Falih: ‘We are Falling Behind, We Need to Keep Pace with the World in Chemical Sector’

Saudi Energy Minister Khalid al-Falih. Reuters
Saudi Energy Minister Khalid al-Falih. Reuters
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Falih: ‘We are Falling Behind, We Need to Keep Pace with the World in Chemical Sector’

Saudi Energy Minister Khalid al-Falih. Reuters
Saudi Energy Minister Khalid al-Falih. Reuters

Saudi Arabia’s Energy Minister Khalid al-Falih said that the Gulf region can claim only two percent of the world’s $4 trillion a year in chemicals revenue, including all the branches of downstream value addition despite its commodity leadership position in oil and gas leadership and production.

He said that this is largely due to the Gulf’s limited position in higher and value-added products.

“For example, our region’s share of global specialties revenues is barely one percent compared to 25 percent for Western Europe, and we account for only three percent of worldwide value addition from chemicals, compared to the 25 percent of value addition that comes from the United States,” Falih said.

The region locally consumes only about 18 percent of petrochemicals for conversion into higher value products while more than 80 percent are exported.

In return, the United States exports only one-third of its petrochemical production as basic commodities while the two-thirds are usually converted into higher value products, Falih explained.

“I urge our regional industry to match the US conversion rates by the year 2030. Likewise, the US and European chemical industries each employ between five and six million worker, directly and indirectly, compared to only about half a million here in the entire GCC.”

We are also falling behind our global competitors in terms of operational excellence since our region’s operating costs exceed US levels by between 15 and 20 percent and China's levels by double these percentages, Falih noted.

As a result, the profitability of the sector and its macroeconomic benefits have declined significantly. The competitive cost structure depends largely on the cost advantages of the feedstock rather than on the cost of production, Falih said, stressing the need for concerted efforts by the government, industry, investors and innovators to bridge these gaps.

“In other words, if we are to take a leadership position that corresponds to the immense potential of our region, the future-oriented progressive government policies must be supported by sound institutional strategies as well as an environment that fosters entrepreneurship, venture capital, research and development,” he said while delivering the inaugural address at the 12th Annual Gulf Petrochemicals and Chemicals Association (GPCA) Forum in Dubai.



Macron and Scholz Call for Re-balancing China Trade

Chancellor Scholz will have to balance encouraging words on economic cooperation with the EU's strident message accusing China of unfair subsidies © JOHN THYS / AFP/File
Chancellor Scholz will have to balance encouraging words on economic cooperation with the EU's strident message accusing China of unfair subsidies © JOHN THYS / AFP/File
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Macron and Scholz Call for Re-balancing China Trade

Chancellor Scholz will have to balance encouraging words on economic cooperation with the EU's strident message accusing China of unfair subsidies © JOHN THYS / AFP/File
Chancellor Scholz will have to balance encouraging words on economic cooperation with the EU's strident message accusing China of unfair subsidies © JOHN THYS / AFP/File

French President Emmanuel Macron and German Chancellor Olaf Scholz called on Friday for a "re-balancing" of trade relations between Europe and China on the eve of the German leader visiting Beijing.

In a video call between the two European leaders, they also discussed the impact of the war in Ukraine on European security, officials in Macron's office said.

Scholz travels to China this weekend for a delicate three-day trip at a time when the West is sharpening its tone towards Beijing, both about its trade practices and its closeness to Moscow, AFP reported.

The European Union has accused China of inundating Europe with subsidised goods sold at below-market prices.

The European Commission on Tuesday opened a probe into Chinese wind turbine suppliers, following investigations into state aid for solar panels, electric cars and trains.

In their call, Macron and Scholz also underlined the need to "spur European competitivity", notably by deepening pan-European capital markets, a project that would require harmonising financial rules across the bloc, but which has been held up by disagreements between Paris and Berlin.

The two also reaffirmed their "unwavering and long-term support for Ukraine" and "discussed European initiatives to provide military support for Ukraine," Macron's office said.

The French president has been expected to visit Ukraine for several weeks, but he has said he will only make the trip when he has something concrete to bring.

Macron and Scholz will meet face-to-face at a joint French-German cabinet meeting May 28 in Meseberg, near Berlin, which will coincide with a state visit to Germany by the French president.


