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Iron ore slumps as China's demand falters, despite stimulus hopes
Iron ore prices fell on Monday as a result of a seasonally 'faltering' demand, and the thinning margins in steel production in China, the top steel consumer. This tempered hopes that Beijing would announce stimulus measures later this week to boost China's economy. Iron ore, the most traded contract at China's Dalian Commodity Exchange(DCE), recovered earlier losses and was trading up 0.07% to 743.5 Yuan ($109.89). As of 0251 GMT, the benchmark August iron ore traded on Singapore Exchange was down?0.61% at $97.55 per ton. After steel demand seasonally declined and margins shrank, several Chinese steelmakers began equipment maintenance. Data from Mysteel revealed that the average daily hot metal output, which is a measure of iron ore consumption, fell for the third consecutive week by 0.6% compared to the previous week. This was the lowest level since April 3. Analysts at Everbright Futures stated in a report that the market is focusing on the Politburo meeting scheduled for end-July, when policymakers are expected to strengthen countercyclical policies and introduce incremental measures to stabilise economic development. Coking coal and coke both increased in price, but other steelmaking?ingredients remained mixed. The benchmarks for steel on the Shanghai Futures Exchange mostly moved up. Rebar gained?0.33%; hot-rolled coils advanced?0.43%; wire rod gained 0.21% while stainless steel fell 0.24%.
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Gold prices rise on US-Iran truce; Fed decision is imminent
Gold prices rose by a little more than 1%?Monday, as oil prices fell due to a pause of Middle?East hostilities, easing inflation fears. Investors awaited U.S. Federal Reserve policy announcement. By 0200 GMT, spot gold had risen 1.4% to $4110.56 an ounce. U.S. Gold Futures rose 1% to $41,112.10. Gold is clearly a beneficiary of today's dual price action of oil and the U.S. Dollar, which both dropped due to de-escalation expectations between the U.S. Tim Waterer said that lower oil prices are easing inflation concerns. The U.S. Dollar Index was down by 0.3%. This made greenback-priced gold more affordable to other currency holders. Iran will cease its attacks as long the United States also does,?a senior Iranian official said on Sunday. This comes at a time when the United States has paused its bombing campaign, after Donald Trump's advisors informed him that they had run out of targets. They also expressed concern about the depletion of the U.S. nuclear arsenal. The oil price was down by more than 4% on the day. Oil prices have risen since the beginning of this conflict, causing inflation fears and central bank rate increases. Gold, despite being traditionally seen as a hedge against inflation, has been impacted by this. Higher rates increase the opportunity costs of holding the metal. "Longer-term, I remain constructively optimistic about gold. Waterer said that the fate of gold is closely tied to where oil prices are headed. The path upward is likely to be volatile and heavily influenced geopolitical headlines until a more durable peaceful takes hold. Investors and economists are also focusing on the Federal Reserve meeting, which is taking place this week. They expect rates to remain unchanged. According to the CME FedWatch Tool, traders are pricing in an 80% chance that rates will rise in September. (Reporting by Ashitha Shivaprasad and Pablo Sinha in Bengaluru; Editing by Subhranshu Sahu and Ronojoy Mazumdar) (Reporting and editing by Subhranshu Sahu, Ronojoy Mazumdar and Pablo Sinha from Bengaluru)
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Russell: Crude oil futures prices are a measure of market adaptability and not a sign of Iran peace.
