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Sources say that Shenhua China has halted spot coal imports due to a rise in port inventories.
China Shenhua Energy, China's biggest coal miner and importer, has stopped buying imported coal on the spot market as port stocks grow. Three traders who are familiar with this matter said that it is a move which will dampen prices of imported coal. According to two analysts and a senior coal trader in Singapore, who spoke under condition of anonymity, the decision of CHN Energy Investment Group, Shenhua’s parent company will impact purchases starting April. According to a coal trader based in China, the decision was also applicable to deliveries made at the end of March. Shenhua didn't immediately respond to an faxed comment request. According to a second China based trader, the move by the state owned company will affect around 1 million tons per quarter of coal and is not applicable to term contracts. Two traders stated that no decision was made as to how long the halt in spot imports will last. The affected volume may be small in comparison to China's record imports of coal of 542.7 millions metric tons by 2024. However, it has sparked market anxiety over whether other companies will follow and whether this import pause might become government policy. The policy was designed to protect Shenhua’s coal sales on the domestic market. However, the coal trader based in Singapore could not remember the last time Shenhua stopped such imports. Analysts with more than 10 years of experience in the sector said that this was the very first time Shenhua has stopped such imports. Shenhua reported in a recent filing that its commercial coal sales fell by 21.6% on an annual basis to 30.2-million tons in January. The company cited warmer temperatures as a factor, and also the accumulation of stocks. Shenhua reduced production in January by 8.5% compared to the previous year, to 24.9 millions tons. The Singapore-based trader stated that "coal is oversupplied domestically as well as globally", adding that this was bad news for Chinese import coal prices. The unseasonably warm weather this winter has had a negative impact on the coal consumption. Normally, heating demand boosts the consumption of coal. The data of consultancy Mysteel revealed that thermal coal inventories in 55 major Chinese port cities were 72.92 millions tons on February 21. This is moving closer to the all-time record of 77.46million tons set in August 2019.
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Amplats suspends operations in South African mine following heavy rains
Anglo American Platinum announced that it had stopped operations at its Tumela Mine in South Africa after flooding was caused by excessive rains. The company, however, maintained its production forecasts for the year. In a recent statement, the world's largest producer of platinum group materials (PGMs) used to reduce vehicle emissions stated that heavy rains over the last week in the north of South Africa had caused widespread floods. Amplats said that the Tumela underground mine, a smaller operation within the Amandelbult Complex, had been the most affected. The rest of the complex including the main Dishaba Mine, the concentrator, and other infrastructure were not affected and operations resumed Monday following a brief pause. A detailed impact assessment and recovery plan to ensure safe production at Tumela mine, which produces about 10% of Amplats' monthly metal-in-concentrate, was under way. Amplats stated that preliminary indications indicate that the metal-in-concentrate production guidance for 2025 of 3 to 3.4 millions PGM ounces will not be affected. Amplats reported on February 17, a 40% drop in its profit for 2024, to 8.4 billion Rand ($458.56 millions), as lower PGM prices continue hurting the company's income. (1 dollar = 18.3184 rands) (Reporting and Editing by Aidan Lewis).
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The rise in iron ore is halted after four days due to increased duties on Chinese steel
Dalian iron-ore futures prices ended a four day winning streak on Sunday as increased levies against Chinese steel dampened prospects for demand. However, decreasing portside stocks in China limited the decline. The May contract for iron ore on China's Dalian Commodity Exchange ended the daytime trading 0.77% lower, at 832.5 Yuan ($114.95). As of 0710 GMT, the benchmark March iron ore traded on Singapore Exchange was 0.18% less at $108.3 per ton. According to a document from the trade ministry, Vietnam will levy a temporary antidumping levy up to 27,83% on certain steel products imported from China. This move follows the announcement by U.S. president Donald Trump of 25% tariffs for all steel imports in early this month. South Korea followed suit, and imposed tariffs provisionally on Chinese steel sheets last week. China's stocks fell on Monday due to concerns about President Donald Trump’s new memorandum, signed last week, which restricts Chinese investment in strategic areas. This is escalating the trade tensions. Mysteel data revealed that the capacity utilisation rate in the blast furnace steelmills surveyed had decreased for a second consecutive week. The daily hot metal production was down 0.21% from last week to 2,28 million at the end of February 20. Iron ore demand is usually gauged by the hot metal production. Hexun Futures, a Chinese consultancy, said that despite the weather in Australia, iron ore exports worldwide have decreased slightly. Port inventories will also be falling, they added. SteelHome's weekly data showed that portside iron ore stocks in China dropped 1.15%, to 145.8 millions metric tons on February 21. Coking coal and coke both fell by 1.99% and 2.9% respectively. The benchmark steel prices on the Shanghai Futures Exchange have fallen. Hot-rolled coils fell 1.24% and stainless steel and wirerod dropped 0.23%. $1 = 7.2422 Chinese Yuan (Reporting and editing by Mrigank Dahniwala, Janane Venkatraman).
