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UK's Babcock upgrades medium term forecast as defence needs rise
The British defence engineering firm Babcock updated its medium-term forecast on Wednesday. It expects to benefit from UK plans to increase spending on defence and energy to counter rising geopolitical instabilities. Keir starmer, British Prime Minister, pledged on Tuesday to increase overall defence and security expenditure to 5% by 2035. He cited volatility as a result of the wars in Ukraine and the Middle East, and tensions with China. Babcock, which maintains Britain’s naval fleet and builds new warships, as well as providing weapons systems and nuclear engineering, has said that it now expects an operating margin underlying of at least 9 percent in the medium-term, up from a minimum of 8% previously. This is a new age for defence. Babcock CEO David Lockwood stated in a press release that there is a growing recognition of the importance of investing in energy security and defence capabilities to both safeguard populations and drive economic growth. Babcock expects an operating margin of 8 percent for the current year. This is up from 7.5% recorded in the 12 months ending March 2025. The company announced that it would buy back 200 million pounds ($272.46 millions) of shares. Babcock shares have doubled since the beginning of this year, thanks to Britain's commitment to increase defence spending. This is a far better performance than Britain's bluechips index, which has risen by 8%.
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Wall Street Journal, June 25,
These are the most popular stories from the Wall Street Journal. These stories have not been verified and we cannot vouch their accuracy. Investigators cite Boeing’s defective manufacturing and insufficient regulatory oversight as factors that contributed to the January 2024 737 MAX incident. Xero, a New Zealand-based accounting software company, has agreed to purchase New York payments firm Melio for $2.55 billion. This is the largest outbound deal the Kiwis have made in the past decade. Iberdrola, a Spanish power utility, has named Pedro Azagra Blazquez as its new chief executive officer. He replaces Armando Martnez Martinez, who quit as CEO. Amazon has expanded its Same-Day and next-day delivery service in the United States to include thousands of smaller cities and towns. McDonald's and Krispy Kreme, a donut manufacturer in the United States, announced on Tuesday that they will end their partnership by the middle of July due to the struggle the companies have had managing the costs involved with the venture. A U.S. Intelligence report revealed that military strikes against Iranian nuclear facilities delayed Tehran's plans by only a few weeks. (Compiled Bengaluru Newsroom)
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Andy Home: LME's position rules are a reflection of a changing metals market
London Metal Exchange (LME) has tightened the regulatory screws against holders of long positions at a time when both copper and aluminium contracts are in turmoil. The unique date structure of the LME exchange has been under severe stress as traders have increased their bets despite LME inventory being depleted. It's not a coincidence that these two contracts have been the most affected. Tariffs and sanctions have caused massive distortions in the physical markets for copper and aluminum. The LME, having just recovered from the 2022 nickel crisis, is keen to avoid another one. Since it cannot do much about tariffs or sanctions either, managing the effects is the best option. As with any 148-year-old market, there is always the danger that tinkering with such a complex eco system can have unintended consequences. CORNERING the Future The copper market's turmoil this week is a classic example of a massive clash of positions ahead of the cash date. On Monday, the "tom-next spread", which is a position roll for overnight, blew out to $69 per metric tonne. This helped to inflate backwardation over the cash-to-3-months period The price of a ton has increased to $397, the highest since 2021. The week began with one entity having a cash position of 80-90% or more of the available stocks. They are designed to stop anyone from cornering the market and distorting prices with positions that are so dominant. The LME Special Committee introduced new rules on Friday that extend the lending cap beyond the cash date to the next monthly prompt. These are temporary, at least for the moment. The recent pressure on the aluminium markets was not focused on the LME rolling cash date, but rather on the monthly prompt date for June. It's clear that this is not the only position with a mega-long term contract which has caused concern to LME senior management. The LME stated that there have been "several occasions" where significant positions were held in the near-by prompt dates, and the special committee "at times" has directed holders to reduce their holdings "relatively to the prevailing stock level," it said. The rub. Copper and aluminium are in short supply. TARIFF DISTORTION Since the beginning of 2025, LME copper stock has shrunk by 65% to 94.675 tons. The amount of tonnage available is at a 2-year low of 54.500 tons. This isn't due to a diminished global availability, but rather reflects an