Since the beginning of the Iran War, there has been a debate about whether crude oil futures accurately reflect the stress in the physical markets of oil and refined products or if traders are blindly optimistic peace is on the horizon. The Iran War between the United States of America and?Iran is continuing on its volatile and unpredictable course, with renewed hope that an 'interim pause' in the strikes could be possible. This small glimmer of optimism was sufficient to drive Brent futures down in the early Asian trading on Monday. Brent futures fell by nearly 5%, to $92.06. The Strait of Hormuz is still at best contested. Shipping volumes have dropped through the narrow waterway after surging in mid-June during a three-week ceasefire between the Trump Administration and Tehran. After the collapse of the deal and the renewed U.S. attacks on Iran, Tehran responded with a series of strikes against U.S. bases and vessels trying cross the Strait of Hormuz. Tehran appears to have also successfully activated the Houthi allies to target Saudi oil tankers that are trying to cross the Bab el-Mandeb Strait. This eliminates a route that Saudi oil could have taken to reach refineries on the Asian continent via the Red Sea port Yanbu. Alternative routes include a much longer and more complex route via the Suez Canal. This involves partial discharging of cargoes, and the use of the SUMED Pipeline due to?draft restriction in the canal. Exports of physical crude from the Middle East are still constrained. Only limited volumes pass through the Bab el-Mandeb and Hormuz straits. A lasting peace agreement also seems distant? with the United States of America and Iran being far apart in key areas and having a deep mistrust for one another. UKRAINE LESSON This situation seems to call for a much stronger reaction than what has been seen in the oil futures market. Brent?dropped to $70.14 per barrel during the short ceasefire on July 2. It then rallied by 45%, reaching a high price of $102.00 on 23 July before falling back. This may seem like a big rally, but it is still well below the $139.13 peak Brent achieved in the weeks following the Russian invasion of Ukraine in February 2022. At the time, this event raised concerns about the disruption of Russia's exports, as they were the second largest crude shipper. These fears were not justified, as the crude markets quickly adapted. They rerouted Russian oil towards buyers in China and India, while Europe increased its imports of American oil?and African oil. The Iran conflict differs in that there is a real disruption of crude supply. And the longer the situation persists, the more the buffers created by inventory drawdowns as well as China's reduction of imports are strained. The argument is that crude futures are not high enough to reflect the risk of a prolonged disruption in Middle East crude supply, which appears to be more likely. It's likely that the crude futures market is pricing adaptability, rather than pricing the worst-case scenario or even the best-case scenario of lasting peace. The market has effectively bet that it will handle disruptions through rerouting of flows and increasing alternative sources. The Suez Canal is a more expensive and time-consuming way to transport Saudi Arabian Red Sea crude oil from Yanbu into Asia, but if the market demands it, then this is what will be done. Other smaller workarounds, like Iraq sending fuel oil to Turkey are also emerging. These, when combined, help reduce the loss of crude and products worth around 10 million barrels a day (bpd). It is possible that the market has bet that traders of crude oil and refined products will be able mitigate the worst effects of the Iran Crisis. You like this column? Open Interest (ROI) is your new essential source of global financial commentary. ROI provides data-driven, thought-provoking analysis on everything from soybeans to swap rates. The markets are changing faster than ever. ROI can help you keep up. Follow ROI on LinkedIn, X. These are the views of the columnist, an author for.