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New attempt made by countries to reach $200 billion nature finance agreement
This week, countries will gather in Rome to try again to figure out how to raise $200 billion per year to preserve biodiversity around the world. It's a chance to give global cooperation a boost as the United States pulls back. Donald Trump's moves to cut development funding since his January inauguration have cast a cloud over discussions and put pressure on participants, despite the fact that the world's largest economy wasn’t a signatory of the efforts. Last October, after striking a landmark agreement in 2022 - the Kunming Montreal Global Biodiversity Framework to stop nature losses by 2030 – countries met in Cali, Colombia to discuss how to pay for the deal. Negotiators were unable to reach an agreement on the other parties who should pay, or how the funds should be managed. WWF, a non-profit organization, has stated that the need for action is urgent, as vertebrate wildlife population has decreased 73% since 1970. How to make richer countries pay to help their less wealthy peers is a difficult question to answer, especially when the willingness to offer grants or low interest loans has declined amid a cost of living crisis. Cali's gavel was dropped with only $163 million pledged. This is a far cry away from the $30 billion per year that had been hoped for by the end the decade. Rome is not likely to see major public finance pledges, but observers are looking for more transparency on who pays what and how much. It is possible that the talks in Rome on February 25-27 could collapse. This would hinder Brazil's efforts to integrate nature in efforts to combat climate change, when the country hosts the next round in the Brazilian city Belem. The United States may not be a signatory to the U.N. Convention on Biological Diversity but the recent changes in policy could reduce the willingness of other countries to support policies that promote nature. Oscar Soria is the co-CEO and founder of The Common Initiative a think tank that focuses on global economic policy and environmental issues. He said that countries must rise above political tensions, and that funding for biodiversity has been neglected too long. He said: "This could be an historic moment if they choose to aim high." "The question is if they will fight like gladiators for the future or let this chance slip away." NEW SOURCES OF FUNDING Rich countries, including those in Europe, want middle-income nations such as the Gulf States to pay more. Due to the unwillingness to provide money in the form grants, there is increasing pressure to find other funding sources, such as through the lending of development banks, domestic resources, and the private sector. In parallel, the countries will discuss how they can divert $500 billion per year, which is estimated to be spent on subsidies, and other incentives, that are used to fund projects that harm the environment, into activities that promote nature. The nations must decide how to house any funds raised. A new fund could be created, or countries can use an existing one, like the Global Biodiversity Framework Fund run by the Global Environment Facility. While Europe is content to let the GEF manage any money, other countries such as the Democratic Republic of Congo and Brazil have called for a new system where they would have more control. There are less likely to be businesses at the conference this week, as there will be no side events. Cali Fund is expected to officially launch, although it's unclear whether the first financial commitments are announced. (Editing by Simon Jessop & Susan Fenton).