enormous redistribution in global inventory. Since February, when U.S. president Donald Trump began a Section 232 investigation into U.S. imports of copper, physical metals have been flowing to the United States in order to take advantage of the premium commanded by CME's U.S. Customs-cleared Copper Contract over the LME’s international product. The U.S. imported refined copper in April jumped above 200,000 tonnes, marking the highest arrival rate of this decade. LME warehouses were emptied to fuel this physical tariff trading. CME stocks have nearly doubled to 184 464 tons this year, their highest level since August 2018. SANCTIONS IMPACT The prospect of U.S. Tariffs has disrupted global copper flows. However, sanctions against Russian metal have disrupted those for aluminium. The LME suspended all deliveries after April 2024 when the United States and Britain announced sanctions against Rusal, a Russian producer. The Russian metal that was already part of the LME could be traded, but it wasn't as popular as other brands. Since then, there have been several dogfights over the available non-Russian stock. Each involved large positions and spread volatility. The LME's aluminium stock is now at its lowest level since October 2022. The majority of the physical stock that was awaiting loading has been removed, and what is left is mostly Russian metal. No sign of a replenishment is imminent. LME off warrant stocks, which usually rise when visible inventories fall as metal is redirected to cheaper warehouse agreements, are also lower than at the beginning of the year. Since March, there haven't been any significant new deliveries to the LME warrant. Since last year, the Russian liquidity has dried up and other brands may be reluctant to give them up in LME clearing. The LME's global supply function is dependent on a fluid, globally distributed physical supply chain. This simply does not exist at this time. Reduced Incentives LME's lending guidelines has always been criticized for favoring holders of short positions over those with long positions. The regulatory focus is further distorted by extending the lending restrictions to dominant long positions in the first month of the curve. Remember that the 2022 Nickel Blow-Out was caused by a dominant short, not a dominating long. The LME has stepped up its efforts to avoid another crisis, given the mismatch that is growing between the size of the position and the available inventory. It is possible that removing what the LME considers as distortions to the price-setting function of the exchange may reduce the financial incentives for metals to be delivered to the supposed market of last recourse. It's important to note that the United States is not receiving any Russian aluminum or copper. The author is a columnist at
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Sources: Some Japanese buyers are willing to pay an extra $108/t for Q3 Aluminium.
Four sources said that some Japanese aluminium buyers agreed to pay an extra $108 per metric ton over the benchmark price, a 41% reduction from the current quarter. This was due to the weak demand and abundant supply. This is a decrease from the $182 paid per ton in April-June. It marks the second consecutive quarter of declines and the lowest figure since the January to March quarter in 2024. The price is below the initial offers made by producers around the world of $122 to $145.00 per ton. Japan is the largest Asian importer for premiums and light metals For primary metal shipments, it agrees to each quarter pay over the benchmark London Metal Exchange cash price that is set as the benchmark for the area. Source at a trading firm said that despite concerns about the impact of U.S. Tariffs, so far the effect has been minimal and the premium has fallen sharply because supply-demand conditions are weak. Three major Japanese ports have large stocks of aluminium Marubeni Corp. said earlier in the month that the total amount of coal produced at the end May was 331,000 tonnes, an increase of 3.3% compared to the previous month. A second source from an end-user stated that "there was no significant change to local demand" but the local spot price has fallen during negotiations. It even reached $80, forcing producers abandon their initial offer. Due to the sensitive nature of the issue, the sources refused to identify themselves. Late May, Japanese buyers and global suppliers including Rio Tinto South32 began quarterly pricing discussions. Some buyers are still in negotiation. (Reporting and editing by Tom Hogue; Yuka Obayashi)
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The price of iron ore continues to fall due to a rise in supply and a drop in demand during the off-season
