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Copper prices set to fall, ending six-week winning streak due to demand concerns
Copper fell on Friday, and it was expected to snap its longest weekly gains since '2020. It and the wider Industrial Metals Complex were weighed down by worries about 'demand prospects. Benchmark three-month Copper on the??London Metal Exchange fell 0.56% to $14,069 per metric ton at 0300 GMT. After six weeks of gains, the metal will end this week at its current level. The Shanghai Futures Exchange's most traded copper contract fell?0.33% to 107460 yuan (15,935.82 USD) per ton. Metal demand is still a concern, despite the fact that inflationary pressures are easing and interest rate fears are fading. Fastmarkets analyst, Andy Farida, said that while the demand for base metals appears resilient, it's still questionable whether it can maintain its strong momentum considering how rapidly asset prices have risen and wage growth has been subdued. The benign U.S. data on inflation has helped to reduce the likelihood that a U.S. Federal Reserve will raise rates next month. This could have dampened economic activity and weighed down industrial minerals such as copper. According to CME's FedWatch, interest rate traders have reduced the probability of the Fed raising rates during its September meeting from 44% last Friday. The biggest loser was aluminium on Friday. The price of the light metal at the?LME dropped by 0.98%, ending the week with a 1.42% decrease. The price of alumina on the SHFE fell by 1.28%, ending the week at 0.64% less than when it began. The?Middle East's supply recovery prospects eased some of the expected tightness, and the alumina production scale at Norsk Hydro Alunorte in Brazil began scaling back on Thursday after a temporary output reduction that supported the prices. Zinc fell 0.61% on the LME, while lead dropped?0.26%. Nickel also declined 0.66%. Tin also fell 0.28%. Zinc, lead, nickel, and tin all dropped in price.
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Oil prices rise after US threatens to blockade Iran indefinitely
Prices of oil?inched up on Friday, after the United States threatened an indefinite naval blockade against Iran. This rekindled concerns about supply after the previous session's drop on a weakened outlook for demand as well as a large build-up of U.S. stockpiles. Brent futures were up 1 cent or 0.1% to $87.08 per barrel at 0247 GMT. U.S. West Texas Intermediate crude futures increased 6 cents to $81.00 a bar. Brent rallied for six sessions and WTI rose for five, putting the benchmarks on course for a weekly increase of around 4%. Susan Bell, senior Vice President for Oil Commodity Markets at Rystad, said in a recent note that despite the negative crude stock data the geopolitical background is preventing an even greater?price drop. The?United States warned on Thursday that they could continue a naval blocade against Iran indefinitely, and increase economic pressures on Tehran because ceasefire talks have stalled. In an interview with Newsmax's Rob Schmitt, Treasury Secretary Scott Bessent said: "Watch this space because more announcements are coming next week. We will?apply?measures that have never been?seen in the history of economic isolate of a nation." The latest U.S. threat comes as Iran restricts traffic through Strait of Hormuz. This area carried 20% of world oil before the conflict. Fuel prices are rising and President Donald Trump is under pressure to end the war, which is unpopular in the United States. Hossein TAEB, recently appointed head Iran's Basj Paramilitary Unit, said that the strait was "under the management of and controlled by the Islamic Republic" according to semi-official Fars News. The prospect of a prolonged war constraining the supply was 'offset' this week by OPEC and International Energy Agency lowering their outlooks on demand growth. Data showed that U.S. crude stocks had increased the most in more than three-and-a half years. Tim Waterer, KCM's chief market analyst, said that the two forces were counterweights. The result is that the market remains stable but has a hard time breaking higher as long as these opposing forces remain in place. The state news agency of the United Arab Emirates, WAM, reported that two vessels of the state-owned Abu Dhabi National Oil Company, were attacked Thursday while transiting the Strait of Hormuz. The incident was condemned by the United Arab Emirates as an Iranian attack. Reporting by Mohi Nrayan from New Delhi, and Helen Clark from Perth. Editing by Sonali P. and Clarence Fernandez.
