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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.
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All Inter-Array Cables Installed at 488 MW French Offshore Wind Farm
The final inter-array cable has been installed at Îles d’Yeu and Noirmoutier (EMYN) offshore wind farm in France, being developed by Les Éoliennes en Mer Services.The 61st and final inter-array cable was installed on June 22 at the EMYN offshore wind farm, Louis Dreyfus TravOcean said on social media.The accomplishment paves the way for a transmission capacity of 512 MW.Geoquip Marine’s Geoquip Elena, converted into a Cable Laying Vessel (CLV) with a bespoke project-specific deck layout used in the operation, will be demobilized early July from the Dunkirk offshore base, according to Louis Dreyfus TravOcean.In addition, the termination and testing activities performed by Prysmian from Island Offshore’s service operation vessel (SOV) Island Diligence are on track to conclude in July.With 61 wind turbines, each rated at 8 MW, the EMYN offshore wind farm will have a total installed capacity of 488 MW, generating 1,900 GWh per year, which is equivalent to the electricity consumption of 800,000 people.The wind farm is expected to be fully commissioned by the end of 2025.
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Copper prices rise on weaker dollar and tentative Middle East truce
The London Metal Exchange and Shanghai Futures Exchange saw copper prices rise on Wednesday. This was due to a weaker dollar and an improved risk outlook, as a result of a tentative ceasefire agreement between Iran and Israel. As of 0101 GMT the three-month copper contract at the London Metal Exchange rose 0.18% to $9,686 a metric ton. The most traded copper contract at the Shanghai Futures Exchange remained unchanged at 78480 yuan (10,945.45) per ton. Israel has said it will take strong action against Iranian missile attacks that followed after U.S. president Donald Trump announced the end of hostilities. The U.S. Federal Reserve chair Jerome Powell has been neutral with his remarks about the interest rate reduction. A Beijing-based metals expert from a futures firm said this under condition of anonymity. According to an initial U.S. intelligence report, the U.S. airstrikes didn't destroy Iran's nuke capability, but only pushed it back a few weeks. Even after Powell testified before the U.S. Congress, he said that many Fed officials expect inflation to accelerate soon and that the central banks is currently not in a hurry to ease borrowing rates. Dollar-priced materials are more appealing to buyers who use other currencies because of the softer dollar. LME aluminium continued to decline for a second day in a row, falling 0.52%, or $2,565.5 per ton. SHFE aluminium also declined for the fifth consecutive day, slipping 0.34%, or 20,260 yuan. LME zinc rose 0.26%, to $2.688.5. Lead grew by 0.15%, to $2.022, while nickel climbed 0.1%, to $14.935. SHFE lead increased by 0.95%, to 17,090 Yuan. Nickel gained 0.42%, to 117720 Yuan. Tin fell 0.36%, to 262,240 Yuan. Click or to see the latest news in metals, and other related stories. Data/Events (GMT 0500) Japan Leading Indicator Revised Apri 1000 France Unemp SA Class-A May 1400 US Home Sales Units May
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Asia markets stabilize, dollar drops following Middle East truce
The Asian stock market stabilized on Wednesday, as crude oil hovered at multi-week lows. A ceasefire between Israel & Iran boosted sentiment even though hostilities were threatening to flare up. As oil prices fell, the bond market was less exposed to inflation. Israel has said it will take strong action against Iranian missile attacks that followed after U.S. president Donald Trump announced the end of hostilities. According to an initial U.S. Intelligence Assessment, the U.S. airstrikes didn't destroy Iran's nucleonic capability, but only pushed it back a few months. This contradicts Trump's previous comments that Iran’s nuclear program had been “obliterated”. The Nikkei 225 and Australia's benchmark index were both flat, but Taiwan's index rose 1%. Hong Kong's Hang Seng index rose by 0.6%, while mainland Chinese blue-chips fell by 0.1%. The U.S. Stock Futures are little changed. The MSCI global stock index remained stable after reaching a new record high over night. Brent crude rose 81 cents per barrel to $67.95, following a drop of up to $14.58 in the two previous sessions. U.S. West Texas Intermediate Crude added 70 cents per barrel to $65.07 The markets have shrugged off the tenuous cease-fire between Israel and Iran, according to Kyle Rodda senior financial market analyst at Capital.com. He said that "Realistically the markets do not care if there is a continuing conflict between the two nations, which is mainly air strikes." It's really the threat of a wider war with a deeper US involvement and an Iranian blocking of the Strait of Hormuz, that matters. For now, it seems that the risks are low. The yield on the two-year U.S. Treasury fell to its lowest level since May 8, at 3.787%. The U.S. Dollar Index, which measures currency against six major counterparts fell 0.1% to 97.854. The dollar fell 0.1% to 144.70 Japanese yen. The euro rose 0.1% to $1.1625 and is now back at the overnight high level of $1.1641, which has not been seen since October 20,21. Federal Reserve chair Jerome Powell stated on Tuesday that tariffs may begin to raise inflation this summer. This period will be crucial for the U.S. Central Bank when considering interest rate reductions. Powell was speaking at an hearing before the House Financial Services Committee. The data showed that consumer confidence in the United States unexpectedly declined in June, indicating a softening of labour market conditions. According to CME FedWatch, the markets continue to price in an 18% chance of the Fed cutting rates in July.
