Wall Street Breakfast Podcast: Auto Trouble Over Rare Earths

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Auto industry braces for supply chain disruptions from China’s rare earth curbs. (00:21) Kimberly-Clark nears $3.5B sale of international tissue business to Suzano – WSJ. (01:35) Citigroup to cut 3,500 jobs at China tech centers. (02:33)

This is an abridged transcript.

The automotive industry is bracing for supply chain disruptions.

Suppliers are increasingly facing delays in getting export licenses from China due to controls on rare earth elements and magnets, which were imposed in retaliation to President Trump’s tariffs.

China dominates the critical mineral supply chain, producing about 90% of the world’s rare earths that are widely used in the auto, energy, semiconductor, and defense industries.

“The European automotive supply industry is already experiencing significant disruption,” auto supplier association CLEPA has warned, adding that the impacted auto parts are critical to combustion engine and electric vehicles.

“These restrictions have led to the shutdown of several production lines and plants across Europe, with further impacts expected in the coming weeks as inventories deplete,” the group noted.

While the European Union is in talks with China to address the issue, the bloc is looking to diversify supply chains. The EU has identified 13 critical raw material projects overseas to ensure sustainable supply, including in the UK, Ukraine, Greenland, Canada, and South Africa.

Kimberly-Clark (NASDAQ:KMB) is nearing a sale of its Kleenex and tissue businesses outside of North America.

The Wall Street Journal reported Wednesday that the buyer is Brazilian pulp producer Suzano (NYSE:SUZ) for ~$3.5B, in a deal that could be completed as soon as today.

The sale would be part of an attempt by Kimberly-Clark to focus on more profitable areas, according to the report.

Kimberly-Clark’s (NASDAQ:KMB) global tissue business, known as the International Family Care & Professional segment, is the smallest of the company’s three core divisions, with annual net sales totaling less than $3.5B and the lowest profit margins of the three.

A sale would leave Kimberly-Clark (KMB) with its North America business, the company’s largest, with ~$11B in net sales last year, as well as its international personal care division, whose net sales amounted to ~$5.7B in 2024.

Citigroup (NYSE:C) will cut about 3,500 jobs at its two major technology centers in China.

The cuts at the China Citi Solution Centres in Shanghai and Dalian are expected to be completed by Q4 this year.

The jobs affected are mostly in the IT services unit, providing software technology development, testing and maintenance, and operational services for Citi’s global business. A few positions will be transferred to Citi’s technology centers elsewhere.

This action is part of Citi’s (NYSE:C) previously announced plan to reduce its global workforce by 20,000 by the end of 2026, as the bank seeks to streamline operations and cut costs amid a challenging global economic environment.

What’s Trending on Seeking Alpha:

Trump signs travel ban for citizens from 12 countries, citing security concerns

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Catalyst watch:

• Management with Procter & Gamble (PG) and Levis Strauss (LEVI) will present at the Deutsche Bank dbAccess Global Consumer Conference.

• Nintendo (OTCPK:NTDOY) will release the Switch 2 in the U.S. and Europe. The next-generation hybrid console builds on the versatility of the original Switch, while introducing significant upgrades in hardware, design, and features. Retailers Target (TGT), Best Buy (BBY), and Walmart (WMT) are expected to see an incremental sales lift.

• Oshkosh (OSK) will hold an Investor Day event. Management will provide an in-depth review of the company’s strategic initiatives, technology highlights, capital allocation priorities and financial growth targets.

• Lyft (LYFT) will hold its annual meeting with Engine Capital pushing for its own board nominees.

Now let’s take a look at the markets ahead of the opening bell. Dow, S&P and Nasdaq futures are in the green. Crude oil is up 0.2% at $62/barrel. Bitcoin is up 0.1% at $104,000. Gold is up 0.6% at $3,393.

The FTSE 100 is up 0.2% and the DAX is up 0.3%.

The biggest movers for the day premarket: Verint Systems (NASDAQ:VRNT) +21% – Shares surged after the company delivered better-than-expected Q1 results, highlighted by a 24% Y/Y increase in AI annual recurring revenue (AI ARR), which includes its AI-powered software offerings.

On today’s economic calendar:

• 8:30 am Jobless Claims

• 12:00 pm Federal Reserve Board Governor Adriana Kugler speaks on the economic outlook and monetary policy before an Economic Club of New York luncheon.

• 1:30 pm Philadelphia Federal Reserve Bank President Patrick Harker speaks on the economic outlook before the Philadelphia Council for Business Economics.

• 1:30 pm Kansas City Federal Reserve Bank President Jeffrey Schmid speaks on banking policy before”The Future of Banking: Navigating Change” conference hosted by the Federal Reserve Bank of Kansas City.