Google Cloud Boasts Consistent Service Across Region, US

CEO of Google Cloud Thomas Kurian (Google)
CEO of Google Cloud Thomas Kurian (Google)
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Google Cloud Boasts Consistent Service Across Region, US

CEO of Google Cloud Thomas Kurian (Google)
CEO of Google Cloud Thomas Kurian (Google)

Google Cloud CEO Thomas Kurian, speaking to Asharq Al-Awsat on the sidelines of the “Google Cloud Next ‘24” event in Las Vegas, affirmed that Google Cloud’s presence in Saudi Arabia, Qatar, and Kuwait sets it apart from its digital cloud competitors.

Kurian pointed out that the services offered by his company in those countries are the same as those provided in the US, ensuring global consistency and uniformity.

He noted that while some other service providers offer similar services, not all are available in these countries compared to Google Cloud.

Kurian emphasized that Google Cloud provides a “grocery store” of choices catering to the diverse needs of businesses, stressing that a one-size-fits-all artificial intelligence model won't suffice, as companies require a cloud platform offering multiple services to tailor to their specific needs.

Meanwhile, Abdulrahman bin Mohammed Al-Thehaiban, the managing director of Google Cloud for the Middle East, Türkiye and Africa region (META), stated that artificial intelligence will revolutionize industries and businesses.

He highlighted that governments and organizations in the Middle East are reaping the full benefits of Google Cloud’s investments in artificial intelligence, particularly through its hubs in Dammam and Doha launched in May and November last year.


ECB Poll: Economists Confident Euro Zone Inflation Will Fall to 2%

The building of the European Central Bank (ECB) appears on the horizon during sunset in Frankfurt, Germany, December 2, 2023. REUTERS
The building of the European Central Bank (ECB) appears on the horizon during sunset in Frankfurt, Germany, December 2, 2023. REUTERS
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ECB Poll: Economists Confident Euro Zone Inflation Will Fall to 2%

The building of the European Central Bank (ECB) appears on the horizon during sunset in Frankfurt, Germany, December 2, 2023. REUTERS
The building of the European Central Bank (ECB) appears on the horizon during sunset in Frankfurt, Germany, December 2, 2023. REUTERS

Economists are sticking to their view that inflation in the euro zone will fall to 2% and stay there, a European Central Bank poll showed on Friday, in comforting news as the ECB prepares to cut interest rates.

The ECB's latest Survey of Professional Forecasters (SPF) put inflation at 2.4% this year and 2.0% in 2025, 2026 and in the longer term -- unchanged from the previous round of the poll three months earlier, Reuters reported.

Revisions to economic growth forecasts were minimal, with GDP seen expanding by 0.5% this year, 1.4% next year and in 2026, and 1.3% thereafter.

The ECB held interest rates at a record high on Thursday but signalled it could start cutting as soon as June, even though stubbornly high US inflation could stop the US Federal Reserve from following close behind.

The SPF's results are based on responses from 61 economists at European companies and financial institutions polled between March 18 and 21.


China’s Government: Natural Disasters Cost $3.3 Billion in First Quarter

FILE PHOTO: Paramilitary police officers remove snow from a road following snowfall in Beijing, China February 21, 2024. REUTERS/Florence Lo/File Photo
FILE PHOTO: Paramilitary police officers remove snow from a road following snowfall in Beijing, China February 21, 2024. REUTERS/Florence Lo/File Photo
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China’s Government: Natural Disasters Cost $3.3 Billion in First Quarter

FILE PHOTO: Paramilitary police officers remove snow from a road following snowfall in Beijing, China February 21, 2024. REUTERS/Florence Lo/File Photo
FILE PHOTO: Paramilitary police officers remove snow from a road following snowfall in Beijing, China February 21, 2024. REUTERS/Florence Lo/File Photo

Floods, droughts, an earthquake and freezing conditions in China caused direct economic losses of 23.76 billion yuan ($3.28 billion) in the first quarter, the government said on Saturday.

The emergency management ministry cited damage from several cold spells, a 7.1 magnitude earthquake in the northwestern region of Xinjiang, landslides in Yunnan province in the southwest and flooding on the Yellow River.

The disasters killed 79 people while 110,000 needed emergency relocation and resettlement and 10.4 million people across 26 regions and provinces were affected in the period, the ministry said in a report, according to Reuters.

Other natural disasters included a drought in the southwest affecting 424,000 hectares (10,500 acres) of crops, sandstorms in the northwest and forest fires in the southwest and south.

Last year natural disasters in China caused 345.45 billion yuan ($47.7 billion) of direct economic losses, with 691 people dead or missing, the ministry reported in January.

In January the ministry said it plans a three-year campaign to tackle problems hampering response times during disasters and accidents, including production safety lapses in sectors like mining.


