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Prices of gas in Europe trade within a narrow range due to strong supply
The Dutch and British wholesale prices of gas were in a tight range on Monday due to the strong supply from Norway, and LNG. According to LSEG, the benchmark Dutch contract for August deliveries at TTF hub increased by 0.06 euros to 33.46 Euro per megawatt-hour (MWh) as of 0843 GMT. The contract for the day ahead was up by 0.15 euros at 32.65 Euro/MWh. The British contract for tomorrow's day has dropped by 0.25 pence, to 78.25 cents per therm. Fundamentals remain the same. The fact that Norwegian production is back at normal levels, and the low wind generation expected in the weeks to come will keep prices relatively stable," said Auxilione. LSEG data shows that gas-for-power is increasing across the country in line with the weaker renewable forecasts. A high-pressure period expected in the coming week will cause wind speeds to drop and fall below normal. The Norwegian export nominated volume has increased by 2 million cubic meters (mcm), or 321 mcm/day. The Norwegian holiday season means that maintenance is minimal in July. The day ahead will see prices trading in the recent ranges. Trump tariff uncertainty and confusion could also have an impact on global markets as they fall as the U.S. flagged a delayed tariff without any indication of what may happen," said Wayne Bryan. Donald Trump, President of the United States, said that several trade agreements will be finalised in the coming days. The United States will inform other countries about higher tariffs by July 9 and they are set to go into effect on August 1. The benchmark contract on the European carbon markets was down by 0.65 euros at 71.41 euro per metric tonne. (Reporting and editing by Nina Chestney; Marwa Rashad)
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EU to use 'nature credit' to fill funding gap
The European Commission announced on Monday that it will create rules to "nature credit" farmers and foresters for taking care of ecosystems in order to make their work more profitable. The EU is looking for ways to boost funding for environmental protection without further straining the public budgets already stretched by other priorities such as defence. The EU estimates that it is short of funding for biodiversity protection by 37 billion euros ($43 billion). This is because the EU pays huge subsidies to farmers through its Common Agricultural Policy. It said that the Commission would form an expert group this year, including government officials, farmers, and local communities, to develop methodologies for "nature credit" and fund a project pilot for these credits before 2027. It would allow companies or countries to buy credits from farmers, foresters, and other land managers who protect nature, by planting trees, restoring wetland or switching to regenerative agriculture, for example. The expert group will examine how to certify and regulate a market for nature credits, before deciding if this should be incorporated into EU law. Reporters were told by EU Environment Commissioner Jessika Rosawall that "this is not about turning the nature into a product, but recognising actions which restore and sustain the nature". This idea is similar to a market more developed for "carbon credit", where projects that reduce CO2 emission sell credits to businesses seeking to support efforts against climate change. Carbon credit market is tainted by recent scandals where projects aresuing credits have failed to deliver on the benefits claimed for climate change. Last week, Brussels announced an EU climate goal for 2040 that would allow countries to use international carbon credits for the first time towards the EU target. The Commission stated on Monday that it was aware of "challenges" and "opportunities" highlighted by the carbon credit markets. Kate Abnett reports. $1 = 0.8519 euro
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China's central banks purchases gold for the eighth consecutive month in June
Official data released by the People's Bank of China on Monday showed that China's central banks added gold to their reserves for the eighth consecutive month. China's gold reserves increased to 73.90 millions fine troy ounces by the end June from 73.83 at the end May. China's gold reserves increased to $242.93 Billion at the end last month from $241.99 Billion at the end May, according to central bank data released on Monday. Carsten Menke is an analyst with Julius Baer. He said, "We expect the PBOC will remain a consistent buyer over the next few year, motivated by their desire to diversify away from the U.S. Dollar and - in the extreme case – to be less vulnerable to potential U.S. sanction targeting the dollar." Gold, which is traditionally viewed as a safe haven from economic and political uncertainty, has reached multiple records so far this season on the backs of uncertainty regarding tariffs, interest rate reductions, geopolitical conflict and central bank purchases. The PBOC will be re-established in May 2024. The 18-month gold buying spree has been halted The Chinese demand for gold has been significantly affected. The central bank will resume gold purchases in November 2024. The industry ministry announced in late June that China is implementing a plan to implement 2025-2027. Increase your income By 2027, the country's gold reserves will increase by 5 to 10 percent and its gold and Silver output by at least 5%. A report from the Official Monetary and Financial Institutions Forum shows that one third of central banks manage a total $5 trillion. Plans to increase gold exposure Over the next one to three years, this will be the highest level for at least five years. HSBC, however, said in a report last week that gold purchases by central banks are not a concern. Will moderate Gold could correct closer to $3,000 if it continues to rise. Reporting by Anushree mukherjee, Xiuhao chen and Liz Lee in Beijing. Editing by Louise Heavens & Joe Bavier.
