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As the market assesses the supply risk posed by Russian refinery attacks, oil prices are on the rise.
The price of oil edged upwards on Tuesday, after rising the previous day. Market participants were concerned about a possible disruption in supply from Russia following drone attacks by Ukraine on its refineries. Brent crude futures were up 15 cents at $67.59 per barrel as of 0354 GMT, while U.S. West Texas intermediate crude was also up 15-cents. Brent crude settled at $67.44, up 45 cents. WTI closed 61 cents higher on Monday at $63.30. Ukraine intensified its attacks on Russia's infrastructure to undermine Moscow's military capability as the talks to end their war have stagnated. In a note to clients, Tony Sycamore, IG's market analyst, said that "heightened fears of supply disruptions by Russia, a major producer accounting for more than 10% of the global oil output", is helping oil price. U.S. Treasury secretary Scott Bessent said on Monday that the government will not impose any additional tariffs on Chinese products to encourage China's purchase of Russian oil, unless European countries impose steep duties on China and India. Analysts at JP Morgan said that an attack on a Russian export terminal such as Primorsk would have a greater impact on Russia's ability sell oil overseas, and thus affect export markets. The attack also suggests that there is a growing willingness among oil companies to disrupt the international oil market, which could add upward pressure to oil prices. Investors will also be watching the U.S. Federal Reserve meeting on September 16-17, where the bank is expected to reduce interest rates. Lower borrowing costs may boost fuel demand. Sycamore stated that "a weaker U.S. Dollar, driven by the expectation of a Federal Reserve interest rate cut this coming week, has further supported crude oil." The U.S. Dollar Index, which measures the strength of the greenback against six other currencies, has fallen to a near-week's low. Oil becomes cheaper for holders of currencies other than the dollar when the dollar falls. The markets also factored in the expectation of a decline in crude inventories in the U.S. in last week's official data, which is expected to be released on Wednesday at 1430 GMT. Energy strategist Walt Chancellor of Macquarie Group stated in a note to clients that U.S. crude stocks are expected to drop by 6.4 million barrels during the week ending September 12. This follows a build-up of 3.9 million a week prior. According to a poll conducted on Monday, analysts expected that U.S. crude and gasoline stocks would have decreased last week while distillate stockpiles likely increased. (Reporting and editing by Christopher Cushing in Bengaluru, Anjana Anil from Bengaluru)
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Gold reaches new highs as Fed hopes for rate cuts dent the dollar
The gold price reached a new record on Tuesday. This was largely due to the weakening dollar, which is expected to be a factor in the Federal Reserve meeting scheduled for this week. Gold spot rose by 0.1%, to $3.681.18 an ounce, as of 0326 GMT. It had earlier reached a session high of $3.689.27. U.S. Gold Futures for December Delivery were unchanged at $3,718.50. "The mood is bullish... the markets are buying rate cuts going into this FOMC Decision." "The outlook for gold remains positive in the short-to-medium term," said Kyle Rodda of Capital.com. If the Fed does not support this in their forecasts and guidance, gold prices could hit an air pocket. If the Fed supports market pricing, it could be the catalyst that sends gold prices through $3,700. In a post on social media, U.S. president Donald Trump called for Fed chair Jerome Powell to implement a "bigger cut" to the benchmark interest rate. CME FedWatch shows that traders are pricing in an almost certain 25 basis-point rate cut by the end of the meeting, which will take place on September 17. There is a slight chance of a reduction of 50 bps. Gold becomes cheaper when interest rates are lower. The dollar was trading near a two-and-a-half-month low versus the euro, and close to its 10-month low versus the risky Aussie. SPDR Gold Trust (the world's biggest gold-backed ETF) said that its holdings increased 0.21% on Monday to 976.80 tons from 974.80 on Friday. A U.S. court of appeals refused on Monday to allow Donald Trump the firing of Fed Governor Lisa Cook, the latest move in a legal fight that threatens to undermine the Fed's independence. Silver spot fell by 0.4%, to $42.52 an ounce. Platinum fell by 0.5%, to $1394.37, and palladium fell 0.3%, to $1180.64. (Reporting and editing by Sumana Nady in Bengaluru)
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Orsted Initiates $9.4B Rights Issue, Majority Earmarked for Sunrise Wind
Danish offshore wind developer Orsted has priced its $9.42 billion rights issue at 66.6 crowns ($10.46) per share, a 66.7% discount to the stock's closing price on Friday, as it shores up its finances in the face of mounting challenges.The company has been grappling with supply chain disruptions, surging interest rates, project delays and U.S. President Donald Trump's anti-wind policies, leaving its share price down 85% from a January 2021 peak.Earlier this month, Orsted won shareholder approval for the capital raise, which it needs to help fund U.S. projects thrown into uncertainty.The company, which currently has 420 million shares outstanding, plans to add 901 million new shares in the rights issue, it said in a prospectus published on Monday.At the heart of its financial struggles are the U.S. projects Sunrise Wind and Revolution Wind."Today ...we're initiating a rights issue, through which we intend to raise capital to cover the additional funding requirement related to Sunrise Wind and create a robust financial foundation for Orsted to realise the potential of our business," it said in a statement.Two-thirds of the new capital is earmarked for Sunrise Wind, a project that saw potential co-investors flee after the White House ordered Norway's Equinor to halt a neighbouring wind farm in April.U.S. officials also issued a stop-work order last month against the nearly complete Revolution Wind project. The joint venture overseeing it subsequently filed a lawsuit against the administration.The rights issue closes on October 2, with trading in the new shares set to start on October 10, Orsted said.($1 = 6.3661 Danish crowns)(Reuters - Reporting by Stine Jacobsen, editing by Essi Lehto and Anna Ringstrom; Editing by Kirsten Donovan)
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Iron ore production in China is recovering.