Euro Reaches Five-Month Low

Common currency dropped nearly 1% to $1.0631 on Friday, breaching the previous low of the year set in February  - Reuters
Common currency dropped nearly 1% to $1.0631 on Friday, breaching the previous low of the year set in February - Reuters
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Euro Reaches Five-Month Low

Common currency dropped nearly 1% to $1.0631 on Friday, breaching the previous low of the year set in February  - Reuters
Common currency dropped nearly 1% to $1.0631 on Friday, breaching the previous low of the year set in February - Reuters

The euro fell to its lowest level this year as the European Central Bank looks set to cut interest rates before the Federal Reserve, fueling market discussion of just how much further it could fall.

The common currency dropped nearly 1% to $1.0631 on Friday, breaching the previous low of the year set in February and reaching the weakest in five months. It’s headed for a 2% weekly decline, which would be the worst since late 2022, according to Bloomberg.

The selloff, which follows the ECB’s clearest signal yet rate cuts are looming, is fueling talk among strategists that the euro can fall further to $1.05 by mid-year and even reach parity if the Fed stays on hold this year.

Banks including Bank of America Corp. ING Bank NV and Germany’s LBBW have already warned on the risk.

Adding to pressure on Friday were reports that Israel is bracing for a possible attack from Iran, which boosted demand for the safe-haven dollar.


Stocks Suffer Sharpest Weekly Decline during 2024

All three major indexes fell more than 1%, and registered losses on the week - Reuters
All three major indexes fell more than 1%, and registered losses on the week - Reuters
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Stocks Suffer Sharpest Weekly Decline during 2024

All three major indexes fell more than 1%, and registered losses on the week - Reuters
All three major indexes fell more than 1%, and registered losses on the week - Reuters

Stocks slumped to a second consecutive weekly loss on Friday, as intensifying tension in the Middle East prompted caution among investors.

All three major indexes fell more than 1%, and registered losses on the week.

The S&P 500 index (.SPX), opens new tab notched its biggest weekly percentage loss since January, while the Dow Jones Industrial Average's (.DJI), opens new tab weekly loss was its steepest since March 2023.

"When we look at what's happened in the macro space, inflation has taken a turn for the worse and that has put more pressure on companies to deliver this earnings season," said Mike Dickson, head of research at Horizon Investments in Charlotte, North Carolina, Reuters reported.

"Everyone's a bit jittery with intense focus on how good earnings need to be."

Results from a trio of big banks marked the unofficial launch of first-quarter earnings season.

JPMorgan Chase & Co (JPM.N), opens new tab, the biggest US bank by assets, posted a 6% profit increase but its net interest income forecast fell short of expectations. Its shares slid 6.5%.

Wells Fargo & Co's (WFC.N), opens new tab stock inched lower after profits fell 7% as net interest income dropped on weak borrowing demand.

Citigroup (C.N), opens new tab posted a loss after spending on employee severance and deposit insurance. Its stock dipped 1.7%.

Economic data this week, particularly Wednesday's hotter-than-expected Consumer Price Index report, has suggested that inflation could be stickier than previously thought, prompting investors to reset expectations about the timing and extent of the US Federal Reserve's rate cuts this year.

US Steel (X.N), opens new tab slid 2.1% after shareholders voted to approve a proposed merger with Nippon Steel Corporation (5401.T), opens new tab.

Declining issues outnumbered advancers on the NYSE by a 4.19-to-1 ratio; on Nasdaq, a 3.16-to-1 ratio favored decliners.

The S&P 500 posted 12 new 52-week highs and nine new lows; the Nasdaq Composite recorded 35 new highs and 211 new lows.


World Bank Chief Pushes Internal Reforms at Spring Meetings

World Bank chief Ajay Banga leaves after attending the G20 Finance Ministers, Central Bank Governors (FMCBG) and Finance & Central Bank Deputies (FCBD) meetings, at the Mahatma Mandir in Gandhinagar on July 17, 2023. (AFP)
World Bank chief Ajay Banga leaves after attending the G20 Finance Ministers, Central Bank Governors (FMCBG) and Finance & Central Bank Deputies (FCBD) meetings, at the Mahatma Mandir in Gandhinagar on July 17, 2023. (AFP)
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World Bank Chief Pushes Internal Reforms at Spring Meetings

World Bank chief Ajay Banga leaves after attending the G20 Finance Ministers, Central Bank Governors (FMCBG) and Finance & Central Bank Deputies (FCBD) meetings, at the Mahatma Mandir in Gandhinagar on July 17, 2023. (AFP)
World Bank chief Ajay Banga leaves after attending the G20 Finance Ministers, Central Bank Governors (FMCBG) and Finance & Central Bank Deputies (FCBD) meetings, at the Mahatma Mandir in Gandhinagar on July 17, 2023. (AFP)

World Bank President Ajay Banga said on Friday he plans to highlight a range of process improvements next week to speed up the development lender's loan approvals, improve the accountability of its 16,000 employees and attract private capital to projects.

