0845 GMT - Shell's renewables division is likely to remain loss-making in the fourth quarter as the unit continues under scrutiny, Interactive Investor's head of markets Richard Hunter writes. An adjusted earnings loss of up to $600 million--up from a $200 million loss in the third quarter--is expected, he writes. The analyst said that either unproven technologies or unprofitable investments are making progress difficult, adding that Shell's decision to dial back sustainable energy investments last year drew a mixed response, Hunter writes. Shell's stock faces the ever-increasing possibility that some investors will be unwilling or unable to invest given environmental concerns but, for now, the market consensus is that the company is a strong buy, Hunter adds. Shares fall 1.9% at 25.68 pounds. (adam.whittaker@wsj.com)
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Shell's Weak Trading Update Unlikely to Hit Shareholder Returns -- Market Talk
0814 GMT - Shell's fourth-quarter trading update shows weakness across its oil, gas and power divisions, but this shouldn't affect shareholder returns, RBC Capital Markets analysts Biraj Borkhataria and Adnan Dhanani write. The analysts regard the update as negative and believe it will result in downgrades to consensus earnings expectations. Shell booked a $1.3 billion charge related to emission permits and warned of hedging contracts dragging on its integrated gas division. But because these charges are non-cash, the weaker results shouldn't harm shareholder payouts or Shell's broader outlook, the analysts write. Shares fall 1.8% to 25.70 pounds.(adam.whittaker@wsj.com)
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Galp CEO Exit Likely to Fuel Acquisition Expectations -- Market Talk
0740 GMT - Galp CEO Filipe Silva's surprise resignation is likely to fuel expectations about a potential acquisition of the Portuguese energy company, RBC Capital Markets' Biraj Borkhataria and Adnan Dhanani say in a research note. Chevron seems the most logical buyer of Galp, the analysts say. "Filipe [Silva]'s legacy has been to 'tidy up' Galp's priorities in the energy transition, simplifying the low carbon strategy, while also streamlining the upstream portfolio through the asset sales in Angola & Mozambique," the analysts say. All of this and near-term growth expectations thanks to a project in Brazil make Galp an appealing target for a bigger peer, RBC says. (adria.calatayud@wsj.com)
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Coal Consumption in China, India Still Strong Despite Renewables Growth -- Market Talk
0705 GMT - Coal consumption in China and India is still going strong despite growing renewable energy capacity, Bahana Sekuritas analysts say in a research report. Rising global electricity consumption, driven mainly by China and India, is likely to fuel coal consumption growth, particularly as the two countries begin to rely more on domestic coal production to support energy independence, the analysts say. Coal prices may stay resilient on balancing supply-demand dynamics amid headwinds faced by other commodities, the analysts add. Bahana Sekuritas upgrades Indonesia's coal mining sector to overweight from neutral. The brokerage's top sector pick is United Tractors, for which it raises the target price to IDR32,000.00 from IDR27,850 with an unchanged buy rating. Shares are 1.3% lower at IDR25,525.00. (ronnie.harui@wsj.com)
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China's EV Demand, Prices May Trend Lower in the First Quarter -- Market Talk
0658 GMT - The demand and pricing of electric vehicles in China may trend down in the first quarter amid the winter seasonality, HSBC Global Research analysts write in a note. EV demand was strong during the 4Q high season but there were signs of softer pricing towards the end of the year, they say. HSBC Global Research downgrades its rating on Great Wall Motor and Zhongsheng Group to reduce from hold and NIO to hold from buy. However, the brokerage forecasts EV penetration in China may rise to 60% this year. This could help the industry consolidate in the long term and further advance its autonomous driving technology, they add. (jiahui.huang@wsj.com; @ivy_jiahuihuang)
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South Sudan Oil Exports on the Move After Pipeline Repairs -- Market Talk
0632 GMT - South Sudan resumes exports of its Dar blend crude oil after neighbouring Sudan lifted a force majeure and the completion of repairs to a key export pipeline to the Red Sea, says oil minister, Puot Kang Chol. Crude exports, which averaged around 150,000 barrels/day in 2023, came to an abrupt halt in March last year after the main pipeline ruptured in a territory controlled by paramilitary force, Rapid Support Forces. Chol notes that exports resume on January 8 after improved security measures, "Following the resolution of pipeline and security concerns and the lifting of force majeure, we are restarting operations with the full support of our international partners," he says; "This restart will have a significant positive impact on South Sudan's economy."(Nicholas.Bariyo@wsj.com;@Nicholasbariyo)
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Aluminum, Alumina Prices May Diverge After Lunar New Year -- Market Talk
0419 GMT - The path ahead for alumina and aluminum is expected to diverge following the Lunar New Year holiday that begins in end-January, HSBC analyst Howard Lau says in a note. Aluminum and alumina futures have slumped since the start of 2025 as a supply shortage eases, with demand falling in the traditional off-season before the Lunar New Year and as new capacity ramps up, Lau says. Going forward, aluminum should rebound, with demand-supply dynamics staying favorable. Supply growth is expected to be limited, while structural demand growth from renewables should offset China property-sector weakness, he says. The alumina supply situation should continue to improve, however, weighing on prices that remain much higher than the average over recent years. LME three-month aluminum is 0.2% lower at $2,513.50 a ton. (hoishan.chan@wsj.com)
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Iron Ore Drops; Investor Remain Cautious Before Trump Inauguration -- Market Talk
0314 GMT - Iron-ore prices are lower in early Asian trade. Investors are cautious before the inauguration of Donald Trump, Nanhua Futures says in a research note. Market expectations could change completely if China unveils more supportive policies in the near term, Nanhua says. Inventories at Chinese ports are declining, providing some support for ferrous metal demand, it adds. There is a low likelihood of a sharp drop in iron-ore prices based on fundamentals, it adds. The most-traded iron-ore contract on the Dalian Commodity Exchange is down 0.5% at CNY749.5 a ton. (sherry.qin@wsj.com)
Write to Barcelona Editors at barcelonaeditors@dowjones.com
(END) Dow Jones Newswires
01-08-25 1014ET