The iron ore futures price rebounded Tuesday due to a rebound in Chinese concentrate production following weeks of declines. Meanwhile, gains in steel benchmarks were a reflection of improving sentiment, despite weak housing statistics. As of 0244 GMT, the most-traded contract for January iron ore on China's Dalian Commodity Exchange was trading 0.82% higher. It was 803.5 yuan (about $112.88) per metric ton. The benchmark iron ore for September on the Singapore Exchange rose 0.24% to $105.75 per ton. Chinese consulting firm Mysteel said that after weeks of decline, the production of iron ore by Chinese mining companies recovered last week. This is a sign of domestic miners gradually recovering their operations. China's crude output of steel in August fell for a third month in a row after steelmakers at Tangshan, China’s largest steelmaking hub, curtailed operations to prepare for upcoming military parades. Meanwhile, raw steel production in Brazil dropped 4.6% on an annual basis in August. As the property market continues to be weak, China's new homes prices dropped 0.3% month-on-month in August. On Thursday, the China Iron and Steel Association (a state-backed organization) will host a meeting for the heads of the iron ore purchasing at steelmakers. Coking coal and coke both increased by 5.42% and 4.03 % respectively. China's coal production fell by 3% in August compared to the same month last year, as production restrictions continued to be a drag. Mysteel, in a separate report, said that the capacity utilisation rate at coking coal mining was still up by 6.9 percentage points, to an average of 82.7%, and daily raw coal production increased by 9.1% from week-to-week. All steel benchmarks at the Shanghai Futures Exchange gained ground. Rebar increased by 1.41%. Hot-rolled coils grew by 1.34%. Wire rod rose by 0.52%. Stainless steel gained 0.19%. ($1 = 7.1184 Chinese yuan). (Reporting and editing by Rashmi Liew)
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Japan's Nikkei reaches record highs as tech stocks follow Wall Street gains
The Nikkei 225 index in Japan reached a new record on Tuesday as the technology stocks followed Wall Street's strong overnight performance ahead of this week's important policy meeting by the U.S. Federal Reserve. The Nikkei reached a high of 45,055.38, surpassing the important 45,000 mark for the first. By the end of morning trading, the index had risen 0.3% to 44,904.13. Monday was a holiday and the market was closed. The Topix index as a whole rose by 0.41% on Tuesday to 3,173.57. The Nikkei closed 4% higher on the week ending last Friday, reaching a record high for a third week in a row. Hikaru Yasuda is the chief equity strategist of SMBC Nikko Securities. He said that the rally was fueled by a strong corporate outlook which prompted analysts at SMBC Nikko Securities to raise their target prices for some local companies, as well as the expectation of a new premier following the resignation of Shigeru Shiba. He said that the Nikkei was also supported by the firm outlook for the global economy and the expectations of U.S. rate cuts. Yasuda said that the Nikkei could finish the year around the 45,000 mark, but it may briefly fall if expectations of U.S. interest rate cuts decline and Treasury yields increase. He said that "the market expectations are quite strong" for rate cuts in the U.S. Tokyo Electron shares rose by 2.17% and were the largest contributor to Nikkei's gains. Advantest, a maker of chip-testing equipment, recovered from losses early on to gain 0.04%. Sumco, a wafer manufacturer, soared by 9.8% and was the Nikkei's biggest gainer. Disco and Resonac Holdings, both chip-related companies, jumped by 6.9% and 5.4% respectively. Fast Retailing, the owner of the Uniqlo brand, fell by 1.26% and weighed the Nikkei most. On the Tokyo Stock Exchange, the prime market, 68% of the stocks traded advanced, 27% declined, and 3% were flat. (Reporting and editing by Sherry Phillips; Junko Fujita)
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Shanghai copper reaches a five-month high as Sino-US trade talks progress