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Sources say that OPEC will complete the voluntary reduction in oil production cut in September.
Five sources claim that OPEC+ producers will approve a big increase in output for September, as they finish unwinding the voluntary output cuts of eight members. They will also allow the United Arab Emirates (UAE) to pump more oil to meet a higher quota. In April, plans to undo cuts of 2,17 million barrels of oil per day (bpd), began with an increase of 138,000 bpd. In May, June, and July, the increase was 411,000 barrels per day (bpd), despite lower oil prices. The group voted on Saturday to approve a 548,000-bpd increase for August. On Monday, five sources familiar with the discussion said that the group will likely approve a September increase of approximately 550,000 bpd when it meets on 3 August. This will bring the total planned return to the market of 2,17 million bpd from the eight member countries: Saudi Arabian, Russia, Kuwait, Oman and Iraq, Kazakhstan, Algeria. The sources also said that the UAE will be able to produce an extra 300,000 bpd as it increases its production quota. (Dmitry Zhdannikov, Maha El Dahan and Dmitry Zhdannikov contributed additional reporting; Dmitry Zhdannikov wrote the article; Jason Neely edited it.)
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Thailand presents new trade proposal that offers zero tariffs for many US products
The Thai Finance Minister announced on Monday that Thailand had submitted a new proposal to the United States. It offered to reduce tariffs to zero for many U.S. imported products in an effort to avoid steep tariff increases on its own goods. Washington has threatened to levy a 36% tax on Thai imports, if no agreement is reached before July 9th when the 90-day period that caps tariffs at 10% for most countries expires. Last year, the United States was Thailand's largest export market, accounting for 18.3%, or $54,96 billion, in total. Washington claims that its trade deficit with Thailand is $45.6 billion. After returning from Washington, where he had held talks, Minister Pichai Chunhavajira said to reporters: "We listened to their feedback and what was important to them, and we have adjusted the trade proposal." Pichai stated that the U.S. Trade Rep's office praised Thailand for its efforts, but suggested minor changes. The improved proposal, he said, includes zero tariffs on many U.S. imported goods and other measures to bring the trade balance with the United States in less than 10 year's time. The proposal also includes a commitment to increasing imports of American products to boost bilateral trade. He said, "It is not only about reducing the tariffs; it's also about further opening up the trade." Pichai stated that "we are not offering zero tariffs across the board but we do offer zero tariffs for a significant number of products." He added, "I think the conditions that we have set are very favorable and should satisfy their needs." Pichai stated that trade talks will continue even after the tariff pause is over, since negotiating terms of trade requires consultations between multiple stakeholders. The top three Thai exports to America were rubber products, computers and teleprinters/telephone sets. The top three U.S. imports were crude oil and machinery, followed by chemicals. Pichai announced earlier that Thailand will import more U.S. gas and lower tariffs for corn imports from the United States. According to the Thai Feed Mill Association, U.S. Corn is subject to an import tax of 73%. PTT Group, the Thai state-owned energy company, signed an agreement in June to purchase 2 million metric tonnes of liquefied gas annually from Glenfarne’s Alaska LNG Project over a period of 20 years. Donald Trump, the U.S. president, has championed this $44 billion project. Pichai said earlier that Southeast Asia's 2nd largest economy could grow by just over 1 percent this year because of the impact U.S. Tariffs. Thailand's economy is struggling with low consumption, rising household debt, slowing tourist numbers, uncertainty in trade and potential steep U.S. Tariffs. The central bank predicted economic growth for this year of 2.3%, after the 2.5% growth in 2016 was below the regional average. Reporting by Orathai Shriring, Kitiphong Thaichareon, and Thanadech Staporncharnchai. Writing by ChayutSetboonsarng. Editing by David Stanway and Martin Petty.