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McGeever: Bowman's turn and oil plunge challenges Fed's hawkish stance
In recent years, the financial markets have consistently underestimated the Federal Reserve’s willingness to reduce interest rates. The latest Fed talk, softer economic data and the dramatic drop in oil prices could indicate that they are right this time. Last week, the central bank appeared to snuff out traders' hopes of a dovish steering. The Fed's summary economic projections maintained its median "dot plot" projection of two rate cuts of 25 basis points this year. It was a close call and the Fed lowered its 2026 forecast from two rate cuts to just one. In the days following, it was widely believed that the hawkish stance of policymakers reflected their desire to anchor inflation expectations. The traders' expectations for rate reductions this year dropped to less than 50 basis points. This reading may be premature. First, the fear of rising energy costs due to conflict in Middle East has disappeared. Oil prices have fallen back to their previous levels, despite the fact that they rose by as much as 17 percent in the days following the Israel-Iran conflict on June 13. The price of oil is falling and, late Monday night, U.S. president Donald Trump announced the two countries had reached a ceasefire. The Fed has made a number of dovish remarks in the past few days, and they are not only from the usual suspects. This suggests that the U.S. Central Bank may be closer than previously thought to lowering rates. NEGATIVE SURPRISE It is not impossible to justify a more dovish approach. Fundamentally, the U.S. economy is deteriorating. Citi's U.S. Economic Surprises Index has been declining since the end May, and is now negative. This means that economic data are underperforming expectations. It fell to its lowest level since September of last year. It is important to be cautious when analyzing the economic surprise indexes following significant movements, because initial expectations could have been overly pessimistic. The current shift is a valid red flag. We look at the surprise factor and how it compares to consensus expectations. Citi's Stuart Kaiser points out that both have fallen into negative territory. The 'hard activity data' index is also now negative. What is 180 DEGREE Turn? Michelle Bowman, Fed Vice Chair of Supervision, surprised investors by saying that she would vote for a rate reduction as early as July if the inflation pressures "remain constrained". Bowman's remarks are important. She hasn't spoken about the economy for over two months. In March, she said that the labor market would be a more significant factor in policymaking. Since her appointment as Fed governor in 2018, she has been consistently one of the most hawkish members on the Federal Open Market Committee. The move came after Governor Christopher Waller said on Friday that a rate reduction next month was on the table. Waller is one of the FOMC’s most dovish members. This is not surprising. Traders and investors should take note if a FOMC hawk such as Bowman now sings from the same hymnal. Cynics might question the timing of Bowman’s apparent 180-degree turnaround, which comes just as Trump intensifies his attacks against Fed Chair Jerome Powell over not cutting interest rates. There's no evidence that political pressure was at work. The recent drop in oil prices will also help her case. It fell 7% on Monday, the largest drop in three years. It was more impressive when you consider that it opened the day at 6% and reached a five-month peak in response to Saturday's U.S. nuclear bombings of Iranian facilities. The price of crude oil did not increase on an annual basis following Israel's initial strike against Iran on June 13. Oil prices have been falling since January and are down by 20% on a year-over-year basis. It's not energy prices that are causing inflation to be sticky. Waller - and Bowman - will love this. It is possible that traders are not overestimating the Fed’s willingness to reduce rates this time. They could be on the right track with their bets that 125 bps will be eased by the end next year. You like this column? Open Interest (ROI) is your new essential source of global financial commentary. ROI provides data-driven, thought-provoking analysis. The markets are changing faster than ever. ROI can help you keep up. Follow ROI on LinkedIn, X.