The price of copper futures in Shanghai reached a five-month high Tuesday. This was largely due to the progress made in trade negotiations between the United States, China and the bets on a rate cut in the United States. U.S. officials and Chinese officials came to an agreement Monday on a framework for the short-video application TikTok. This has sparked hopes of a close trade deal. Analysts at Everbright Futures stated in a report that the progress made by trade talks between the two world's largest economies has boosted market sentiment. The U.S. president Donald Trump will call the Chinese President Xi Jinpingin on Friday. As of 0320 GMT, the most traded copper contract at the Shanghai Futures Exchange had risen by 0.36% to 81,120 Yuan ($11,396.62) per metric ton. The contract reached its highest level since 28 March at 81.530 yuan during the session. Analysts at Everbright Future said that the prices were also boosted by increased bets on a rate reduction this week by the U.S. Federal Reserve. The market is currently focused on whether or not there will be any more positive signals. Analysts at Benchmark Minerals Intelligence wrote in a report that rate cuts increase copper prices by leveraging a weaker currency and expectations of higher demand. Analysts said that the benchmark three-month copper price on London Metal Exchange fell 0.43%, to $10,142.5 per ton, due to profit-taking. On Monday, the contract reached a 15-month high of $10,192.5. Nickel, aluminium, and tin all saw a decline of 0.49%, while zinc, lead, and zinc were relatively unchanged. Aluminium fell by 0.11% on the LME, while nickel dropped 0.2%, and lead declined 0.12%. Zinc also fell 0.15%, but tin rose 0.32%. Click here to see the latest news in metals.
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Sunrise Energy, Australia, secures US funding interest for Scandium Project
Sunrise Energy Metals Ltd, a Canadian company backed by Robert Friedland and specializing in mining in New South Wales, received a letter from the U.S. Export-Import Bank expressing interest in a $67 million debt financing to fund its Syerston Scandium Project. The miner's shares surged up to 38.8%, reaching A$4.65, the highest level since November 2018. This was a far greater increase than the 0.4% gain in the benchmark S&P/ASX 200. The company stated that the financing is equivalent to half of the estimated costs of development for the project. The U.S. government's support for scandium underscores its strategic importance, following China's April restrictions on rare earth metals exports that have disrupted the global supply chain. Alternative sources are becoming increasingly valuable for the Western defence and technology sector. Robert Friedland, Co-Chair of the Committee, said that Australia is a major ally of America and its significant supply of strategic metals makes it an important supplier. The company plans to finish its feasibility study in late October and incorporate the new metal inventories to ore reserves estimates for the project. The company stated that if Sunrise submits a formal loan application, EXIM would conduct due diligence prior to making a final commitment. (Reporting and editing by Anjali Sing in Bengaluru)
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Australian shares rise as commodities soar, traders focus on jobs data
Australian shares rose on Tuesday as investors were cautious in anticipation of important unemployment data which could affect the Reserve Bank of Australia’s rate-cutting policy. As of 0023 GMT, the S&P/ASX 200 was up 0.3% to 8,874.90. The benchmark index closed Monday flat. The markets in Sydney bet that the RBA will adopt a cautious stance on policy easing at its two-day September 29-30 meeting following a string of positive domestic data. Swaps indicate that the odds of a RBA cut in this month are minimal. What was once priced as a near certainty move in November is now priced at 70%. The focus is now on the local jobs data, due on Thursday. These numbers have been strong for months. Australian heavyweight miner's gained 1.4%, hitting a 2-week high. The weaker dollar helped global copper prices reach a 15-month-high on Monday. BHP, Rio Tinto, and Fortescue all gained between 1% to 1.6%. Stocks of gold rose by 1.2% as bullion prices reached a record high. A weaker dollar made the precious metal priced in greenbacks more attractive to holders of other currencies. Evolution Mining shares rose up to 2.4%. The energy sector gained 0.6% as oil prices rose. New Hope Coal, which is a major contributor to the subindex's growth, has risen as high as 8.3%. This is its highest level in seven months despite reporting a 8% decline in annual profits. Financials captained broader gains by a 0.1% drop. According to CME’s FedWatch tool, the odds of a 25-basis point cut by the U.S. Federal Reserve at the conclusion of its two-day meeting are near 100%. New Zealand's S&P/NZX 50 Index traded flat at 13,218.22, with attention on GDP data that are likely to show 0.3% quarter-on-quarter contraction. This will reinforce expectations for two additional rate cuts before early next year.