The price of iron ore futures fell for the second consecutive session on Wednesday as increased shipments out of Australia and Brazil and a slowing in seasonal demand by China, the top consumer, weighed on sentiment. The September contract for iron ore on China's Dalian Commodity Exchange ended the morning trading 0.85% lower, at 699.5 Yuan ($97.58). As of 0349 GMT, the benchmark July iron ore traded on Singapore Exchange was down 0.46% at $92.55 per ton. According to Chinese consultancy Mysteel, the total volume of iron-ore shipments by top suppliers Australia, Brazil, and South Africa increased from June 16-22 to reach a record high. Rio Tinto, Australia's world-leading iron ore producer has received all the necessary approvals from government for its Hope Downs 2 Project. The joint venture project Hope Downs 2 between Rio Tinto, Hancock Prospecting and others will have a production capacity of 31 millions tons per year. Rio Tinto said it would invest over $13 billion in new mines, plants and equipment. ANZ analysts say that iron ore prices have continued to decline despite signs of a steady supply. ANZ added that, as Chinese imports of ore will likely fall even further over the summer months, construction activity in China is expected to slow. According to the World Steel Association, the global steel production fell by 3.8% between May and a year ago. China's central bank has stated that it will "guide the financial institutions on both the demand and supply side of consumption" as part of its efforts to boost the domestic consumption. Coking coal and coke, which are both steelmaking ingredients, also fell, by 0.69% each. The Shanghai Futures Exchange saw a decline in most steel benchmarks. Hot-rolled coils fell 0.35% and rebar and wire rod by around 0.5%. Stainless steel increased 0.77%. ($1 = 7.1683 Chinese yuan). (Reporting and editing by Michele Pek, Lucas Liew)
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Tesla's European Sales Drop for Fifth Month as EV Rivals Gain
Tesla's European new car sales fell by 27.9% from a year ago in May, even though sales of fully-electric vehicles in the region grew by 27.2%. The revised Model Y has yet to show any signs of reviving Tesla's fortunes. The European Automobile Manufacturers Association's (ACEA) data showed that overall car sales in Europe increased by 1.9%. Plug-in hybrids and alternative fuel cars saw the biggest growth. Why it's important Tesla's European Sales have fallen for the fifth consecutive month as customers opt for cheaper Chinese EVs, and in some cases protest against Elon Musk. Tesla's European Market Share dropped from 1.8% to 1.2% in just one month. The new Model Y will revamp the company's aging model range, as Chinese and traditional automakers launch EVs in a rapid rate amid trade tensions. By the Numbers ACEA data show that new vehicle sales in May in the European Union (EU), Britain, and the European Free Trade Association increased to 1,11 million vehicles. This follows a decline of 0.3% in April. The registrations of SAIC Motor, a Chinese state-owned company, and BMW in Germany rose by 22,5% and 5,6% respectively. Mazda's registrations fell by 23%. Total car sales in the EU have declined by 0.6% this year. This is despite the growing demand for EVs. Registrations of battery-electric cars (BEV), hybrid-electric vehicles (HEV), and plug-in hybrids (PHEV) have increased by 26,1%, 15,8%, and 19,8%, respectively. In May 2024, the EU's sales of BEVs (Battery Electric Vehicles), HEVs (High-Efficiency Vehicles) and PHEVs together accounted for 48.9% of all passenger car registrations. In the EU's largest markets, sales of new cars in Spain and Germany increased by 18.6% and 1,2%, respectively, while they fell in France and Italy by 12.3%, and 0.1%, respectively. Registrations in Britain were up by 1.6%. Reporting by Jesus Calero, Editing by Mark Potter
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New Zealand draft infrastructure plans outlines the need for hospitals and electricity
New Zealand released on Wednesday a draft 30 year national infrastructure plan. The plan highlighted the need for New Zealand to invest more into hospitals and electricity production, and prepare to spend even more to respond to national disasters. The plan is designed to improve infrastructure planning and to introduce a less political approach to infrastructure investments. Critics say that the impact of electoral cycles on infrastructure investment has been costly, with large projects being affected by stop-start effects. Geoff Cooper is the chief executive officer of the New Zealand Infrastructure Commission. He said, "We would like the National Infrastructure Plan (NIP) to provide guidance for the Government on infrastructure decisions, so that they can make informed decisions." The draft plan stated that the country must establish affordable and sustainable financing, make building new infrastructure easier, give priority to maintaining existing infrastructure, and assess project readiness before funding. New Zealand, while in the top 10% in terms of infrastructure spending as a proportion of its gross domestic product in the OECD, was not achieving the returns that it should. According to the plan, to meet the demand, capital investments would need to rise from 12 billion NZ$ today to a little more than 30 billion NZ$ by 2050. New Zealand's government announced plans to increase infrastructure in the nation. Earlier this year, it hosted a summit on infrastructure investment to encourage foreign investment. Chris Bishop, Minister of Infrastructure, said: "The Government is committed to improving New Zealand's Infrastructure System and working with the industry and other parties to reach a consensus on what changes are needed." The plan will be finalised by the end of this year, and the parliament will discuss it in early 2026. Reporting by Lucy Craymer, Editing by Lincoln Feast.
