Need To Know News

Statistics Canada will release the July Consumer Price Index tomorrow at 7am EDT. July headline CPI is expected to ease back to a 0.4% gain from the 0.7% rise in June, while y-o-y CPI is expected at 3.4% from 3.1% prior. The BOC has predicted inflation could accelerate to a 4% clip before the end of the year.

Core CPI is expected to accelerate to a 0.2% increase from 0.1% previous. Y-o-Y core prices are expected up 1.6% from 1.5% in June.

Lower energy prices over the July period should give the BOC some breathing room on inflation, though persistently elevated prices could trickle through to core CPI, as they did in Canada’s southern neighbor that month.

Barry Engle is leaving Ford Canada after just 6 months in the job, bailing the ailing auto sector for the booming agricultural sector.

Engle is leaving Ford for New Holland Agricultural Equipment, a unit of CNH Global, he said today.

In his statement, Engle said he was leaving “with mixed emotions” and that leading the Canadian auto-unit had been “one of the best experiences of his career.”

A Ford spokesperson said a replacement for Engle will be named in a future announcement.

Petro-Canada, Canada’s fourth largest oil producer, said a fire in the 450k barrel storage tank at the Ras Lanuf, Libya, petrochemical and refining facility has not affected field operations in the country, nor is it likely to have a significant financial impact.

According to a company statement the tank is owned by Harouge Oil Operations, a joint venture with Libya’s National Oil Co., 49% owned by Petro-Canada.

Just 2 months ago, Alberta-based Petro-Canada signed 6 long-term exploration and production agreements with the Libyan state oil company that would see the joint venture invest $7bln on an oil field redevelopment program at Ras Lanuf facility and double production to 200k barrels a day over the next 5 to 7 years.

ArcelorMittal, the world’s biggest steel producer, announced a $250mln agreement with Canada’s Adriana Resources for the development of an iron-ore port facility in Rio de Janeiro Brazil. The port will be built on lands acquired by Vancouver-based Adriana Resources in January.The announcement came on the heals of Arcelor’s $810mln acquisition of London Mining Brasil.

According to a company statement, the firm plans to use its share of Adriana’s port’s capacity to export iron ore from London Mining’s Brasil mine to its steel facilities in the Atlantic basin.

London Mining Brasil has an estimated 1,059 mln tonnes of iron ore resources, and ArcelorMittal is considering investing another $700 mln to increase production.

Since its creation in 2006, ArcelorMittal has been aggressively seeking to raise its iron ore self-sufficiency to 75% by 2012 from its current 45%, and has already raised its coal self-sufficiency to 20% from 15% following the purchases of mines in Russia and the U.S this year. The company has, over the past two years spent billions of dollars in investments and acquisition in both developing and mature economies.

The S&P/TSX composite index jumped 154 points to 13,1218 at the open today, lifted by oil and commodity prices even as Financial continue to exert a drag, on the alarming prospect of US intervention on behalf of Fannie and Freddie.

The energy complex is on the rise, up 4.56 points, with Encana up 6.54%, Suncor up 4.09%. Meanwhile metals and mining jumped 22 points with Goldcorp up more than 4%, Barrick up 2.08%. However financials are still down o.66 points with Royal Bank and Bank of Montreal both down 0.6% and Canadian Imperial Bank of Commerce down 1.6%.

The index is also enjoying a boost from Potash Corp. up 1.7% and RIM up 1.3% following y/day’s announcement by the BlackBerry maker’s of the release of its new Bold smartphone.

Shell has reported a refinery unit trip at the Scotford facility in Alberta y/day.

According to the company, one of the refinery units tripped out and is in the process of being restarted. Intermitent flaring of hydrogen, which started last night, will continue for the next 12 hours.

Shortly after markets closed y/day the Ontario Court of Appeal announced a unanimous ruling endorsing a plan to swap C$32bln of insolvent Canadian commercial paper into longer-term notes or bonds, rejecting an appeal from note-holders opposed to a clause protecting banks from most lawsuits.

The ruling sets a new precedent in Canadian bankruptcy law by defining the scope of releases that may be granted in restructuring insolvent companies. The panel of judges said immunity may be granted for criminal conduct such as fraud in exchange for help in getting companies out of bankruptcy.

Canadian banks, including CIBC and RBC, are providing below-cost financing to the plan, while other institutions will assume increased risks in their credit-default swap contracts in exchange for the immunity, according to the 55-page ruling.

Several Canadian companies — including Jean Coutu, Hy Bloom, Aeroports de Montreal, and Ivanhoe Mining, who hold about C$1bln of commercial paper — argued the immunity is illegally broad because it strips paper owners of the right to sue for losses except in very narrowly defined circumstances of fraud. The ruling dismissed the objections.

Today Ivanhoe said it would seek a Supreme Court hearing.

Tomorrow morning Statistics Canada will release June Retail Sales and July Leading Indicators at 8:30am EDT.

Retail Sales are expected to edge up 0.4% in June, the same as previous. The surprising 1% drop in New Motor Vehicle sales reported earlier this month is expected to provide a drag on total sales although strong gasoline prices are expected to provide a balancing boost. However the slowing domestic economy suggests Retail Sales could still disappoint.

Meanwhile excluding Autos, Retail Sales are expected to increase 0.6% from 0.4% prior.

July Leading Indicators are expected to rise 0.1% in July following the flat (0%) report last month. Stocks are expected to provide a drag, as is Manufacturing, though the latter could surprise on the upside given the unexpected 2.1% growth reported for June Shipments last week.

Continued growth in consumer spending suggests that economic activity is still expanding in spite of a cooldown in the housing sector and the twin challenges of a strong currency and a US slowdown faced by the manufacturing sector.

Canadian Prime Minister Stephen Harper suggested Tuesday that Canada’s commercial natural gas deals with Russia could be at risk following Russia’s military actions in neighboring Georgia.

At a news conference near Toronto, Harper said, “We’re examining obviously all aspects of our relationship. We’re obviously focusing on aspects that have to do with the strategic and military situation, but we will of course review everything,” according to a Reuters report.

Russia’s Gazprom, the world’s largest natural gas company, had announced last May it was joining Enbridge, Gaz Metro and Gaz de France in developing a C$840mln liquified natural gas project in Quebec. The project is expected to produce 500mln cubic feet of gas per day, enough to supply Canada’s two largest markets, Quebec and Ontario, by 2014.

The project would be the Russian firm’s first major investment in North America, giving Gazprom an unspecified stake in the Rabaska terminal on the St. Lawrence River.

The province of Newfoundland and Labrador will finally sign a deal tomorrow with Chevron to develop the C$6bln Hebron oil field, according to a provincial press release.

The formality comes a year after the province’s premier, Danny Williams, and oil companies reluctantly agreed to an MOU giving Newfoundland and Labradore a 4.9% stake in the field. The memorandum was reached after a fierce public battle between Williams and the companies over royalties and an equity stake in the project for the province.

Hebron is believed to hold 700mln recoverable barrels of oil that could generate revenues of about C$16bln over its projected 25-year lifespan.

The oil field is located in the Jeanne d’Arc Basin in the Atlantic Ocean, about 350km southeast of St. John’s, and is co-owned by Petro-Canada, Exxon Mobil and StatoilHydro.