Britain faces race to avoid $1 Billion in EU Carbon Tax Costs
Market experts say that Britain will have a difficult time linking its carbon market with the EU's within the next seven months to avoid UK companies being charged the carbon border tariff by the EU and facing annual bills of around 800 million pounds ($1.08billion) for the UK.
As part of "a reset" of relations following Britain's exit from the European Union in 2016, the two sides announced that they would link their carbon emission trading systems by the year end.
The two sides have not set a deadline or described the steps that need to be taken before January when Europe's border tax on carbon kicks in.
It will probably take several years for the linkage to become effective. Ben Lee, senior emission analyst at Energy Aspects, said that the earliest date is 2028. However, it's likely to be 2030 or 2029.
The UK government stated that a major benefit of joining the EU carbon market (or emissions trading system, ETS) is the ability to avoid being charged by the EU carbon border tariff, which will be implemented next year. This fee will be imposed on CO2 emissions associated to imports of goods such as steel, cement, and others. The UK government claimed that avoiding these costs could save them 800 million pounds a year.
EU officials claim that in order to be exempted of the border tax, Britain must link its carbon market with the EU.
Yan Qin, ClearBlue's carbon analyst, said that a full linkage would take several years due to the technical complexity of the process. He added that an optimistic scenario could lead to the link being formed in 2027.
A British government spokesperson said that the British government will try to reach an agreement on a carbon market connection as soon as possible. They said that they would not be providing a constant commentary on the negotiations.
TECHNICAL HURDLES
For the UK to make this link, it must adjust its national rules on carbon trading permits. It also needs to bring its emission permit auctions into line with EU regulations and change the national cap for how much carbon can be emitted by companies that are covered by the market.
Not only that. EU and UK schemes have not aligned yet on the number of free CO2 permits that they offer industries. The EU carbon market also has a "reserve", which can add or remove permits to the market in order to stabilize prices.
The EU scheme lacks the "reserve" that Britain has, but it does have a mechanism to control costs and set a price ceiling.
Ingvild Sörhus, senior analyst at Veyt, said that resolving the issue of an adjustment mechanism for supply will be one of many technical calibrations needed before the two systems are linked.
Many businesses claim that these problems are easily resolved.
Alistair McGirr is the Head of Policy and Advocacy for British energy company SSE. He said that with the right political will an ETS linking accord between the EU and UK can be signed in 6 months and operational by the year 2028.
Energy UK, an industry group, said that linkage negotiations might be concluded within a year. However the UK should request a waiver from the EU border carbon tax until the link has been sealed in the event the talks drag on into 2026.
"It's not a matter of major political roadblocks but rather of primarily technical processes... Adam Berman, Energy UK's Policy Director, said that the problems were not small, but not insurmountable.
The UK is planning to introduce its own carbon-border tariff in 2027, a year after the UK.
Brussels might be less in a hurry. Britain's carbon markets are less than one tenth the size of those in the EU, so any link would give British businesses access to a more liquid market.
Although EU officials claim that the EU wants to extend carbon pricing to as many countries as is possible, in order to ensure they all put a price tag on greenhouse gas emission. The companies also claim that the move will reduce costs and avoid competitive distortions for EU and UK consumers.
Pascal Canfin is a French member of the European Parliament who said that the benefits for Britain are more evident than those for the EU.
Canfin said that the EU was motivated by a "political move". "The UK used to be part of [the EU] ETS." It's not a big deal. $1 = 0.7387 pounds (Reporting and editing by David Evans, Susanna Twiddale)
(source: Reuters)