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Moniz from Hawaii and Brooks, Canada's tube shooter, win in Tahiti
Seth Moniz of Hawaii won his first event title on the world championship tour with a display of?tube riding at the Tahiti Pro in Tahiti, Thursday. Erin Brooks, a Canadian teenager, fought back and beat Israel's Anat Leliar in the women's competition. Moniz was a standout throughout the contest held at Teahupo'o. This is the site of the 2024 Paris Olympics Surfing event and is considered to be one of the most perfect waves in the world. Even though the conditions were not as extreme as the ones earlier in the week when Kelly Slater was dominant, there were still steep drops and deep tubes. Halfway through his final match against Griffin Colapinto from California, Moniz charged into a cavern with his backhand. He squeezed out at the very last second, and rode into a screaming, splashing audience of spectators who were watching the channel. Colapinto's 7-point ride and a 9.07 score seemed to be enough to win. Moniz was not done yet. As the final hooter sounded he snared a "near replica" deep barrel for 9.10, and an incredible two-wave score of 18.17. This whole week has been surreal. The 28-year old Hawaiian claimed that he had "this crazy momentum" every time. "Surfing can be a very difficult sport. Only one person wins each time." "I worked so hard on this, and it paid off." Lelior, a finalist at the women's competition, was a bit of a shock. She threaded multiple deep barrels before emerging from the field in a cloud of spray. The Tel Aviv-born world tour rookie, aged 26, grew up surfing in the soft waves of Mediterranean Sea. He was a competitive success as a child and qualified for both the Tokyo and Paris Olympics. In the final, her top two waves were both 8 points for a combined total of 16.33 in the first half of heat. Brooks, the wildcard winner of a 2024 world championship event held in Fiji’s hollow 'waves', battled her way back to the competition with an 8.27. The clock was ticking down when Brooks, a 19-year-old Texas native, slid into the wave that would win the final. She weaved through the tube to score an 8.93 and a total two-wave score of 17.20. "The season was really tough and I lost every second round in every event. "I almost doubted myself, so to win gives me a lot more confidence," Brooks said. "The girls are so much better now and I'm really disappointed with my results." "But I'm pleased with this one." Next up on the tour is Fiji. This powerful left-hand tropical reef break is another strong destination. Pipeline, Hawaii will crown the world champions in December. (Reporting from Sydney by Lincoln Feast; editing by Peter Rutherford)
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Asian stocks to gain weekly on the back of fading US rate hike bets
The Asian stock market rose on Friday as the inflation data lowered expectations for an imminent U.S. interest rate hike. However, the faltering talks to end the Middle East war are likely to keep the risk sentiment in check. Brent?futures remained steady at $87.03 a barrel, following a decline on Thursday, but were on track for a weekly gain of 4%, ending a two-week loss streak. This was after the U.S. warned to increase economic pressure against Iran, including by extending a navy blockade. The markets have largely ignored the lack of progress made in the Iran War, focusing instead on the AI theme and global monetary policy outlook. The U.S. Inflation Reports this week indicated that pricing pressure was under control. This lowered the chances of a Federal Reserve rate increase next month. Charu Chanana is the chief investment strategist for Saxo. He said that risk appetite can be held because immediate Fed hike risks have been priced lower. Chanana said, "But it's still headline-driven rally and not a risk-free regime." "Without clarity about the Middle East/Hormuz a new oil spike could quickly bring inflation and Fed worries back." MSCI's broadest Asia-Pacific share index outside Japan rose by 0.28%. This is its best performance since mid-June. Japan's Nikkei?was 1.5% higher and set to gain over 5% for the week. John Sidawi is senior portfolio manager at Federated Hermes for fixed income. He said that the markets have been puzzling in recent months because of the disconnect between geopolitical uncertainties and asset prices volatility. For now, the markets seem to be willing to accept a considerable amount of uncertainty before demanding higher premiums. This equilibrium is not likely to last forever," Sidawi stated. Investors could be forced to leave the sidelines if there is a significant escalation of conflict or a clear road toward resolution. This could trigger a larger volatility reaction than what current market prices suggest. YEN STUCK IN INTERVENTION LOOP The yen is at 159.40 against the dollar. It's close to 160, which traders think could spark another round of yen purchases from Tokyo after the joint intervention with the U.S. ended in July. The idea that the Bank of Japan might finally start to support the yen has gained traction among traders, who have priced in the possibility of a rate increase next month. However, investors could be disappointed if they leave the meeting of September feeling that the BOJ was not aggressive enough. Padhraic G Garvey is the head of global rates at ING. He said that the yen was weak because of "a Bank of Japan which remains uber-cautious and whose policy rate?remains too low." Padhraic noted the yen has returned to 160 levels, as the underlying problems remain. Garvey said that rate increases can help to ease this tension. The sooner they are implemented, the better. While that may be seen as a negative for the economy it is also a decision. Do you think it's important to protect the yen or not? Gold was down 0.8% at $4,313 an ounce in?commodities as traders locked in profits following the yellow metal's highest level since early June the previous session due to dimming expectation of a short-term increase. CME FedWatch showed that traders now price in a 35% probability of a Fed hike next month, down from 55% one week ago. This led to an increase in U.S. Treasuries, despite a disappointing auction of 30-year bonds.
