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Apple puts supplier Foxconn’s India plant on notice after protests

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Apple said it had placed the southern Indian factory of iPhone assembler Foxconn on probation after both companies found that some worker dormitories and dining rooms did not meet required standards.

Apple did not explain what probation meant.

When it placed the southern India plant of another supplier, Wistron Corp, on probation after unrest last year, it said it would not award that company new business until it addressed the way workers were treated.

The latest action follows protests that erupted this month after more than 250 women who work at the Foxconn plant and live in one of the dormitories were treated for food poisoning. More than 150 were hospitalised, Reuters reported.

The plant, which is located in the town of Sriperumbudur town near Chennai and employs about 17,000 people, was closed on Dec 18. Apple and Foxconn did not say when they expected it to reopen.

A spokesperson for Taiwan’s Foxconn said on Wednesday that it was restructuring its local management team, taking immediate steps to improve facilities and added that all employees would continue to be paid while it makes necessary improvements to restart operations.

An Apple spokesperson said on Wednesday it had dispatched independent auditors to assess conditions at the dormitories “following recent concerns about food safety and accommodation conditions at Foxconn Sriperumbudur.”

Apple said it had found that some of the dormitory accommodations and dining rooms, which were not on the factory’s premises, did not meet its requirements and that it was working with the supplier to ensure a comprehensive set of corrective actions, adding that it will ensure its strict standards are met before the facility reopens.

A senior government official familiar with the matter said Foxconn has been answering queries from the state government on amenities provided to workers. “Once they get clearances from the government, workers will be inducted and the company will resume production,” the official said.

A second official said the reopening of the Foxconn plant in Chennai could be delayed until Monday.

Earlier this week, Reuters reported that Foxconn as well as 11 of its contractors including those who provide food and living facilities, were summoned for a meeting with the state government and that officials had asked Foxconn to review services provided to the workers, including power backup at the hostels, food and water.

The impact on Apple from the closure of the plant, which makes iPhone 12 models and has started trial production of the iPhone 13, is expected to be minimal, analysts have said. But the factory is strategic in the long term as the U.S. tech giant tries to cut its reliance on its Chinese supply chain amid trade tensions between Washington and Beijing.

(Reporting by Sayantani Ghosh, Sudarshan Varadhan in Chennai, Chandini Monappa in Bengaluru, Dawn Chmielewsk in Los Angeles and Stephen Nellis in San Francisco; Editing by Christian Schmollinger, Kenneth Maxwell and Raju Gopalakrishnan)

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Stocks plunge into the red then rebound as uncertainty returns to markets – CBC News

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Stock markets plunged into the red before recovering to finish the day in positive territory on Monday, as fears over war in Ukraine and higher interest rates in the U.S. and Canada took investors on a wild ride.

Early in the afternoon, the Dow was off by more than 1,000 points, or about three per cent, and the tech-heavy Nasdaq was faring even worse as investors worried about the prospect of war in Ukraine.

“What really sparked the sell-off today is the fact that we seem to be marching inexorably towards a full-scale invasion of Ukraine by Russia,” Dennis Mitchell, CEO of Toronto-based investment firm Starlight Capital, said in an interview.

Canadian shares were not exempt from the sell-off, as the benchmark Canadian index was on track for its worst day in months, down more than 600 points, or three per cent at one point.

In the afternoon, however, the market changed direction and investors started buying up shares. All three major U.S. stock groupings, the Dow Jones Industrial Average, the S&P 500 and the Nasdaq, finished the day in positive territory.

“The selling that you’re seeing today is usually a good indication that this is a good buying moment,” Mitchell said.

After falling nearly three per cent by midday, the TSX mounted a comeback of its own in the afternoon but fell short of reversing its losses, and closed the day down 50 points to 20,571.

Dianne Swonk, chief economist with Grant Thornton, said the pandemic has been a time of unprecedented volatility for almost two solid years now, and that can sometimes result in wild swings for stock prices.