Banga told reporters ahead of the World Bank and International Monetary Fund spring meetings that the development lender had reduced its average 19-month project approval time by about three months and would cut it by another three months by the middle of next year.

Banga, a former MasterCard CEO who took over the helm of the World Bank last June, is guiding the lender's expansion of its traditional development and anti-poverty mission to include fighting climate change and other global crises. This requires far greater resources and a major expansion of its lending capacity, which was $128.3 billion in the fiscal year ended June 30, 2023.

The World Bank adjusted its loan-to-equity ratio to unlock another $40 billion of lending capacity over 10 years, but this falls far short of the trillions of dollars needed annually to finance the global energy transition and climate mitigation.

Banga said more steps were underway, including joint work with other multilateral development banks and credit ratings agencies to unlock the use of callable capital, the emergency capital pledged by governments but not paid in.

Banga said the World Bank will launch a new enterprise-wide platform for loan and insurance guarantees that puts it on a path to more than triple its guarantee issuances to $20 billion by 2030.

But a major new securitization initiative could also attract vast amounts of private capital.

"We are at the beginning of a years-long effort to build a securitization platform for the emerging markets, making it easier for institutional investor - pension funds, insurance companies and sovereign wealth funds - to bring some portion of the $70 trillion they manage to these developing countries."

The World Bank also is reforming its business planning and budgeting processes to find savings to redeploy elsewhere, including $144 million from improving productivity at its core International Bank for Reconstruction and Development and International Development Association arms, Banga said.

He added that a unified approach to real estate had saved the lender $150 million for 2023 and 2024.

"We want to start every year looking for 5% productivity savings from our expenses," Banga said. "This is all part of the work that we are trying to do to get the plumbing of the Bank to work even better."

In addition, the World Bank has recently launched a new "corporate scorecard" to measure its performance based on development and climate outcomes rather than dollars deployed. The new scorecard has 22 categories, down from the previous 153, Banga said.


EU Pledges Egypt 1 Billion Euros in Financial Aid

 A boy checks the calendula flowers, usually exported and used for cosmetics, pharmaceuticals, and traditional medicine, during the annual calendula flower harvest, at a field in Al Fayoum Governorate, southwest of Cairo, Egypt March 21, 2024. (Reuters)
A boy checks the calendula flowers, usually exported and used for cosmetics, pharmaceuticals, and traditional medicine, during the annual calendula flower harvest, at a field in Al Fayoum Governorate, southwest of Cairo, Egypt March 21, 2024. (Reuters)
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EU Pledges Egypt 1 Billion Euros in Financial Aid

 A boy checks the calendula flowers, usually exported and used for cosmetics, pharmaceuticals, and traditional medicine, during the annual calendula flower harvest, at a field in Al Fayoum Governorate, southwest of Cairo, Egypt March 21, 2024. (Reuters)
A boy checks the calendula flowers, usually exported and used for cosmetics, pharmaceuticals, and traditional medicine, during the annual calendula flower harvest, at a field in Al Fayoum Governorate, southwest of Cairo, Egypt March 21, 2024. (Reuters)

The EU on Friday said it would provide Egypt with 1 billion euros ($1.07 billion) in short-term financial aid to help stabilize the country's economy.

Egypt agreed last month to an expanded $8 billion support program with the International Monetary Fund and a deal with the EU worth billions to boost cooperation and help curb migration, as it is struggling with a prolonged economic crisis linked to chronic foreign currency shortages.

The 1 billion euros in short-term aid is part of a bigger package worth 5 billion euros in loans, the statement said. Another 4 billion euros were scheduled as longer-term assistance over the period 2024-2027, but still had to be adopted by the bloc's 27 members.

The loan is meant to address Cairo's deteriorating fiscal situation and financial needs, notably after the outbreak of the Gaza war, the Houthi militia attacks in the Red Sea and the repercussions of Russia's war of aggression against Ukraine, the statement said.


