TheChek News Flow

Water level of crucial trade river has fallen to match 2018 record low after extreme heatwaves

Water levels on the Rhine have dropped to near the lowest in eight years due to extreme heat and drought in Europe, disrupting the flow of goods and causing manufacturers to cut production.

The navigable depth level of Germany’s most important inland trade corridor at Kaub, a key shipping chokepoint on the Rhine between Mainz and Koblenz, fell to 25 centimetres on Friday. That matches the record low recorded in 2018.

When the Kaub gauge reads 25cm, the actual water depth in the navigation channel is roughly 1 metre deeper. It could fall below that level early next week, according to the latest forecast.

The drought means that vessels can carry significantly less cargo along the Rhine, requiring more ships to transport the same volume and making it more expensive, the latest example of the economic costs of extreme heat in western Europe.

The longer shipping is restricted, the more the strain increases, Marc Schattenberg, an economist at Deutsche Bank, said. “The volumes that would have to be shifted are so large that replacing them by rail or road would be difficult, especially as some important connections are currently undergoing construction work,” he said.

In Germany, temperatures reached towards 40C again this week after a record-breaking June heatwave. The low-water period started “unusually early” this year, according to the Federal Waterways and Shipping Administration.

Last month was the hottest June on record on the fastest-warming continent as a result of climate change.

In eastern Serbia, the Danube fell so low that sunken German ships from the second world war could be seen.

Some economists have warned that disruption due to the Rhine’s low water levels could shave as much as 0.2 percentage points off German growth.

German chemical companies, such as BASF, Covestro and Evonik, have plants concentrated along the banks of the river and are particularly exposed to further disruption.

BASF said there could be disruptions to supply from its plant in Ludwigshafen if water levels continued to sink, though it had options to deploy specialised ships or switch cargo volumes to other means of transport.

Chief executive Markus Kamieth told analysts this week that it would “not be wise to exclude that there will be force majeure announcements or . . . product shortages in certain cases”. He noted that acute supply shortages of individual raw materials could have “ripple effects” in production at complex chemical plants.

Still, BASF said it was better equipped than during a previous dry period in 2018 when it suffered a €250mn hit to its operating profit as it was forced to scale back production.

Covestro said it had built up raw material stocks “several weeks ago” to maintain production, and had also switched to vessels with a lower draft which do not sink as low into the water.

The measures “entailed higher costs” for Covestro, as the volumes carried by each ship were reduced, the number of trips was increased and therefore more fuel was used, the company said.

Germany’s economic affairs ministry said businesses had already adapted to the risk by holding larger inventories, adding storage locations and using a wider range of transport routes. “The negative effects are therefore likely to be less severe overall than in previous years,” it said.

Heavy industry located on or near the Rhine is facing complications shifting materials via inland waterways. Thyssenkrupp was forced to limit hot metal production in Duisburg after facing disrupted delivery of raw materials, but said that customer supply was “currently not at risk”.

The company has taken its own fleet of barges out of service and chartered vessels capable of navigating shallower waters to ensure supply.

The Danube has also fallen to a record low in Hungary, forcing the nuclear power plant which supplies nearly half the country’s electricity to shut down within the next few days, the government said on Thursday. Prime Minister Péter Magyar said the situation was “unprecedented” and asked the population to refrain from using electricity in peak evening hours.

Romania has also been forced to shut down one of the two reactors of the Cernavodă nuclear power plant, which takes cooling water from the Danube.

Deal would land amid consolidation wave sweeping semiconductors as they position for AI revolution

NXP Semiconductors, one of Europe’s top chipmakers, is in talks to buy Ambarella, a chip designer specialising in AI-enabled chips used in the camera technology for self-driving cars.

Talks between the two companies are ongoing but a transaction is not a foregone conclusion, according to people familiar with the matter. They cautioned other buyers could emerge or talks could collapse altogether.

Ambarella, of San Francisco, with a market value of about $3.3bn as of Friday, is part of a wave of companies specialising in designing chips for use in so-called edge AI, in which models run directly on devices instead of through the cloud.

The potential deal would be a boost to NXP’s business supplying chips for automotive makers, which is projected to account for roughly half of the group’s $15.1bn in revenue this year. Ambarella specialises in image-processing semiconductors used in security cameras and self-driving car systems.

The acquisition would land amid a wave of consolidation sweeping across the semiconductor industry as chip suppliers look to position themselves for the AI revolution. Earlier this year, Texas Instruments struck a $7.5bn deal to buy Silicon Labs, while last year Japan’s SoftBank acquired Ampere Computing for $6.5bn.

NXP, of the Netherlands, has largely eschewed doing sizeable deals of its own in recent years. The group agreed to sell itself to Qualcomm for $47bn in 2016 but the deal unravelled two years later after not obtaining Chinese regulatory approval.

Shares in Nasdaq-listed NXP are up 11 per cent so far this year, giving the group a market capitalisation of roughly $62bn as of Friday.