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Trade uncertainty and China's steel production curbs are a result of the iron ore fall.
Iron ore futures fell on Monday, as new concerns about demand pressured the market. This was due to output restrictions at China's main steel production hub Tangshan. The day-traded iron ore contract for September on China's Dalian Commodity Exchange ended 0.68% lower, at 731 Yuan ($101.92), per metric ton. As of 0745 GMT, the benchmark August iron ore traded on Singapore Exchange fell 0.37% to $95 per ton. Tangshan Baochun Data, a provider of information in Tangshan City in northern China, posted a message on its WeChat page on Saturday. The note stated that steelmakers were given notices for production controls related to environmental protection. Tangshan Baochun, a local mill, said that some mills had undertaken maintenance work on their sintering machinery. Analysts noted that this move was expected to reduce demand for iron ore. ANZ analysts noted in a recent note that the markets are also on edge, as the deadline for U.S. trade agreements approaches. Donald Trump, the U.S. president, said on Sunday he was close to finalising a number of trade agreements. He will inform other countries by July 9 that higher tariffs are coming into effect in August. Vietnam, China's largest steel exporter, has implemented an anti-dumping tax of up to 27,83% on certain steel products after a temporary tariff ended. Iron ore prices have been held back by the strong steel margins and the resilient demand in near-term. Data from Mysteel revealed that despite signs of a slowdown, the average daily hot metal production, which is a measure of iron ore consumption, was still at 2,41 million tons as of July 3. This was higher than it had been a year earlier, and despite signs of a softening. Coking coal and coke, the other steelmaking ingredients, also recorded losses. The benchmark steel prices on the Shanghai Futures Exchange dropped. Rebar fell 0.68%, while hot-rolled coils dropped 0.62%. Wire rod dropped 0.99%, and stainless steel declined 0.94%.
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EU delays signing climate pledge with China, FT reports
A top climate official said in comments published by the Financial Times on Monday that the European Union will not sign a joint climate pledge with China during a summit to celebrate a half-century diplomatic relationship. EU climate targets are some of the most ambitious in the world, but have always been based on domestic emission reductions. The bloc has a deadline of mid-September to submit to the UN a new climate target for 2035. Officials from the EU said that Brussels refused Beijing's repeated demands for a climate agreement after the summit between the second and third largest economies of the world, unless China promised to do more to reduce greenhouse gas emissions. Wopke H. Hoekstra, Climate Commissioner told the newspaper: "A declaration is only worthwhile if it also contains content and demonstrates ambition." A spokesperson for the foreign ministry responded to these comments by saying that China has actively promoted green and low carbon development. Mao Ning told a regular press briefing that "we will continue to work together with other countries in order to strengthen international co-operation on climate change and to contribute to green transformation and sustainable human development." China is likely to miss its five-year target of a 18% reduction in carbon intensity. The European Commission has not responded to an immediate request for comment. Reporting by Dheeraj K. Kumar in Bengaluru and Liz Lee in Beijing. Editing by Tom Hogue, Clarence Fernandez
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China's tightening grip on its rare earths sector
Smuggling was rampant in China when China, during a diplomatic spat in 2010, restricted rare earth exports from China to Japan. When China imposed new restrictions on April of this year, it caused shortages in the auto industry within two months, leading to some to stop production. Beijing, through quotas and consolidation, has transformed a sector that was once unruly, accounting for 90% of the rare earth processing capacity into a powerful diplomatic tool. Here's a brief summary of the ways in which the number one producer of rare earths has tightened the grip on the industry. CONSOLIDATION China started its crackdown in the mining and processing sector 15 years ago. There were hundreds of miners. In 2013, ten producers controlled nearly all mining. Today, only two giants are state-owned: China Rare Earth Group (CREG) and China Northern Rare Earth Group High-Tech. David Abraham, associate professor at Boise State University in