“This is giving us a lot of turbulence out there,” she said in an interview, “and the problem is it it ups the uncertainty at a time when uncertainty is already high.”

Higher rates coming

Prior to Monday’s trading, the major event of the week was slated to be the Bank of Canada’s interest rate decision on Wednesday. Expectations are growing that central banks will soon have to raise their interest rates to keep a lid on inflation, which has run up to the highest level we’ve seen in decades lately.

All things being equal, higher interest rates are bad news for stocks because they raise the cost of borrowing. That gives companies and investors less of an incentive to borrow to invest.

Currently, the market is pricing in about a 60 per cent chance of a rate hike in Canada as soon as this week. If one doesn’t come this time around, it’s a near certainty to happen next time the bank meets in March, according to trading in investments known as swaps.

Swonk said some of the uncertainty comes from figuring out how central banks are going to try to find the right balance between keeping a lid on inflation but also not harming the economy that is still being hit by Omicron.

“They don’t want to put the flame out on the economy, but they certainly want to cool it off a bit,” Swonk said. “That’s left many people unsure of how fast rates will go up.”

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Declining U.S. Petroleum Inventories Push Oil Prices Higher – OilPrice.com

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Declining U.S. Petroleum Inventories Push Oil Prices Higher | OilPrice.com


Tsvetana Paraskova

Tsvetana Paraskova

Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. 

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  • U.S. commercial petroleum stocks have fallen in most of the weeks in the past year and a half.
  • The continuously declining U.S. petroleum stocks over the past year suggest that supply has not caught up with rebounding demand.
  • Petroleum stocks at lower than seasonal norms have contributed to market tightness alongside the OPEC+ group’s inability to fully meet its rising monthly production quotas.

Petroleum inventories

Despite a crude oil inventory build in the latest EIA report, U.S. commercial petroleum stocks have declined in most of the weeks in the past year and a half, falling below seasonal averages for the past five years and even below the five-year average before the pandemic.   The continuously declining U.S. petroleum stocks over the past year suggest that supply has not caught up with rebounding demand as U.S. exploration and production companies have not responded with a spike in new drilling activity to the rising crude oil prices.  

Petroleum stocks at lower than seasonal norms have contributed to market tightness alongside the OPEC+ group’s inability to fully meet its rising monthly production quotas and rising global demand as economies look to return to normal. 

Global oil demand has held resilient during the Omicron wave so far, prompting the International Energy Agency (IEA) to revise higher its 2022 demand growth estimate by 200,000 barrels per day (bpd) last week. 

In the United States, the latest EIA data as of January 14 showed a small crude inventory build of 500,000 barrels and another large increase in gasoline stocks, which added 5.9 million barrels. This follows a combined build in gasoline inventories of over 18 million barrels for the previous two weeks. 

Despite the increase, gasoline stocks in the U.S. are now in line with the five-year average 2015-2019, before the pandemic, according to estimates by Reuters market analyst John Kemp.

Compared to the latest five-year average, which includes the pandemic years, gasoline stocks are now about 2 percent below the five-year average for this time of year, EIA data showed.

The data also pointed to the fact that total commercial petroleum inventories in the United States decreased by 1.5 million barrels in the week ending January 14. U.S. crude oil inventories are about 8 percent below the five-year average for this time of year. Distillate fuel inventories are about 16 percent below the five-year average, and propane/propylene inventories stood at some 7 percent below the five-year average, according to the EIA. That’s including the pandemic years. 

Compared to the 2015-2019 average, total U.S. commercial inventories are 4 percent below the pre-pandemic five-year seasonal average—the lowest level for this time of the year since 2015, Reuters’ Kemp has estimated. 

In December 2021, for example, U.S. petroleum demand returned to 21.1 million bpd with more people driving places instead of flying, the American Petroleum Institute’s chief economist Dean Foreman said in API’s latest Monthly Statistical Report

Related: The Nickel Supply Squeeze Could Send Prices Even Higher

“By contrast, the production of U.S crude oil and natural gas liquids (NGLs) remained flat overall, with a minimal response by investment and drilling even as oil prices returned to more than $80 per barrel in January,” Foreman wrote. 