NXP declined to comment. Ambarella did not immediately respond to requests for comment. Bloomberg reported last year that Ambarella was exploring a sale.

If Spain loses Ceuta, it LOSES CONTROL of the Strait of Gibraltar. Between Gibraltar (United Kingdom) and Morocco, the Anglo-Zionist axis would have total control of the passage to the Mediterranean, sidelining Spain.

IT'S NOT AN INVASION, IT'S AN ATTACK, AN AGGRESSION by "OUR ALLIES" with the complicity of a political class installed by them to shepherd the Spanish people.

Situational Awareness, a hedge fund formed by former OpenAI researcher Leopold Aschenbrenner, has sold the majority of its public stock portfolio to Ken Griffin’s Citadel following steep losses over the past month, The Wall Street Journal reported earlier on Thursday. It’s a big comedown for the rising star who has been described as both “scarily smart,” and “brash.”

German-born Aschenbrenner, who is 25, had no prior trading experience before launching the fund in 2024. He gained prominence for his investment thesis after publishing essays arguing that scaling AI would require a major build-up in semiconductors, compute, memory, and energy infrastructure.

He joined OpenAI’s “superalignment” team in 2023, two years after graduating as valedictorian from Columbia at 19 (he enrolled at age 15). But he was dismissed from the company a year later over what it described as an improper disclosure of internal information. At the time, that team was led by OpenAI co-founder Ilya Sutskever and AI researcher Jan Leike. Soon after, Sutskever left to start his own company, Leike joined rival Anthropic, and Aschenbrenner launched his fund.

Things couldn’t have been going better for Situational Awareness until very recently. The fund returned 439% for the year through June, Financial Times reported. Assets under management reportedly grew to as much as $45 billion during their peak before the fund’s positions began dropping sharply amid a broader decline in AI infrastructure investments, CNBC reported.

Even after losses mounted, Aschenbrenner didn’t flinch. In a July 24 letter to investors seen by FT, he called the selloff one of the best buying opportunities since early last year and invited clients to commit fresh capital starting August 1. According to Bloomberg, the appeal didn’t garner the commitments he’d hoped would materialize.

Some of the hardest-hit stocks held by the fund included memory chip producers SK Hynix and Sandisk, clean energy developer Bloom Energy, and neocloud provider Nebius Group, all of which have plummeted by more than 30% over the past month. AI infrastructure equities fell as public investors grew concerned that massive capital expenditures weren’t translating into near-term revenue. The fund’s losses were amplified by leverage, a common hedge fund strategy of using borrowed money to buy stocks.

After Citadel bought the bulk of those holdings, Situational Awareness’ overall assets fell to roughly $10 billion, Bloomberg reported, down from around $20 billion in recent months, per an earlier WSJ report.

Situational Awareness raised several hundred million dollars at its outset. Early backers of the fund include quant-trading firm Jane Street, Stripe co-founders Patrick and John Collison, and Meta executives Daniel Gross and Nat Friedman.

Citadel’s purchase fits a familiar pattern for Citadel. Ken Griffin’s hedge fund has a reputation for stepping in to snap up attractive assets when leveraged players are having to unwind themselves. Even before picking up some of Situational Awareness’ holdings, Citadel’s portfolio featured some of the same AI infrastructure bets, suggesting that, like Aschenbrenner, Griffin expects the sector to recover and has the ability to wait it out.

Situational Awareness did not, however, sell its investments in private companies, according to multiple reports. Most notably, it continues to hold a stake in Anthropic that’s right now valued at $5 billion, according to Bloomberg, and which many would view as an asset that continues to appreciate. Indeed, Anthropic was last valued at $965 billion in a Series H round in May, and it’s expected to go public as soon as October, potentially at an even higher valuation. It’s conceivable that a windfall from the sale of those shares could offset some of the hedge fund’s public-market losses.

MiniMax is open-sourcing its flagship video model in a challenge to ByteDance, Google and Kuaishou’s Kling.

Chinese AI firm MiniMax on Friday announced a new open-source video generation model, H3, cranking up competition against AI video rivals like ByteDance and Google.

MiniMax is trying to shake up the market by open-sourcing its flagship video model for the first time. MiniMax said H3, a multimodal model that understands text, image, video and audio in prompts, can generate videos up to 15 seconds long with stereo sound.

Also on Friday, ByteDance made its latest video generation model, Seedance 2.5, widely available to the public through its Dreamina AI image and video platform. ByteDance first unveiled the model last month, but it was in beta testing until Friday’s official release.

MiniMax’s H3 ranks second in the text-to-video category, just behind Google’s Gemini Omni Flash, and first in the video-editing category on a leaderboard compiled by Artificial Analysis. Seedance 2.5 doesn’t appear on the leaderboard yet.

Apart from Google, most major developers of AI video generation models are Chinese, including ByteDance, Kuaishou’s Kling AI video unit, MiniMax and Alibaba.