Idaho, said that the consolidation process, which lasted for more than a decade, gave Beijing greater control while also curbing environmental damage caused illegal and reckless mining. In the past, rogue miner's illegal supply chain delivered ore to non-authorised separation facilities. The finished products were then disguised and sent abroad. In 2014, it was estimated that 40,000 metric tonnes of rare earth oxides had been smuggled abroad. This is half the amount exported by official means. Magnet makers have not been consolidated as much as the upstream mining sector. There are dozens of magnet producers and processors in China, such JL Mag Rare-Earth, and Ningbo Yunsheng. China has introduced a tracking system in its rare earth magnet industry since June. Companies are required to provide information, including customer details and volume of transactions. The ultimate goal is to track the entire chain. QUOTAS China's production quota system (introduced in 2006) has been used to control the supply, along with its consolidation. Quotas are set for mining, smelting, and separation. They are usually issued twice a years and widely monitored to gauge global supply. Beijing has gradually reduced the number of groups eligible for quotas. In 2024, there will only be two state-owned companies, as opposed to six before. China's supply growth has been dramatically reduced since 2024, when the total mining production quota increased only 5.9% annually compared to a 21.4% annual increase in 2023. Analysts and traders predict that mining output quotas will either remain flat this year or increase by as much as 5% compared to 2024. Beijing restricts the export of technology as well. Since long, the tools and methods used to separate and extract rare earths are banned. It extended the ban in late 2023 to include technology used to manufacture rare earth magnets. Staff Reporting; Editing by Lewis Jackson, Sonali Paul
Oil gains weekly amid improved demand and supply concerns
The oil prices were stable on Friday, and are expected to rise by a significant amount this week due to an improved outlook for the demand in China and the United States. The price of oil was also supported by concerns over disruptions to supply in Russia.
Brent futures fell 3 cents, to $76.45 a barrel by 0414 GMT. U.S. West Texas intermediate crude was down 4 cents at $72.44.
Both indexes gained more than 2% in the past week, marking their largest weekly gains since early January. Brent will be marking its second week of gains following three weeks of declines. WTI will have its first positive week after four consecutive weeks of declines.
JPMorgan analysts stated in a Friday note that the global oil demand averaged 103.4 millions barrels per daily (bpd). This is an increase of 1.4 million bpd.
The coming week will see increased demand due to cold weather in China and an increase in industrial activity as Chinese people return from their holidays.
The Energy Information Administration reported on Thursday that the U.S. crude stockpiles increased while gasoline and distillate stocks fell due to seasonal maintenance at refineries, which led to a lower processing.
Toshitaka Takawa, an analyst with Fujitomi Securities, said that the oil price is supported by both the drawdown of U.S. gasoline stocks and concerns about tight supply in Russia.
The hardened stance of Ukraine has led some investors to buy into the market.
The Ukraine president Volodymyr Zelenskiy was furious earlier this week at U.S. and Russian attempts to negotiate a deal without Kyiv, and Donald Trump's comments blaming Ukraine as the cause of the three-year conflict with Moscow.
Zelenskiy, however, said that after a meeting on Thursday with Trump's representative for the Ukraine conflict, Ukraine was prepared to work quickly in order to reach a solid agreement with the United States on security and investments.
U.S. Treasury Sec. Scott Bessent said on Bloomberg Television that Russia may be able to get some relief from U.S. Sanctions if it is willing to negotiate a ceasefire in its war with Ukraine.
Despite the disruptions in oil supply, prices continued to rise.
Russia reported that oil flow through the Caspian Pipeline Consortium, which is a major route used for exporting crude oil from Kazakhstan, was reduced by 30-40% after an attack by a Ukrainian drone on a pumping facility on Tuesday.
Industry sources reported on Thursday that Kazakhstan had pumped record oil volumes in spite of damage to its main route for export via Russia (the Caspian Pipeline Consortium). It wasn't immediately clear how Kazakhstan was able to pump such high volumes. Reporting by Yuka Obaashi in Tokyo, and Siyi Lu in Singapore. Editing by Sonali Paul & Edwin Gibbs
(source: Reuters)