The EU has proposed tweaks to the Emissions Trading System ahead of a broader revision in July as the bloc faces an energy crunch https://t.co/86Zv41o13h ...

Core Viewpoint - European clean-energy producers are facing potential volatility as a rally driven by AI-related power demand expectations encounters policy risks, particularly regarding carbon pricing and energy affordability [1]. Group 1: Market Dynamics - The clean energy sector had previously surged due to expectations of increased electricity demand from data center expansions, mirroring trends in the U.S. where demand is now driven by firm market conditions rather than subsidies [1]. - Recent discussions among European governments about reforming the EU carbon-trading system have led to a decline in carbon prices by over 20%, impacting generator earnings [1]. - The International Energy Agency (IEA) forecasts that European electricity demand will not return to 2021 levels until 2028, following significant declines in 2022-2023 and a projected modest recovery thereafter [1]. Group 2: Policy Risks - Analysts suggest that renewed debates over carbon policy could lead investors to reassess their assumptions regarding valuations and earnings in the clean energy sector [1]. - Germany and other countries are prioritizing energy affordability and security over green initiatives, indicating a shift in policy focus that could affect the clean energy market [1]. - The upcoming review of the Emissions Trading System (ETS) is expected to create uncertainty in carbon prices and utility stocks until clearer policy signals are provided [1]. Group 3: Valuation Trends - The utilities index in Europe has seen a significant increase of over 40% in the past year, despite earnings forecasts for 2025-2027 remaining largely unchanged [1]. - Some utility stocks in Spain, Italy, Germany, and Britain are perceived to have stretched valuations, reflecting investor optimism that may not align with actual demand growth [1]. - Bank of America warns that if the EU were to eliminate carbon cost pass-through to power prices, long-term earnings for renewable developers could decline by more than 30% [1].

Thailand’s government set out plans for new carbon taxes and an emissions trading system under the country’s first formal climate change legislation https://t.co/3HbvTtC37B ...

Financial Data and Key Metrics Changes - POSCO Holdings reported consolidated revenue of 17.3 trillion KRW and operating profit of 640 billion KRW for Q3 2025, showing improvement in operating profit for three consecutive quarters [1] - The operating profit margin for the quarter was recorded at 6.6%, driven by increased sales volume and cost-cutting efforts, despite a 1.7% drop in revenue compared to the previous quarter [1][8] - Operating profit for POSCO specifically was 585 billion KRW in Q3, reflecting a continuous recovery pattern from previous quarters [6] Business Line Data and Key Metrics Changes - In the steel sector, despite a decline in sales prices due to market saturation and increased imports, production volume increased by 4.9% [7][8] - In rechargeable battery materials, losses narrowed significantly quarter-over-quarter, with cathode sales volume nearly doubling due to the impending IRA benefit sunset [2][10] - POSCO E&C faced significant losses due to the Shenzhen line incident, with a one-time cost of 288.1 billion KRW recognized in Q3, and an additional 230 billion KRW expected in Q4 [10][49] Market Data and Key Metrics Changes - The domestic steel market in Korea is normalizing, but the company anticipates challenges due to reduced EU duty-free quotas and increased tariffs on steel products [1][9] - Overseas steel profits are expected to decline moderately, particularly in Mexico and India, while steady performance is anticipated in Indonesia and Vietnam [9][10] Company Strategy and Development Direction - The company is focused on ramping up new lithium plants and improving process efficiency, with a commitment to disciplined execution to avoid additional costs [2] - POSCO Group is implementing a comprehensive safety management plan to prevent future incidents and improve workplace safety [4][5] - The company is restructuring its portfolio, having completed 63 projects generating 1.4 trillion KRW in cash, and is prioritizing investments in high-growth markets such as the U.S. and India [6][25] Management Comments on Operating Environment and Future Outlook - Management expressed that while the current operating environment is complex, they expect to return to normal profitability levels in 2026 after accounting for one-off losses [3][10] - The outlook for the steel market in 2026 is positive, with anticipated overall profit increases compared to the current year [9] - Management highlighted the importance of adapting to changes in carbon-related costs and trade regulations, particularly the EU's Carbon Border Adjustment Mechanism [13][19] Other Important Information - The company is actively engaging in negotiations to secure more quotas in response to EU tariff increases and is adjusting its sales strategy to mitigate impacts from reduced quotas [47] - The company is also exploring potential M&A opportunities in sectors aligned with its long-term growth strategy [26] Q&A Session Summary Question: Steel market outlook for Q4 and impact of anti-dumping measures - Management indicated that the impact of anti-dumping measures would be difficult to assess immediately due to prior imports and expected seasonal demand fluctuations [16][17] Question: Response to EU Carbon Border Adjustment Mechanism - Management noted that while initial impacts may be minimal, costs are expected to rise in subsequent years, and they are developing guidelines to address these changes [18][19] Question: Investment plans and restructuring strategies - Management confirmed ongoing evaluations of investment opportunities in high-growth markets and emphasized the importance of maintaining competitiveness through facility upgrades and potential closures of underperforming assets [24][25] Question: Update on lithium operations and market demand - Management provided updates on the ramp-up of lithium operations, indicating that full operations are expected by early next year, with anticipated increases in demand driven by EVs [41][44]

Core Viewpoint - German chemical companies are expressing concerns that high carbon allowance costs are undermining Europe's competitiveness, prompting calls for adjustments in the emissions trading system to support struggling industries [1][3]. Group 1: Industry Concerns - Leading firms such as BASF SE and SKW Stickstoffwerke Piesteritz GmbH are advocating for exemptions in the emissions trading system as costs are expected to rise with the phase-out of free certificate allocations starting next year [1]. - The chairman of SKW Piesteritz highlighted that carbon prices in Europe are five times higher than in other regions, posing a significant threat to the industry's survival, even more so than previously high gas prices [2]. - The chemical sector is intensifying lobbying efforts against the EU's climate policies due to ongoing crises, with German chemical plants operating at only 72% capacity in Q2, marking the lowest level in over 30 years [3]. Group 2: Government and Policy Response - The German ruling coalition is supporting struggling industries, with Chancellor Friedrich Merz advocating for more flexibility in the EU's 2035 ban on new combustion-engine vehicles to aid automakers [4]. - The European Commission is working on enhancing the Carbon Border Adjustment Mechanism to protect domestic industries, but the current review will not address the chemical sector [4]. - BASF SE has stated that the existing carbon market scheme is detrimental to the competitiveness of energy-intensive basic material production in Europe, warning that failure to reform the CBAM could lead to increased relocation of emission-intensive production [5].