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New Zealand Foreign Minister to Question Chinese Naval Activity in Beijing
New Zealand's foreign minister Winston Peters is scheduled to arrive in Beijing for a 3-day visit on Tuesday. Relations between the two nations are strained following the live firing exercise conducted by Chinese Navy ships in the Tasman Sea. Officials from New Zealand and Australia said China conducted live-fire drills in international waters between their two countries, with little warning and forcing commercial airline to divert flights. New Zealand Defence Force reported on Monday that the three ships were currently 280 nautical mile (519 km), east of Tasmania and outside Australia's exclusive economy zone. Christopher Luxon, the New Zealand prime minister, said that on Monday China would raise in Beijing the notice given by China that it was going to conduct a live firing drill. Luxon said that the flights were compliant with international laws. "The issue is that we would appreciate more notice, especially on a busy route." The Chinese Foreign Ministry did not respond immediately to a comment request. Peters' trip to China is part a larger tour that also includes stops in Saudi Arabia and the UAE, Mongolia, and South Korea. Peters will meet with Wang Yi, the Foreign Minister of China, in Beijing. Peters stated in a press release last week that he will discuss bilateral relations with Chinese officials, as well regional and global issues of interest to the two countries. "China is New Zealand's most complex and significant relationship, with important cultural, trade and people-to-people connections. Peters stated that the New Zealand government intends to keep a regular, high-level dialogue with China. Peters also expressed concern that the Cook Islands, a country independent in free association with New Zealand had signed a strategic partnership with China and other agreements without consulting New Zealand satisfactorily. Jason Young, Director at the New Zealand Contemporary China Research Centre, Victoria University, Wellington, stated that while there would be questions asked about challenging issues, such as the Cook Islands agreement and the activities of the People's Liberation Army Navy in the Tasman Sea, the discussion would also include future high-level trade and visits. (Reporting and editing by Christian Schmollinger; Lucy Craymer)
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Oil prices slip as Kurdistan export resumption looms
Oil prices in Asia fell on Monday, continuing losses from the previous week, as investors awaited clarification on the talks to end Russia's conflict with Ukraine. Brent futures fell 14 cents or 0.2% to $74.29 a barrel as of 0441 GMT. U.S. West Texas intermediate crude futures dropped 22 cents or 0.3% to $70.18 a barrel. Brent and WTI both dropped more than $2 last Friday, registering weekly declines of 0,4% and 0.5% respectively. The downward spiral of crude oil prices was caused by the U.S. President's pressure on Iraq to resume oil production from Kurdistan, which would improve global oil supply after two years of disruption, said Sugandha Sagandha, founder of New Delhi based research firm SS WealthStreet. An Iraqi official from the oil ministry said that once oil shipments resumed, Iraq would export 185,000 barrels of oil per day through the Iraq-Turkey oil pipeline. The Iraqi oil ministry announced that all procedures were completed for the resumed exports via the Iraq-Turkey pipe, which could resolve a dispute that had disrupted crude flow. On Monday, the fourth anniversary of Russia's war against Ukraine will be celebrated. All eyes are on the progress made in talks to bring an end to this conflict. Officials announced on Sunday that European Union leaders would meet on March 6 for an extraordinary summit to discuss additional support and European security assurances for Ukraine. The announcement comes after U.S. president Donald Trump began talks with Russia to end the war, but did not invite Ukraine or the European Union. A senior Russian diplomat has said that the Russian and U.S. Teams plan to meet next week to discuss improving their relations. The U.S., EU and other countries have imposed sanctions on Russian oil exports. This has curtailed its shipments as well as disrupted the seaborne oil supply flow. If a peace agreement is reached and the sanctions are lifted, global energy supplies will increase. Sachdeva stated that oil prices are influenced in the short-term by geopolitical events and U.S. announcements of policy. Hamas officials in the Middle East said that talks with Israel via mediators about further steps to a ceasefire deal are contingent on Palestinian prisoners being freed as agreed. Israel and Hamas both accuse each other of violating the ceasefire, but it continues to hold.
