Today's top stories from Report on Business :
Countries urge G20 to act
The leaders of Canada, the United States, France, South Korea and Britain are urging their colleagues to finish what they started at a Pittsburgh summit to boost the economy and bolster the global financial system. A letter released publicly, signed by Prime Minister Stephen Harper, President Barack Obama, France's Nicolas Sarkozy, South Korea's Lee Myung-bak and Britain's Gordon Brown warns their counterparts that their work is not done and that the nascent economic recovery is still fragile.
"Current strains illustrate the continuing risks to global economic and financial stability," the leaders wrote. "... We must ensure that our international financial institutions are strengthened to meet the needs of today's global economy. Reforms are needed to enhance their credibility, legitimacy and effectiveness, to reflect the strong growth in dynamic emerging and developing countries, and to equip them to foster sustainable growth, promote financial stability and lift the lives of the poorest."
The letter comes in the runup to the G20 meeting in Toronto in June, and in advance of another summit in South Korea. As The Wall Street Journal pointed out, several economic officials fear momentum for co-operation is ebbing as the crisis eases. Read the story
Ore producers abandon pricing system
Iron ore producers Vale SA and BHP Billiton Ltd. marked a "momentous" shift in pricing today, striking deals with buyers for shorter-term contracts and eliminating a four-decade-old system of annual benchmarking. In the past, one producer and one steel maker would set a price in negotiations that the rest of the industry would match for a year. Today, though, Vale won a 90-per-cent increase in a quarterly deal. The Financial Times noted that, as iron ore affects steel prices and thus prices for a raft of products, these negotiations had been the most important for the global economy. Leading Chinese and Japanese steel makers agreed to the new quarterly pacts, the FT said, a move that Macquarie analyst Brendan Harris described as "momentous."
In an interview with the newspaper, Steel Business Briefing analyst Rafael Halpin added: "I think Chinese mills may well prefer to agree a quarterly price below current spot levels, rather than risk talks breaking down and being forced to pay more on the spot market."
In the new pricing, Vale struck a deal for a record 90-per-cent increase, winning a price of $100 (U.S.) to $110 a tonne.
Earlier this year, Canada's potash producers also struck quarterly deals after a standoff with China. Read the story
Honda to add 400 jobs
Canada's auto industry is bouncing back, although the rebound is related to demand for specific vehicles. Honda of Canada Manufacturing announced today it will add a second shift at one of its plants in Alliston, Ont., boosting output to 600 vehicles a day from 400, and adding more than 400 jobs. The plant produces the Honda Civic, the Acura ZDX crossover, and the hot-selling Acura MDX. Honda's decision follows a move by General Motors of Canada Ltd. last week to ramp up production of two of its most popular vehicles, the Chevrolet Equinox and GMC Terrain. GM is adding a full shift and recalling more than 700 laid-off workers in Oshawa, Ont., while bringing back laid-off workers and actually hiring about 70 more at its Cami operations in Ingersoll, Ont.
Separately today, Bank of Nova Scotia auto analyst Carlos Gomes predicted Canada's auto industry would continue to rebound. Car and light truck purchases in Canada saw their best performance in February since early 2008, at 1.7 million vehicles on an annualized basis, he said, noting too the "sharp improvement" from the 1.46 million for all of last year. "While last month's outsized 25-per-cent year-over-year jump in sales may overstate the strength of the Canadian market, we expect purchases to continue to move higher alongside improving job prospects, a broadening economic recovery and enhanced incentives," Mr. Gomes wrote in a report.
Advisers urge Beijing to allow yuan to rise
Beijing now faces outside and inside pressure to allow its currency to appreciate. Several countries, most notably the United States, have been pushing China to let the yuan rise, which Beijing has rejected several times. Now, two advisers just named to the country's central bank have also called for gradual appreciation of the yuan, though the government was quick to reject that as well. One of the advisers, Xia Bin of the think tank Development Research Centre, told Reuters that Beijing should resume the managed floating exchange rate that preceded the financial meltdown "as quickly as possible." Another adviser, Li Daokui, was quoted by a local magazine as also saying China should take the initiative. But China's Commerce Minister Chen Deming said that "it has been proved both in theory and practice that the appreciation of a nation's currency provides little help for improving the balance of payments." This is all playing out in the runup to a mid-April decision by U.S. Treasury Secretary Timothy Geithner on whether to label China a currency manipulator.
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