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Investors assess Iran-Israel ceasefire and oil prices rise
The price of oil rose on Wednesday, as investors weighed the stability and potential for a ceasefire agreement between Iran & Israel. However, it remained near its multi-week lows due to the expectation that crude oil flow would not be interrupted. Brent crude futures gained 85 cents or 1.3% to $67.99 per barrel at 0341 GMT. U.S. West Texas Intermediate crude (WTI), however, rose 87 cents or 1.4% to $65.24. Brent settled at its lowest level since June 10, and WTI, since June 5. Both were before Israel launched an attack on Iranian nuclear and military facilities on June 13, After the U.S. attack on Iran's nuclear facility over the weekend, prices had risen to five-month highs. The global energy prices have moderated following the Israel/Iran ceasefire. Our oil strategists' base case is still anchored in fundamentals that indicate a sufficient global supply of oil, according to JP Morgan analysts. According to an initial U.S. Intelligence assessment, U.S. Airstrikes didn't destroy Iran's nuke capability, but only pushed it back a few months. This was as a fragile ceasefire between Iran and Israel, brokered by U.S. president Donald Trump, took hold. Both Iran and Israel announced earlier on Tuesday that the air conflict between the two countries had ended - at least temporarily - after Trump publicly reprimanded them for breaking a ceasefire. Both countries claimed victory as they lifted civil restrictions after 12 days war, which the U.S. also joined by attacking Iran's uranium enrichment facilities. The Israel-Iran ceasefire will likely prove fragile. As long as both sides are unwilling to attack energy export infrastructure or disrupt shipping through the Strait of Hormuz we expect the bearish fundamentals of the oil market to continue. Investors were worried by the direct U.S. involvement. The Strait of Hormuz is a narrow waterway that connects Iran and Oman. It carries between 18 and 19 million barrels of crude oil per day, or bpd, which represents nearly a fifth of the global demand. Investors were awaiting U.S. government statistics on crude oil and fuel stocks due Wednesday. Market sources cited American Petroleum Institute data on Tuesday to show that U.S. crude stocks fell by 4,23 million barrels during the week ending June 20.
Oil prices drop after IEA reduces demand outlook
The oil prices fell on Tuesday, after the International Energy Agency (IEA) followed OPEC and lowered its oil demand projection. However, price drops were limited by President Donald Trump’s suggestion for some new tariff exemptions.
Brent crude futures fell 50 cents or 0.8% to $64.38 a barrel at 1005 GMT. U.S. West Texas Intermediate Crude also fell 50 cents or 0.8% to $61.03 per barrel.
OPEC lowered its demand forecast on Monday due to the uncertainty created by a vacillating U.S. Trade Policy.
The IEA cut its estimates for the global oil demand to 730,000 barrels a day (bpd), down from 1.03million bpd, and to 690,000. bpd, next year. It cited escalating tensions in trade.
UBS, a Swiss bank, cut its Brent price forecast by $12 per barrel to $68 per barrel on Tuesday.
The UBS analyst Giovanni Staunovo said that if the trade war escalates, the downside risk scenario -- i.e. a worsening U.S. economy and a hard landing on the Chinese mainland -- would see Brent trading between $40-60/bbl in the next few months.
BNP Paribas has lowered its average price expectations for this year and the next to $58 per barrel from $65.
Chris Wright, the U.S. Energy Secretary, said in comments that helped support Friday's prices that the United States can stop Iranian oil exports to Tehran as part of Trump’s plan to pressurize Tehran over its nuclear program.
China's crude imports were up nearly 5 percent in March compared to a year ago, as Iranian oil shipments surged.
Trump's announcement that he would consider modifying the 25% tariffs on auto imports from Mexico, among other countries, also helped risk assets like equities and crude oil. (Additional reporting from Colleen Chow in Beijing and Emily Chow, Singapore; editing by Sonali, Kim Coghill, and Jason Neely.)
(source: Reuters)