This week, the war was at the forefront of pricing pressure. The Ukrainian army, following the US-supplied ATACMS missiles, expanded its use of long-range weapons supplied by the West, and launched its first strike on military targets in Russia with British-made Storm Shadow missiles. The move suggests that the thousand-day war has entered a new phase. While Putin has indicated that he is ready to negotiate a potential ceasefire with Trump, this suggestion is being met with skepticism by Western officials. NATO officials argue that Putin is not ready for serious negotiations and aims to expand his territorial gains in Ukraine and remove Ukrainian forces from the Kursk region. Trump’s return to the White House also increases the possibility of a sharp decline in US aid to Ukraine. Ukrainian President Volodymyr Zelenskyy has once again emphasized that his country will not compromise on its sovereignty or territory.
Russian President Vladimir Putin accused the West of provoking a global conflict in a statement following the Western-backed missile attacks on Ukraine. Russian television channels cut their broadcasts on Thursday evening and broadcast Putin’s statement without making any announcement. This statement was shared on the Kremlin’s website a while later. Putin stated that following Ukraine’s attacks with US-made ATACMS and UK-made Storm Shadow missiles, Russia responded to the Southern Machine-Building Plant with the Oreshnik hypersonic ballistic missile. Emphasizing that the Oreshnik could not be intercepted by modern air defense systems, Putin stated that these missiles were a response to the US’s missile deployment plans.
The Euro/Dollar parity fell to $1.04, the lowest level in a year. This is the sharpest decline since the 2022 energy crisis. Vincent Mortier, Chief Investment Officer of Amundi, Europe's largest asset management company, stated that volatility in the foreign exchange market will return and predicted that the Euro/Dollar parity could fall to 1 next month. Mortier stated that the euro will fall due to technical factors, interest and growth differences, and expressed that he thinks the euro will strengthen again next year.
As temperatures drop below seasonal norms in Europe, energy demand is increasing. Natural gas storage is beginning to be withdrawn after remaining above 95 percent, putting pressure on supply.
Donald Trump's victory in the recent US elections, especially with possible policy changes regarding liquefied natural gas (LNG) exports, is increasing uncertainty in global gas markets. We see that Dutch TTF contracts are persistently above 40 Euros in the first cold wave reaching Europe. US natural gas producers expect the increasing demand for liquefied natural gas (LNG) exports to support production growth in 2025.
According to the latest report by the Energy Information Administration (EIA), production is expected to fall slightly in 2024, while production levels are expected to recover in 2025. Many producers have cut supply after Henry Hub benchmark spot prices in Louisiana fell to their lowest level in 32 years in 2023. But analysts predict rising LNG export demand will push gas prices up more than 40% next year compared with 2024 levels.
The air cargo sector is experiencing a busy period due to high demand from China and logistics disruptions. Increasing cargo prices, especially ahead of the end of November discount and the New Year season, are forcing operators to reorganize their routes. The strong demand for online products from China is causing significant increases in prices for cargo transportation from Asia to the US and Europe. According to market analysis firm Xeneta, cargo fees from Asia to the US increased by 49% year-on-year in October to $5.46 per kilogram, while from Asia to Europe they increased by 25%.
The basis of this increase is the rapid response of China-based e-commerce groups to Western consumers' demand for cheap products. The US and the European Union are discussing lifting import tax exemptions for low-value products in response to these trends. Prioritizing flights from Asia could lead to price increases on other routes. Danish logistics firm DSV has warned that logistics costs in the US and Europe could increase due to the capacity allocated to Asia.
There are new developments on the global food supply side. US President Trump’s plans to increase import tariffs are causing great concern among Italian food and beverage producers. Fearing that prices of products such as Parmesan cheese, olive oil and wine could rise, producers are accelerating their shipments to the US ahead of the tariffs. However, container shortages and production times for products are limiting these efforts. Tuscany and Umbria olive oil producer Michele Buccelletti said they aim to increase the amount of olive oil they normally send to the US from 20-30 thousand liters to 50 thousand liters per year.
Similarly, Bologna-based Granarolo is working to send more Parmigiano Reggiano and Grana Padano to the US. However, Granarolo General Manager Filippo Marchi emphasized that their production capacity is limited due to the long maturation times of the cheeses, and said that the lack of cargo capacity also makes logistics difficult.
Rising oil prices and Russia’s invasion of Ukraine have revived the offshore oil sector at a time when energy security is taking precedence over climate goals.
Global investment in the sector is expected to reach $104 billion in 2023 and to rise to around $140 billion by 2027. However, environmentalists are concerned that plans to produce billions of barrels of new production will undermine commitments to limit global temperature increases to 1.5°C. Industry leaders say that current oil production is decreasing by 4-5% each year, so new discoveries are needed to keep production steady. While companies such as Shell emphasize that offshore platforms can produce oil with a lower carbon footprint, environmentalists say the real problem is the emissions from burning that oil.
BP, which set ambitious targets in its energy transition plans, is making a radical change in its strategy and returning to fossil fuel investments. Other European oil giants such as Shell and Equinor are similarly slowing down low-carbon projects. While the steps are aimed at boosting near-term profitability, they also complicate efforts to limit global temperature increases and increase uncertainty about the future of fossil fuel demand. BP, which announced a goal of focusing on low-carbon energy nearly five years ago, has now begun prioritizing oil and gas projects.
The European plastics sector is experiencing a serious contraction due to energy costs, regulatory burdens and pressures from global competition. According to data released by Plastics Europe, plastic production in Europe will fall by 8.3% by 2023, while plastic recycling has also declined due to lack of demand. This has caused Europe’s share of the global plastics market to fall from 28% in 2006 to 12% last year. The European Commission’s strict environmental regulations are putting pressure on the energy-intensive plastics sector, while the increase in low-cost plastics production on a global scale is further reducing Europe’s competitiveness.
China, in particular, has gained a dominant position in this area, providing 60% of new petrochemical capacities. Even major European plastics producers such as Germany are struggling to resist the pressure created by this global trend. As major players such as ExxonMobil, Sabic and LyondellBasell are closing their facilities in Europe, this decline in the sector has negatively affected not only production but also the plastics recycling sector. Plastics Recyclers Europe said the downward trend in the recycling market has brought many companies to the brink of bankruptcy.
Nvidia continues to surprise investors and the market with its third-quarter fiscal 2025 financial results. The company reported revenue growth of 94% year over year to $35.1 billion, beating the market expectation of $33.2 billion. Net income also increased by 109% to $19.3 billion, pushing earnings per share up from 37 cents to 78 cents. The company maintained its growth momentum, growing revenue by 17% quarter over quarter. Nvidia aims to continue its growth momentum with revenue expectations of $37.5 billion for the current quarter. Annual revenue expectations are shaping up at $140 billion. However, the sustainability of this growth and the impact of supply chain constraints are being closely monitored by analysts.
Ford Global has announced a restructuring plan to adapt to challenging market conditions and electrification in Europe. The company will reduce its workforce in Europe by 2027, cutting 4,000 jobs due to increased competition and economic challenges. This restructuring will primarily impact operations in Germany and the United Kingdom. The statement said that weak demand and economic uncertainties have adjusted plans for electric vehicle production, which will lead to additional shorter working days at the Cologne plant in the first quarter of 2025. Ford pointed to the mismatch between competition and carbon dioxide regulations in Europe and consumer demand, emphasizing the need for industry-wide collaboration to address these issues.
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