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Finland bans certain parts of Baltic Sea after Latvia shoots drones in its airspace
On Friday morning, fighter jets participating in a NATO air defense mission reportedly'shot down' a drone which had entered the airspace of Latvia - a member state of NATO and European Union. A threat to airspace in the vicinity of Russia was also raised by the armed forces. Finland, a member of the EU and NATO that shares a border in part with Russia, has temporarily restricted aviation and maritime traffic to certain areas within the eastern Gulf. This is a precautionary move against drones. The armed forces of Latvia did not immediately disclose any details about the drone's origin or its origin. As Moscow and Kyiv continue their exchange of attacks following Russia's full scale invasion of Ukraine, in February 2022, neighbouring countries to Russia and Ukraine periodically issue air threat warnings and down drones. Alexander Drozdenko, the regional governor, said in an early Friday morning telegram that Russia had shot down 15 drones overnight. The region is located near Finland and Estonia, and includes St Petersburg, which is the second-largest city of the country and a major hub for exports. The?NATO countries in northern Russia are increasing security around dams and power plants, as well as natural gas infrastructure. This is a sign that they're growing more concerned about a possible "false-flag" attack by Moscow using Ukrainian drones. (Reporting and editing by Tom Hogue, Raju Gopalakrishnan, and Jekaterina Glubkova from Tokyo)
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Oil prices rise after US threats to blockade Iran for indefinitely
After falling in the previous session due to a weaker global demand outlook, oil prices climbed a little bit on Friday. The U.S. had threatened to?maintain a naval blocade against Iran indefinitely. Brent futures were up 9 cents or 0.1% to $87.16 per barrel at 0130 GMT. U.S. West Texas Intermediate crude futures were up 4 cents at $81.29. Both benchmarks dropped more than 2% the previous session, paring their gains after a six sessions rally for Brent, and a five sessions rise for WTI. However, they were still on track to achieve a weekly rise of about 4%. The United States said on Thursday that it would maintain its naval blockade against?Iran for as long as necessary and would increase economic pressure on Tehran, since ceasefire negotiations have stagnated. In an interview with Newsmax's "Rob Schmitt Tonight", U.S. Treasury Sec. Scott Bessent stated that "we are going to take measures never before seen in history - of economic isolation" on a nation. The latest U.S. threat comes as Iran continues to restrict traffic through the Strait of Hormuz. This area carried 20% of world oil prior to the conflict. Fuel prices are rising and President Donald Trump is under pressure to end the war, which is unpopular in the United States. According to Fars News, the semi-official news outlet, Hossein TAEB, the newly appointed head of Iran’s paramilitary?Basj unit, has said that the strait "is under the management and the control of the Islamic Republic". OPEC 'and the International Energy Agency lowered their forecasts this week for growth in demand, and data showed that U.S. crude stock made its largest weekly gain since over three -and-a-half years. Tim Waterer, KCM's chief market analyst, said that the two forces were counter-weighted. He said that the market is still supported, but it struggles to move higher while these pressures are in place. The state-owned news agency WAM in the UAE reported that two vessels of the Abu Dhabi National Oil Company, owned by the UAE government, were attacked Thursday evening as they transited the Strait. The United Arab Emirates government denounced it as an Iranian strike.