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Oil skid brings inflation relief to the stock market and bonds
On Monday, Asian share markets rose as a pause between fighting in the Gulf brought oil prices down sharply. This lowered inflation risks and helped bonds. Iran announced on Sunday that it would cease 'its own attacks' as long as the United States followed suit. The U.S. army was reportedly worried about the dwindling supply of ammunition. Yemen's Houthis, who are aligned with Iran, have still continued to attack Saudi oil installations on the Red Sea Coast, a threat to another vital waterway for the global oil trade. Sally Auld is the group chief economist for NAB. She said, "Net, it appears that developments in the Middle East moved in a more positive direction this weekend. This lends some credence to the idea that oil prices above $100 per barrel seem to de-escalate behaviour on both sides." Brent crude fell 5.2% to $91.73 per barrel during the lull of fighting in the Strait of Hormuz, while U.S. Crude dropped 5.4% to $84.00. The Federal Reserve's rate hike probability has been slightly reduced by the recent drop in oil prices. Markets indicate that the central bank will meet on Wednesday, and a rise in interest rates is a 1 in 3 chance. However, most analysts do not believe Chair Kevin Warsh to be supportive of such a move. Analysts at Goldman Sachs noted that "investors view the July meeting's outcome as unusually uncertain. This is likely due to the fact that the Fed was split in recent months, Warsh remains unclear about his own position, and part of the escalation of tensions with Iran took place during the blackout." "There is likely to be at least one dissenter in favor of a hike this week, but the majority of voters seem unlikely to push for an action after the June inflation data." Bank of England meets on Thursday, while Bank of Japan meets on Friday. Both are expected to remain cautious and hold their ground despite the softer inflation data for June. Earnings from TECH BULLS S&P futures rose 0.8% and Nasdaq futures 1.3% as equities found comfort in the decline in oil prices and yields. EUROSTOXX Futures, DAX Futures, and FTSE Futures all rose by 0.6% in Europe. South Korea's index of chips-heavy stocks, the?Chips Index, gained 0.6%. MSCI's broadest Asia-Pacific share index outside Japan gained 0.3%. According to LSEG data, about a third of S&P companies will report earnings this week. Earnings are expected to increase by 26.5% compared to last year. Even 'blockbuster' results may not satisfy investors today, given the high expectations and the mounting concern over AI capex. A WSJ article reported that Nvidia had been in talks with OpenAI to provide a $250 billion backstop as part of a?data center?project. Microsoft, Meta Platforms, Apple, Qualcomm and Amazon are among the tech giants reporting. Also included in this list are a number of companies from the industrial, defence, and healthcare sectors. The U.S. Q2 GDP is a highlight, with growth expected to pick up to 1.5% on an annualised basis after a slow start to the year. Weekly?jobless claim, Q2 Employment Cost Index, and the July Michigan Consumer Sentiment round out this diary. The Eurozone's schedule will include?flash Q2 growth, consumer confidence and flash inflation, as well as June unemployment. The drop in oil prices helped the 10-year Treasury yields to fall by 4 basis points, to 4.63%. This also pushed the dollar down. The euro rose 0.2% to $1.1390 while the dollar fell 0.2% against the yen, to 163.66. The drop in yields has helped gold that does not pay interest to climb by 1.4%, reaching $4,110 per ounce.
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Oil drops 5% after US and Iran stop fighting over the weekend
Oil prices fell?5%? on Monday, after U.S. and Iran stopped their strikes at the weekend following two weeks of attacks. This raised hopes of a diplomatic resolution that would deescalate conflict and allow shipping in the Strait of Hormuz to resume. Brent crude futures dropped $4.89 or 5.05% to $91.89 at 0009 GMT, after briefly slipping below the key support levels of $90 earlier in session. U.S. West Texas Intermediate Crude?was $84.64 per barrel, down by $4.67 or 5.23%. After rising for three weeks, both contracts are now trading at their lowest level in almost a week. Brent oil reached $100 a barrel after the conflict that reduced oil shipments through the 'Strait of Hormuz' spilled into the Red Sea and hampered exports to Asia from Saudi Arabia, the world's largest exporter. Mike Waltz, the U.S. Ambassador to the United Nations (and other U.S. media), told "Fox News Sunday," and other U.S.-based media, that Donald Trump decided to pause U.S. military operations to give more time to diplomacy. In a recent note, IG Markets analyst Tony?Sycamore stated that "hopes are growing" for a diplomatic solution. A return to the 14 point MOU (memorandum of Understanding) with more clarity on control of the Strait of Hormuz would be a good starting point. Shipping data from Kpler revealed that despite the ceasefire in attacks, less than 10 commodity vessels per day passed through the Strait of Hormuz. Ship traffic in the Bab el-Mandeb strait also fell on Sunday, after the Yemeni Houthis launched an attack against Saudi oil installations along the Red Sea Coast. However, a third Chinese Supertanker left the Bab el-Mandeb strait. Saul Kavonic, an MST Marquee analyst, said that any recovery in the?flows of the Strait of Hormuz?is likely be slow and partial. Many shippers are still wary and want more confidence in their own safety before they send in new empty ships. (Reporting and editing by Chris Reese, Jamie Freed and Florence Tan)
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The Russian-held area also suffered damage.