Industrial Metal Prices Jump

Copper has risen nearly 10 per cent since the start of 2024 and hit a 15-month high of $9,523 per metric tonne on Tuesday. (Photo by Reuters)
Copper has risen nearly 10 per cent since the start of 2024 and hit a 15-month high of $9,523 per metric tonne on Tuesday. (Photo by Reuters)
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Industrial Metal Prices Jump

Copper has risen nearly 10 per cent since the start of 2024 and hit a 15-month high of $9,523 per metric tonne on Tuesday. (Photo by Reuters)
Copper has risen nearly 10 per cent since the start of 2024 and hit a 15-month high of $9,523 per metric tonne on Tuesday. (Photo by Reuters)

Industrial metals including copper and zinc have outperformed global stocks this year as signs of a revival in demand from Chinese manufacturers add to concerns over tighter global supply.

An index tracking the performance of six industrial metals on the London Metal Exchange has climbed 8 per cent since the start of 2024, outpacing a 6.3 per cent rise for MSCI’s index of worldwide stocks, The Financial Times reported.

The index, which also includes lead, aluminium, tin and nickel, has risen sharply this month as investors grow more confident that an extended period of high global interest rates, intended to curb inflation, will not choke off economic growth.

At the same time, analysts have raised concerns that production snags from miners will constrain supplies. “Hopes for a global recovery in demand this year are supporting higher prices for industrial metals,” said Ewa Manthey, a commodities strategist at ING.

Traders have also welcomed the first signs of returning demand from China, whose economic performance has sputtered since it came out of its tough-line coronavirus policies in December 2022.

The latest Chinese purchasing managers’ index, published at the end of March, signalled an expansion in factory activity in March for the first time since September. Copper has risen nearly 10 per cent since the start of 2024 and hit a 15-month high of $9,523 per metric tonne on Tuesday.

The metal, which has a wide range of uses including in construction, power lines and electric vehicles, is widely seen as a key barometer of global economic health.

The gains have come as analysts fret over the impact of tighter supplies from miners.

In March, Chinese copper smelters, which process more than half of the world’s supplies of the red metal, agreed to embark on rare joint production cuts in order to cope with the shortage of raw materials, although no final deal has yet been reached.

Morgan Stanley now expects mined copper output to fall 0.7 per cent this year.


ECB Holds Rates at Record Highs, Signals Upcoming Cut

FILE PHOTO: The building of the European Central Bank (ECB) is seen amid a fog in Frankfurt, Germany December 15, 2022. REUTERS/Wolfgang Rattay/File Photo
FILE PHOTO: The building of the European Central Bank (ECB) is seen amid a fog in Frankfurt, Germany December 15, 2022. REUTERS/Wolfgang Rattay/File Photo
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ECB Holds Rates at Record Highs, Signals Upcoming Cut

FILE PHOTO: The building of the European Central Bank (ECB) is seen amid a fog in Frankfurt, Germany December 15, 2022. REUTERS/Wolfgang Rattay/File Photo
FILE PHOTO: The building of the European Central Bank (ECB) is seen amid a fog in Frankfurt, Germany December 15, 2022. REUTERS/Wolfgang Rattay/File Photo

The European Central Bank kept interest rates at record highs on Thursday but sent an even clearer signal that it may be preparing to cut them as euro zone inflation continues to fall.

The central bank for the 20 countries that share the euro currency kept its deposit rate at 4.0%, where it has been since September as part of a 1-1/2-year effort to rein in prices.

But, with inflation now close to the ECB's 2% target, bank lending at a standstill and the economy barely growing, the ECB dropped fresh hints about a possible cut at its next meeting.

"If the Governing Council’s updated assessment of the inflation outlook, the dynamics of underlying inflation and the strength of monetary policy transmission were to further increase its confidence that inflation is converging to the target in a sustained manner, it would be appropriate to reduce the current level of monetary policy restriction," the ECB said, Reuters reported.

ECB policymakers, including those who typically favour higher rates, have been lining up behind a rate reduction at their June 6 meeting, provided key indicators including wage growth and underlying inflation continue to moderate.

But that decision may now be complicated by uncertaintywhether the Federal Reserve will be able cut its own rates in June as US inflation stays stubbornly above its goal.

ECB President Christine Lagarde is likely to be asked about the central bank's plans for June and the possibility of a further cut in July at her regular news conference at 1245 GMT.

With Thursday's decision, the ECB also left the interest rate on its daily and weekly loans for banks at 4.75% and 4.50% respectively.

Banks have barely tapped these auctions for years as they still have plenty of cash from last decade's money-printing programs.