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Exports of China's electric trucks are soaring due to the Iran war
China's?exports of electric trucks to other Asian nations have soared. This is in addition to an increase in domestic sales, as the?higher fuel costs as a result of the Iran War accelerate regional electrification. China's rapid adoption of etrucks - from lighter vehicles to tractors-trailers - has shielded the 'world's largest auto market' from the conflict. Other countries are now scrambling for a chance to catch up. China's heavy etruck exports have more than doubled in the last four months since the U.S. and Israel started the war, on February 28. They now total 16,823 vehicles. The majority of the trucks were shipped to South and Southeast Asia. South Asia saw a five-fold increase in shipments, while Southeast Asia saw a nearly three-fold increase. The war opens the door to markets for Chinese E-Trucks South and Southeast Asia are particularly dependent on the Middle East for oil, and Iran's ?closure of the Strait of Hormuz has triggered some of the biggest jumps in diesel prices, according to GlobalPetrolPrices.com, creating an opening for China, the world's largest e-truck maker. Diesel prices are up ?48% in Sri Lanka since the start of the war and 57% in the Philippines, according to GlobalPetrolPrices.com, while the fuel is 15% higher in China, government data shows. Zhaoting Yue is the vice president for international marketing of Sany, which makes the world's largest electric heavy trucks. The exports are still relatively small compared to the number of trucks in regional fleets, which is in the millions. If growth continues and is similar to the adoption of e-trucks in China, then it may be possible to reduce diesel consumption and carbon emissions. In China, e-truck sales have increased from a near-zero percentage in 2021 to 30% last year. 140,000 e trucks were sold in the first six months of 2018. Diesel consumption in China started to fall last year. Yue said that Sany had previously concentrated on Europe, but now is focusing on Southeast Asia to develop cheaper models. He said that in June the company had shipped its biggest single order of 880 heavy trucks. The contract, however, was not public. Yue stated that before oil prices rose in these countries, it could have taken 28 months for buyers to recover their investment in a heavy electric truck. "Now it only takes 18 months." Sany added that he expects rapid growth in Asia, Africa, and Latin America for at least the next 12 months. FUEL-PRICE SURGE WILL 'FOCUS MINDS' Electric delivery vans have become more common in the United States and Europe. However, the introduction of larger e trucks has been much slower. Tesla, for instance, promised to revolutionise trucking's economics with its electric semi almost a decade earlier, but has now dropped its goal of achieving "volume production" by this year. According to the Centre for Research on Energy and Clean Air, China's electric truck fleet can save 141 million barrels this year by not burning diesel. This is more than 3% and equal to its entire imports from Kuwait. The Helsinki-based centre estimates that China's etruck exports in the first six months of the year replaced fuel at a rate of 1.6 millions barrels per annum. The high cost of the trucks and the lack of charging infrastructure are obstacles to adoption. According to Daniel?Bleakley of Australian electric trucking company New Energy Transport, the cost of an e-truck in Australia is about A$500,000 (about $350,000). However, the fuel savings are so great that they can reduce operating costs by as much as 70% when compared with diesel. Yue said that to boost the charging infrastructure of its trucks,?Sany sells customers systems which can generate and store energy, as well charge their trucks. Lauri Myllyvirta, CREA's co-founder, stated that the rapid adoption of Chinese electric cars will help expand charging networks as well as provide a boost for truck adoption. He said that high fuel prices would focus the minds of businesses and make them move quickly.
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Croatian firefighters also battle a fire that has engulfed a Greek resort.
Residents and tourists fled by sea and land from villages in northern Greece's Halkidiki on Thursday, as a wildfire was fanned by strong winds and engulfed trees and houses near a resort during the holiday season. Local media reported that heavy gusts made firefighting on Croatia's Dalmatian Coast difficult. A major highway in the Lokva Rogoznica region south of Omis was closed due to an blaze. In Europe, "successive" heatwaves have intensified the drought, dried out vegetation and strained water resources, contributing to wildfires in Spain, France, Greece, which scorched land on a scale never seen before. People wearing face masks in Greece, some clutching pets or children, boarded dingies or boats at the seaside village of Siviri, as the fire burned through a forest. Large columns of smoke turned a cloudless sky dark gray. Flames scorched holiday apartments with balconies facing the sea as they approached from the inland. The coastguard said that over 300 people were evacuated from Siviri by boat. Siviri is located on a peninsula of olive groves, woodlands, and beaches, south of Greece's largest city, Thessaloniki. In a press release, the statement said that patrol and fireboats?and fishing boats were involved in this operation. More than 140 firefighters battled?flames on both sides the main road between Siviri and?the town Kassandreia. In a post on X, the fire brigade stated that nine aircraft and seven helicopters had also been deployed. Traffic was stopped and one firefighter injured. Giannis Artopios, a fire brigade spokesperson, told the?Protothema portal that "our effort is focused on extinguishing a fire and ensuring the safety of people." Local media reports in Croatia showed flames bursting out of trees around a main road, and along the coast. The reports cited the fire department to say that evacuations were underway.
Malaysia restricts data center growth to China, blocking AI chips
M alaysia is a hotspot of data centres. It has slowed down its expansion, which industry analysts and insiders believe will hamper China's attempts to access powerful chips, crucial for improving artificial intelligence capabilities.