Local authorities reported that the Russians launched a ballistic missile attack on Kyiv early Sunday morning. Other regions were bombarded later in the day, resulting in at least six deaths. Russia claimed that areas under Moscow's control in Ukraine had also been attacked, with four killed by a Ukrainian drone in the Russian-occupied Ukrainian town of Horlivka. In its morning report, Ukraine's Air Force said that Russia had launched seven missiles and 136 drones against Ukraine overnight. The emergency services of Ukraine reported that a Russian drone struck a?supermarket in the city of Chernihiv located in northern Ukraine, killing two -- including a nine-year-old boy -- and injuring 25 others. Volodymyr Zelenskiy, President of Telegram, wrote: "This is deliberate Russian terror with no military justification." Ihor Terekhov, the mayor of Kharkiv in eastern Ukraine, said that a drone attack during daylight killed one person and injured 16 others. Separately Regional Governor Ivan Fedorov stated that a glide-bomb attack in Zaporizhzhia in the south killed one person and injured six others. The city has been under heavy bombardment for several months. After the missile attack overnight, Kyiv mayor Vitali Klitschko confirmed that a fire had broken out in the apartment building on the 7th and 8th floors. Images released by state emergency services show vehicles on fire. Three people were injured in the capital. Naftogaz, the Ukrainian national oil and natural gas company, said that two of its employees were killed in an attack by Russia while trying to help residents who had been affected by a previous strike. Zelenskiy warned on Friday of the likelihood that Russian attacks would occur in?the next 24 hours. Ivan Prikhodko, a Russian-installed mayor in Horlivka in the Russian-occupied Donetsk Region, said that four civilians were?killed by a Ukrainian drone attack. Prikhodko said that a Ukrainian drone struck?an ambulance, injuring 3 medics and a resident. The Russian-installed officials accused Ukraine on Saturday of attacking civilians deliberately after 12 people died in a drone strike in an area of Ukraine held by the Russians, called 'Zaporizhzhia. Both Russia and Ukraine have denied that civilians were targeted in the war that was launched in February 2022 by Russia's full scale invasion. Most of the victims were Ukrainians. (Reporting and Editing by Peter Graff; Edmund Klamann, Ron Popeski, and Ron Popeski).
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Five Bosnian climbers believed dead on Russia's Mount Elbrus
A Bosnian climbing rescue team said that five Bosnian climbers were believed to have died after being caught in a violent storm on Russia's Mount Elbrus. Russian rescuers are still searching for the bodies. The Emergencies Ministry of Russia said that rescuers saved two more?climbers who were evacuated and taken to medical care. The ministry said that the bodies of two "further" members of the group were located at an altitude 5,350 metres (17,550 feet). They would be removed when the weather permitted. The ministry said that the search for three more bodies was ongoing without specifying the nationality of the victims. Mount Elbrus is famous for its sudden changes in weather conditions and climbing conditions. It rises 5,642 metres (18,510 feet) above the Georgian border. Bosnian media reported that the seven climbers were all residents of Zenica, a town in the central part of Bosnia. They included a married couple as well as a doctor working at the local hospital. Russian media reported that adverse weather conditions, including strong winds, had complicated search and recovery operations. Reporting by Daria Sucic and Anton Kolodyazhnyy, Editing by Helen Popper
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Bordeaux is threatened by wildfires as France and Spain battle the blazes
On Sunday, wildfires spread towards the outer reaches of Bordeaux in the heartland of France's winelands as France and Spain battled fires that forced hundreds of thousands of people to evacuate. Authorities have ordered the evacuation of 220,000 people from?France?, while more than 75,000 in Spain were evacuated and 30,000 others told to shelter in place. Fires in France have destroyed the Cap Ferret Peninsula on the Atlantic Coast, a popular tourist attraction. They also spread to areas around Bordeaux where firefighters are trying to stop the flames reaching the regional capital. The fire was about 15 kilometres from the city's main entry points, Bordeaux Mayor Thomas Cazenave told X on Sunday. Interior