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S&P Global — 28 January 2025
By Nathan Hunt
Start every business day with our analyses of the most pressing developments affecting markets today, alongside a curated selection of our latest and most important insights on the global economy
On Jan. 20, Yemen’s Houthi rebels announced that they would confine future attacks on shipping in the Red Sea to vessels with a strong link to Israel. In the future, only ships wholly owned by Israeli interests or those with Israeli flags would be subject to attacks. Partially Israeli-owned or -operated ships heading for Israeli ports would be exempt. This change in policy was prompted by the recently announced Gaza ceasefire deal between Israel and Hamas. The Houthi rebels committed to ceasing attacks if the terms of the ceasefire are fully realized. Based on the deal between Hamas and Israel that was announced Jan. 15 and took effect Jan. 19, the ceasefire would shift to permanent from temporary in about six weeks. Hamas warned, though, that its attacks will resume if Israel violates the terms of the agreement.
Houthi attacks on Red Sea shipping escalated in December 2023 and early 2024 following the outbreak of hostilities between Israel and Hamas. The attacks prompted shippers and traders to divert from the Red Sea and the Suez Canal to a longer route around Africa’s Cape of Good Hope. S&P Global Commodity Insights data shows that this route costs long-range tankers to Europe from the Persian Gulf an additional $200,000, along with a significant loss of time and convenience. Houthi rebels have claimed attacks on more than 1,000 ships, including ships linked to Israel, the UK and the US. Oil transits via the Bab el-Mandeb Strait at the southern end of the Red Sea fell to 2.5 million barrels per day in 2024 from 6.9 million b/d in 2023. LNG shipments via the Red Sea and Suez Canal have ceased for more than a year due to the risk of attacks.
Despite the announcement, many international shipping companies indicate that they will continue to avoid the Suez Canal until the safety of their crews and cargoes can be guaranteed. Insurance companies remain reluctant to cover ships traveling within reach of potential Houthi attacks. The Joint War Committee of Lloyd's, which provides guidelines to maritime insurers, continues to define the Red Sea region as a high-risk area.
The Petroleum Association of Japan, Taiyo Oil, South Korean and Thai refiners, Japan's Mitsui O.S.K. Lines, and many ship operators, including BP and Frontline, have expressed reluctance to return immediately to the Red Sea, despite Houthi assurances.
"Shipping companies are not naive; they won't be rushing to change their plans just because there is a temporary ceasefire in Gaza," Elisabeth Braw, a senior fellow at the Atlantic Council, told S&P Global Commodity Insights. "Obviously, it's going to take a lot more than a temporary ceasefire in Gaza for the situation to calm down in the Red Sea."
Today is Tuesday, January 28, 2025, and here is today’s essential intelligence.
China has achieved another year of remarkable growth in renewable energy, with the addition of 277 GW of solar and 79 GW of wind capacity in 2024. This surge has brought the cumulative solar and wind capacity to a staggering 1,407 GW. China contributed 15% of the world's installed solar capacity in 2024 alone.
—Read the article from S&P Global Commodity Insights
As Donald Trump embarks on the US's first non-consecutive second presidential term since Grover Cleveland did so in 1893, a number of his proposed policies — including those on trade, taxes and immigration — could have direct, profound effects on the economy and credit conditions. The ramifications of the president's plans — even if only partially effected — will range across the spectrum of issuers we rate. US corporate borrowers, financial institutions and insurers, structured finance and states and municipalities can all expect to see some ramifications from the new administration's approach.
—Read the article from S&P Global Ratings
The outlooks on most German banks remain stable, which makes rating changes unlikely over the next two years. S&P Global Ratings expects German banks’ earnings will remain robust in 2025, following a rebound in 2024. German banks’ profitability may continue to lag that of peers. A potential spike in banks’ asset quality could impair the forecast if another economic deterioration significantly reduces the creditworthiness of German small and midsize enterprises (SME), especially in sectors such as automotive, machinery, real estate or generally energy-intensive sectors.
—Read the article from S&P Global Ratings
Brazilian ethanol exports to Europe remained limited throughout 2024, but traders on both sides of the Atlantic are speculating that these flows could increase in the coming months, driven by the potential for an open arbitrage window in the middle quarters of 2025. Exports of ethanol from Brazil totaled a modest 1.90 billion liters in 2024, reflecting a 25% decline from the 2.52 billion liters shipped overseas in 2023. Of this total, the Amsterdam-Rotterdam-Antwerp hub ranked third among the top five destination markets, receiving just 152 million liters, or 7.9% of Brazilian exports — compared with 586 million liters, or 23%, in 2023.
—Read the article from S&P Global Commodity Insights
CERAWeek Chairman Daniel Yergin speaks with Toby Rice, president and CEO of EQT Corporation, about the current dynamics of the natural gas market as we move into 2025. They explore the implications of the shale revolution on US energy independence, the role of gas in powering AI infrastructure, permitting and infrastructure challenges in the Marcellus Shale and the critical role of LNG in global energy security. As the energy landscape evolves, this conversation previews some of the topics that will be explored in March at CERAWeek 2025.
—Listen and subscribe to the podcast from S&P Global
In a turbulent automotive industry, Japanese automakers Honda and Nissan have embarked on a bold merger. If executed well, the deal will allow the merged entity to harness synergies and fortify its market position, but the path is fraught with challenges. The march toward electrification and software-defined vehicles — intensified by mainland Chinese original equipment manufacturers with their high-tech yet competitively priced models — demands substantial investment from legacy OEMs in cutting-edge battery technology, next-generation vehicle platforms and smart production facilities.
—Read the article from S&P Global Mobility
The ESG Insider podcast will be celebrating its 7th anniversary with an exclusive LIVE recording experience in New York City and the official unveiling of its new name. The sustainability landscape is evolving, and market participants are quickly adapting their sustainability journeys to transform their tomorrow. Join experts in sustainability and notable industry thought leaders for a discussion on emerging trends and leading practices in factoring climate change and other sustainability issues into financial decision-making.
—Register for the webinar from S&P Global Sustainable1