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Petrobras Considers Cancelling FPSO Tender
Petrobras is considering cancelling a tender to charter an FPSO from India's Shapoorji Pallonji Energy, two sources with knowledge of the matter told Reuters.The state-run firm believes the bid by the Indian shipbuilding firm was too high, at $1.5 million per day, and also complained the FPSO would not have enough of its parts built in Brazil, said the sources.A final decision on the matter is set to be taken soon, according to one of the people.Petrobras said the bidding process is "still ongoing," without making any further comments. Shapoorji Pallonji Energy did not immediately reply to a request for comment outside working hours.The Shapoorji vessel would have the capacity to produce up to 100,000 barrels of oil per day and 6 million cubic meters of gas. The process of contracting it has been ongoing since August 2023.Brazilian President Luiz Inacio Lula da Silva has made bolstering the country's shipbuilding sector a priority and as part of that Petrobras has been focusing on using more local ships for its operations and creating local jobs.(Reuters - Reporting by Rodrigo Viga Gaier; Writing by Fabio Teixeira; Editing by Gabriel Araujo and Susan Fenton)
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New Zealand Foreign Minister to Question Chinese Naval Activity in Beijing
New Zealand's foreign minister Winston Peters is scheduled to arrive in Beijing for a 3-day visit on Tuesday. Relations between the two nations are strained following the live firing exercise conducted by Chinese Navy ships in the Tasman Sea. Officials from New Zealand and Australia said China conducted live-fire drills in international waters between their two countries, with little warning and forcing commercial airline to divert flights. New Zealand Defence Force reported on Monday that the three ships were currently 280 nautical mile (519 km), east of Tasmania and outside Australia's exclusive economy zone. Christopher Luxon, the New Zealand prime minister, said that on Monday China would raise in Beijing the notice given by China that it was going to conduct a live firing drill. Luxon said that the flights were compliant with international laws. "We'd like to have a bit more notice, especially on a busy route." Peters' trip to China is part a larger tour that also includes stops in Saudi Arabia and the UAE, Mongolia, and South Korea. Peters will meet with Wang Yi, the Foreign Minister of China, in Beijing. Peters stated in a press release last week that he will discuss bilateral relations with Chinese officials, as well regional and global issues of interest to the two countries. "China is New Zealand's most complex and significant relationship, with important cultural, trade and people-to-people connections. Peters stated that the New Zealand government intends to keep a regular, high-level dialogue with China. Peters also expressed concern that the Cook Islands, a country independent in free association with New Zealand had signed a strategic partnership with China and other agreements without consulting New Zealand satisfactorily. Jason Young, Director at the New Zealand Contemporary China Research Centre, Victoria University, Wellington, stated that while there would be questions asked about challenging issues, such as the Cook Islands agreement and the activities of the People's Liberation Army Navy in the Tasman Sea, the discussion would also include future high-level trade and visits. (Reporting and editing by Christian Schmollinger; Lucy Craymer)
MORNING BID EUROPE - Relieved as German vote avoids extremes
Wayne Cole gives us a look at what the future holds for European and global markets.
Markets are relieved that the CDU/CSU, a relatively mainstream conservative party in Germany won the election. DAX futures have now risen 1.4% following a slow start. The euro is up 0.5% at a new one-month high of $1.0528. This top has been surpassed by the previous $1.0514. Next target is $1.0534.
The Conservative leader Friedrich Merz has yet to form a government coalition. It is unclear whether he needs one partner or more, and the latter will take longer. Analysts believe a simple coalition with the SPD is the best outcome. However, there are still a few horse-trading negotiations to be done. Ifo's German survey, due to be released later, could reveal a rise in support for Merz.
German leadership is needed in light of the questions surrounding President Donald Trump's support of NATO and Ukraine. On March 6, European Union leaders will hold an extraordinary summit to discuss how to fund Europe's growing defence needs and provide additional support to Ukraine. It is likely that this will require more debt and some loosening of EU budget rules. Perhaps they should bring back War Bonds, sorry Defence Bonds, to attract patriotic retail investors.
The threat of tariffs alone was enough to send the services PMI tumbling. It's only going to get worse, as reports suggest that the White House has been pressuring Mexico to increase its tariffs on Chinese imports.
Fed policy makers will not welcome a jump in U.S. consumers' inflation expectations, which have reached their highest level since 1995. They have always reassured themselves that the expectations are "well-anchored". This week, there are nine Fed speakers. There is plenty of opportunity to issue verbal warnings before the PCE report on Friday.
Wall Street futures are at least up in Asian trading, possibly on the hope that Nvidia will deliver results Wednesday which justify its astronomical valuation.
Investors expect fourth-quarter revenue to be around $38.5 billion. First-quarter guidance is expected to be around $42.5 billion. Any caution regarding future AI capex will pose a risk.
Market developments on Monday that may have a significant impact
German Ifo business survey for February, EU final CPI figures
- BoE Research Conference where Deputy Governors Dave Ramsden, Clare Lombardelli and Toni Gravelle of the Bank of Canada speak. BoE committee member Swati Dhingra speaks.
(source: Reuters)