Industry worries EU carbon border tax will penalise British green energy
British wind and solar farms exporting power to continental Europe could face CO2 costs from 2026 even though they do not produce any emissions unless the UK and European Union can agree changes around the EU's carbon border tax.
The charges, set out in a little-noticed clause of the CO2 levy law, might hit profits of renewable resource tasks in the UK, add to already-high EU power rates and even cause greater emissions, market sources and experts told .
It's an issue on both sides, stated Adam Berman, deputy director of market group Energy UK.
( It) disincentivises tidy power in the UK at the moment in which we're trying to increase provision of clean power, and it's. going to increase (power) prices in northern Europe.
The Carbon Border Adjustment Mechanism (CBAM) will impose a. CO2 emissions fee on imports to the EU of steel, cement,. aluminium, fertilisers, electrical energy and hydrogen, unless the. exporting nation has equal CO2 prices policies.
Under its present style, the CO2 fee for power would be. determined using a default value based on average and historical. power generation emissions. The British energy market states. that will unjustly penalise renewables.
It is a problem that we understand and one that we. have actually raised, that the UK has actually raised, with the EU, Catherine. Stewart, the UK Treasury's deputy director for trade policy,. told an occasion in Brussels last month.
A European Commission representative said it would continue. talks with all nations, consisting of the UK, on the design of the. carbon levy before finalising its application from 2026.
The additional cost of the charge might make it uneconomic to. export excess tidy power from Britain to Europe at specific. times when need is weaker, renewables generation is high, and. power prices are low, experts stated.
Analysis from Aurora Energy Research study, shared with ,. showed as much as 3 gigawatt hours (GWh) of eco-friendly power. generation, enough to power up to 2,000 homes a year, could be. curtailed by 2030 if the charge shows a disincentive to exporters.
You are including a tax on exporting, so this basically. reduces the revenue margin each time you want to export, said. Pranav Menon, GB Power & & Renewables Lead at Aurora.
In 2030, the carbon border charge could knock 5% off the price. British eco-friendly tasks can make for their power, Aurora. stated.
Decreased access to cheap British electrical power could increase. wholesale power rates by as much as 4% in markets like Ireland and. Northern Ireland's Integrated Electricity Market which import a. lot of power from the UK, the Aurora analysis revealed.
If European countries increase coal and gas power generation to. comprise the shortage, CO2 emissions might even increase - by as. much as 13 million tonnes a year, comparable to emissions of 8. million cars, an earlier analysis by AFRY suggested.
A European Commission representative said eco-friendly power. exports will be able to prevent the CO2 charge if they can comply. with specific requirements and prove their origin.
But market figures state that might be tough.
Most of the electrical power (throughout interconnectors) is traded. anonymously ... so it's nearly difficult to show what. that carbon material is, said Pieter-Jan Marsboom, items and. services supervisor at UK-Belgian power interconnector Nemo Link.
UK ELECTION
British and EU diplomats have quietly begun going over the. concern, but the extremely political nature of any post-Brexit deals. between the 2 implies no progress is anticipated before the UK. general election on July 4.
Some market groups are already in talks with the Labour. Celebration, which surveys suggest is on course to conveniently win the. election, in the hope that it would push in government for a. deal with Brussels on the CO2 levy.
The Labour Celebration did not react to ask for comment.
One alternative would be to link the EU and UK carbon markets,. excusing UK power manufacturers from the tax.
The very best method to handle the (CBAM), and to stop the UK. exporters paying a tax to the EU that might otherwise go into. the UK budget, would be by having (carbon market) connecting, stated. UK power generator SSE'S Group Head of Policy and Advocacy. Alistair McGirr.
Up until now, neither Brussels nor London has actually leapt at that concept.
Previous UK climate change minister Graham Stuart told . in March that the two sides might examine the possibility of. connecting under their post-Brexit Trade and Cooperation Agreement.
The European Commission spokesperson stated the bloc is open. to linking its carbon market with others, but this must stem. from a mutual dream from both parties.
This stays to be checked out, the representative said.
(source: Reuters)