Minister?Laurent Nunez also said that the situation remained a "difficult one". Pedro Sanchez, the Prime Minister of Spain, visited areas affected by fires in Avila. Avila is one of three provinces centrally affected by major blazes, along with Madrid and Toledo. He said: "We have an opportunity to combat the wildfire this weekend and protect lives, population centers, and ultimately bring this serious wildfire as far under control as possible." SPAIN BATTLES MULTIPLE FLAZES Regional authorities in Spain's eastern Castellon Province said that a separate fire had ravaged 4,300 hectares. The regional leader of 'Valencia', Juanfran Perez told reporters that the fire was out of control and difficult to put out from a technical perspective, particularly because of the adverse conditions which will continue throughout the day. The wildfire has spread to the Sierra de Espadan Natural Park, which contains large forests of cork oaks and pine trees. Scientists say climate change has intensified heatwaves and prolonged droughts. The latest disasters are fires. According to Climate Monitor, the average July temperature in Bordeaux and Avila was 32 degrees Celsius, or 90 degrees Fahrenheit. This is almost 6 degrees Celsius above the normal maximum for the month between 1961 and 1990. International Aid Mobilised Portugal and Greece have deployed over 100 soldiers along with equipment as part of the European Union civil protection mechanism. The Spanish interior ministry announced on X that two more planes would arrive "as quickly as possible" from Turkey. Sanchez announced that his government will declare civil protection emergencies for the provinces in the Central Provinces affected by wildfires on Tuesday, unlocking additional funding. He said that more than 150,000 hectares of land have been destroyed in?Spain over the past six months, which is six times the area destroyed last year. Sanchez noted that wildfires are a common feature of Spain’s summers. However, their increasing intensity and scale, fueled by more extreme weather conditions, require policies based on climate science. Since July 15, 500 firefighters in the Scottish highlands have been battling a massive fire within?Cairngorms' National Park. Residents of Nethy Bridge were allowed to return home late Saturday night after being evacuated Friday evening due to a change in weather conditions. Pope Leo offered spiritual support from his summer home of "Castel Gandolfo" outside Rome. He said: "I want to express my closeness and solidarity with the victims and rescue workers who are engaged in relief efforts, in light of the recent devastating wildfires in France and Spain."
US reduces tailpipe rules, slows EV shift through 2030
The Biden administration on Wednesday slashed its target for U.S. electrical vehicle adoption from 67% by 2032 to just 35% after market and autoworker backlash in the political battlefield state of Michigan.
The Environmental Protection Agency instead embraced a. innovation neutral regulative plan that allows automakers. even more freedom to fulfill emissions requirements with gas-electric. hybrids, which lots of ecologists have actually opposed as a. half-measure that postpones the EV transition. The firm. embraced advanced fuel innovations to save fuel, such as. turbo-charging, lighter lorries or stop-start ignition systems.
EPA administrator Michael Regan told press reporters the new guidelines. would nevertheless attain the very same greenhouse-gas decreases as. the initial EPA proposition for an even more aggressive EV. shift.
Let me be clear, our last guideline provides the exact same, if not. more contamination decrease, he stated. We created the requirements. to be innovation performance-based and neutral to provide. manufacturers the versatility to pick which mix of. pollution control technologies are best fit for their. customers.
Regan emphasized there is definitely no required to embrace. electric cars.
The EPA acknowledged the guideline cuts emissions by 49% by 2032. over 2026 levels compared to 56% under the proposition in 2015. Regan said in an interview the reductions were essentially the. same in between the proposition and final guideline.
The EPA's modified proposition reflects the political capture. Biden faces in his re-election campaign. For both Biden and his. Republican competitor, Donald Trump, the roadway to the White House goes. through Michigan and other commercial states such as Wisconsin. and Pennsylvania where employees fear that the EV transition. threatens tasks. Trump has actually repeatedly excoriated EVs.