In recent years, the Southeast Asian nation has attracted data center investments from U.S. tech giants such as Microsoft, Amazon, Alphabet’s Google, and their Chinese counterparts Tencent Huawei and Alibaba, due to cheap land and electric costs, and robust local AI market prospects.
According to DC Byte, more than two thirds of the data center capacity currently under construction in Southeast Asia’s five major growth markets have been committed to Malaysia. Companies have committed to building more data centres in Johor, Malaysia's neighbouring state. This is due to spillover from Singapore which is more expensive.
The data centre boom is slowing down as Malaysia struggles with its power grid and water resources. Washington has also put pressure on Malaysia to stop Chinese firms from using the region as an export control backdoor for U.S. AI chips.
Malaysia, China's biggest trading partner in Southeast Asia announced in July that it would require permits for all exports and transshipments of high-performance U.S. chips such as those manufactured by Nvidia.
Chinese replacements for U.S.-made chips are still inferior alternatives to the development and maintenance of cutting-edge Chinese AI applications and models that can compete with U.S. competitors.
The new restrictions allow Chinese data centres to import U.S. chip for use in the country.
Experts say that as Malaysia attempts to finalise its trade agreement with the United States, they will be scrutinised more closely.
The U.S. Commerce Department is concerned that data centres located outside of China may purchase AI chips in order to train AI models, and even to support military purposes, in China. Collmann Griffin, a former U.S. Government sanctions policy advisor, said this.
The U.S. Commerce Department has not responded to a comment request.
'AI BELTS AND ROAD'
China's overseas push began shortly after the release of a three-year plan in 2021 for Chinese data centres operators, which called on these firms to expand overseas, particularly in countries that have signed up to Xi Jinping’s Belt and Road Initiative (Xi Jinping’s flagship initiative for overseas development), Malaysia being a signatory.
The countries issued a joint declaration at the end of Xi’s visit to Malaysia, in April. They pledged to increase their cooperation in "data links", 5G infrastructure, and AI. This statement referred to the increasing political momentum behind China's expansion of data centres in Malaysia.
GDS Holdings is one of China’s largest data centres operators. Two years ago, they began operating an hyperscale campus data centre in Johor. This massive project, which continues to be expanded, was launched.
But as the U.S. continues to target China's AI capabilities, GDS has gradually reduced its stake in the Singapore-headquartered subsidiary that managed its overseas data centres and spun it off into an independent entity called DayOne in January.
Lee Ting Han said that the "rebranding", by Chinese companies, is likely to diversify their clientele "because they are very aware of what is happening, trade tensions are moving".
Jamie Khoo, DayOne's CEO, said at the opening of DayOne Singapore's first data center in July that the company has always planned to separate its business from the Chinese parent because both companies operate under different regulations.
Singapore announced last year it would release only 300 megawatts of data center capacity "in a short time" due to its power and water shortages.
Knight Frank reported that by December 2024 Johor would have 12 data centres in operation with an estimated combined capacity of 369.9MW. An additional 28 data centers were planned to be developed, which represents an estimated capacity 898.7MW.
The state's chief Minister said that Johor is Malaysia's largest data centre investment hub, with 42 projects totaling 164.45 billion Ringgit ($39.08billion) being approved by the second quarter 2025. These projects will contribute 78.6% to the country's operational information technology capacity.
Johor's proximity to Singapore allows it to benefit from a lower latency connection to other data centres in the city-state.
Lee explained that Johor had begun to slow down. Last year, the state introduced a committee to review data center projects. The committee rejected 30 percent of applications by 2024 because they did not demonstrate sustainable practices in terms of water and energy use.
He added that the approval rate is higher as more applicants are familiarized with the process.
Vivian Wong is a senior analyst with DC Byte. She said that Southeast Asian countries such as Malaysia are attractive markets for Chinese expansions of data centres due to their geographic proximity, relative lower political friction, and the growing demand for digital infrastructure.
She said that, "However as Southeast Asia faces increased tariffs and scrutiny, this could potentially reap less success than in previous years, particularly in markets known to be home to Chinese-backed operations, which are also being targeted by the Trump Administration." $ 1 = 4.2080 ringgit (Reporting from Eduardo Baptista, in Beijing; Ashley Tang, Danial Azhar, and Jun Yuan Yong, in Singapore; Editing done by Miyoung and Jamie Freed).
(source: Reuters)