“Lower domestic oil production has also required refiners to use oil that’s already been produced and consequently reduced U.S. crude oil inventories to below their five-year range,” he added. 

At the end of December, crude oil inventories were below the five-year range and at their lowest for December since 2014, API’s report showed. Moreover, total inventories were at their lowest for December since 2017.

Lower-than-normal petroleum inventories have been putting an upside pressure on U.S. and international oil prices, which hit the highest since October 2014 last week. 

The tighter market these days is reflected in the rising backwardation in the futures prices of both major benchmarks, WTI and Brent, with prompt prices higher and rising compared to those further out in time.

Robust demand, insufficient investment in new supply, low inventories, and declining global spare production capacity have prompted major Wall Street banks – including Goldman Sachs, JP Morgan, and Morgan Stanley – to forecast that oil prices could hit $100 per barrel as soon as this year. 

By Tsvetana Paraskova for Oilprice.com

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Bitcoin drops to six-month low as investors dump speculative assets – Ars Technica

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Bitcoin drops to six-month low as investors dump speculative assets

Bitcoin dropped to a six-month low on Saturday, extending a steep fall recorded in the previous session as the cryptocurrency market was swept up in a powerful shift by investors out of speculative assets.

The price of the biggest digital token by market value fell 4.3 percent on Saturday morning in Europe to $35,127, the lowest level since July 2021. Bitcoin has now lost almost a quarter of its value this year.

Other cryptocurrencies have also come under intense selling pressure, with an FT Wilshire index of the top five tokens excluding bitcoin down 30 percent in the first month of 2022.

The cryptocurrency rout comes as investors have dumped shares in tech companies on expectations the US Federal Reserve will move to rein in loose pandemic monetary policy to combat inflation. Global stock markets posted their biggest declines in more than a year this week, with the fast-growing companies that powered the rally from the depths of the coronavirus crisis enduring intense falls.

Investors now forecast the Fed, the world’s most influential central bank, will raise interest rates three to four times this year, something that has sent bond yields surging. Higher yields on low-risk assets like US government bonds make the potential returns that can be earned through speculative investments like cryptocurrencies look less appealing, analysts say.

Andrew Sullivan, managing director at Outset Global in Hong Kong, said Asia was seeing “huge volumes going through in a number of markets as investors move to cash” on Friday, as technology shares in the region fell.

The sharp sell-off in digital assets also came a day after the Russian central bank announced on Thursday draft proposals seeking to ban all cryptocurrency trading and mining. The proposed regulations would also block cryptocurrency investment by banks and forbid any exchange of cryptocurrency for traditional currencies in Russia, one of the world’s largest centers for crypto mining.

The central bank said in its 36-page report that the rapidly rising value of cryptocurrencies “is defined primarily by speculative demand for future growth, which creates bubbles,” adding they “also have aspects of financial pyramids, because their price growth is largely supported by demand from new entrants to the market.”

The announcement initially had little impact on bitcoin, which rose as much as 3.7 percent against the dollar on Thursday. But by Friday afternoon in Asia the cryptocurrency had dropped more than 10 percent from the previous day’s high to hit its lowest level since August.

“The Russian regulators have been frustrated [with the cryptocurrency industry] for several years and none of their warnings have been heeded,” said Vince Turcotte, Asia-Pacific sales director at Eventus Systems.

He added that, while the Russian proposal was “relatively harsher,” it was only the latest in a slew of announcements on cryptocurrencies by regulators across the globe focused mainly on protecting retail investors.

Turcotte likened the situation in Russia to that of China before Beijing began a more forceful crackdown on the industry. “Nobody listened to [Chinese officials] until they actually brought the hammer down,” he said. Last year, China declared that all crypto activities were illegal.

© 2022 The Financial Times Ltd. All rights reserved Not to be redistributed, copied, or modified in any way.

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