The emissions rules likely mark the last major ecological. policy move Biden will make before he deals with the voters in. November.
BIG CONTAMINATION REDUCTIONS
The new guidelines, while softened, will however force. significant emissions reductions. The EPA stated the plan cuts. fleetwide tailpipe emissions by 50% over 2026 levels and lowers. greenhouse-gas emissions by 7.2 billion heaps through 2055.
The EPA's percentage targets for EV adoption are not. requireds but projections of how car manufacturers will alter their. fleets to meet policies. Its forecast on Wednesday came as. a large range-- in between 35% and 56% of all sales in between 2030 and. 2032-- instead of a specific target, reflecting the versatility. it stressed for car manufacturers to pursue various. pollution-cutting technologies.
The brand-new guidelines will be simpler, however barely simple, for. automakers to satisfy provided the reasonably low levels of U.S. EV. and hybrid adoption now. EVs in 2015 accounted for less than. 8% of car sales. Hybrids, including plug-ins, represented. about 9% of sales, according to Cox Automotive data.
Hybrid sales, nevertheless, have risen in recent months as EV. need slowed, suggesting the brand-new policies might set off a. hybrid boom.
Environmentalists and electric-vehicle makers such as Tesla. have often blasted hybrids as a side-road on the way to an. urgently required shift to fully electrical lorries.
Tesla executive Martin Viecha duplicated that mantra on. Wednesday, publishing on the X social media platform:. Regrettably, people utilize plug-in hybrids mainly as gas automobiles,. which indicates their CO2 emissions are far even worse than the EPA. suggests. And yet Tesla policy executive Rohan Patel. acknowledged the usefulness of the brand-new requirements in another. post, calling them less ambitious and therefore a lot more. achievable.
Some environment activists had a harsher take.
This guideline might've been the biggest single step of any. nation on climate, but the EPA caved to pressure from Huge Vehicle,. Big Oil and cars and truck dealers and filled the strategy with loopholes big. enough to drive a Ford F150 through, stated Dan Becker, director. of the? For Biological Diversity.
WIN FOR DETROIT
The United Automobile Employees, which has actually endorsed Biden's. re-election project, cheered the more versatile regulations. Its. workers fret that EVs will cost vehicle jobs, which are often less. plentiful and lower-paying in EV plants.
By taking seriously the issues of workers and. communities, the EPA has actually come a long way to create a more. possible emissions rule that protects workers developing cars. With internal-combustion engines, the union said, while. promoting the complete series of automotive innovations to decrease. emissions.
The EPA guideline goes easier on the Detroit 3's. highly-profitable heavy duty pickup franchises than on. passenger cars or lighter trucks. By 2032, lorries such as. Ford's Super Duty pickups will be required to cut their CO2. emissions by 46%. But they will still be allowed to produce more. than three times as much as CO2 than a light-duty pickup such as. the Ford F-150 or Chevrolet Silverado 1500, and nearly 4. times as much CO2 as a passenger car, according to an EPA. statement.
Car manufacturers won separate relief on Tuesday when the Energy. Department decided and softened to stage in brand-new guidelines that will. reduce the mileage rating of EVs. That will help the Detroit. 3 avoid billions of dollars in fines for not meeting fuel. performance requirements through 2032.
Shares in General Motors, Ford and Stellantis increased on. Wednesday, with Ford up the most, up 3.5 % in afternoon trading. Experts and investors have been prompting the Detroit automakers. to slow financial investments in money-losing electric cars. The Biden. administration guidelines provide more leeway to do that.
The modification in the last guidelines shows lobbying by the UAW,. automakers and vehicle dealers.
The Alliance for Automotive Innovation, a trade group. representing almost all automakers except Tesla, said the brand-new. guidelines focus on more reasonable electrification targets in the. next couple of
(source: Reuters)