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Asian refiners continue to buy US crude despite the blockade of Hormuz, traders claim
Four Asian refiners purchased U.S. crude oil this week as the Strait?Hormuz was effectively closed. Refiners were looking for alternative supplies to be delivered later this year. The shipping traffic in the 'Strait of Hormuz' fell below average this month at the end of last week, due to the competing claims of Iran and the United States over the control of the waterway. Strong refining margins and tight fuel supplies, coupled with the lack of immediate prospects of free?shipping across the strait have encouraged refiners to secure crude stocks for the coming months beyond the Gulf. Shell's GS Caltex in South Korea purchased two million barrels for delivery in November. The crude was "priced" at around $13-14 a barrel more than the benchmark October Dubai price, traders reported. Eneos Corp., Japan's largest refiner, bought 2 million barrels West Texas Intermediate crude (WTI) from Trafigura. The price was $10 higher than the October WTI. CPC Corp, Taiwan's state owned company, purchased 2 million barrels WTI through a tender for a premium between $8 and $9 per barrel over Dated Brent. CPC Corp. also bought crude oil from West Africa via the tender. Companies rarely comment on business deals. Before the Iran War, Asia got more than half its crude oil supply from the Middle East. According to data from ship tracking firm Kpler, the region imported 2,35 million barrels of crude oil per day from the U.S. in July. This was a record. The state-run refineries in India, Hindustan Petroleum Corp. and Mangalore Refinery & Petrochemicals Ltd. also released tenders this week to purchase crude. Siyi Liu reported from Singapore and Philippa Fletcher edited the story.
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Taiwan's parliament approves three referendums including one on the caning of sex-criminals
Taiwan's opposition-controlled parliament voted on Friday to hold three referendums, including one ?on caning criminals convicted of sex crimes and ?fraud, and another to support nuclear power, which could be held ?later this year. Taiwan holds referendums?every few year,?generally?after?the citizens sign up for specific proposals. However, lawmakers can also approve these, as in the case of these three votes by lawmakers. The measures must be approved formally by the electoral commission, which will determine the date of the vote. There is no guarantee they will become law if they are passed. A relatively high approval threshold has also been a problem in previous referendums. Taiwan will hold local elections on November 28 for county chiefs, city mayors and other officials. The three referendums may also be held at the same time. The Kuomintang, Taiwan's largest opposition party, proposed both the canning referendum and the nuclear referendum. The third referendum, which was proposed by the tiny Taiwan People's Party, (TPP), that generally votes with KMT, concerns the use of traffic fines for road safety improvement. The ruling Democratic Progressive Party has voted against all three referendums. The opposition believes that the key to a successful referendum is the turnout, and wants them held on the same date as local elections. A referendum must pass if at least 25 percent of the roughly 20 million eligible voters on the island vote in favor. There must be at the very least 5 million "yes' votes and they must outnumber "no' votes. In August last year, an opposition-backed stand-alone referendum to reopen Taiwan's final nuclear plant failed because it didn't reach the legal threshold for validity. The Cabinet has three months in theory to submit relevant legislation to the parliament for approval if referendums are successful. Voters in?2018 approved referendums opposing marriage equality. The same-sex marriage was legalised in the year following because Parliament voted to enforce an earlier court ruling that blocking it would be unconstitutional. Ben Blanchard reports.
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France evacuates 525 people as another wildfire strikes southwest pine forests
French authorities evacuated 525 villages after a wildfire broke out in pine woods near an area that was already devastated by major fires this summer. Gilles Clavreul, regional official, told reporters on Friday that the fire had spread within two kilometers (1.2 miles) from the center of Luglon. He said that the situation was "unfavorable" and added?that six aircraft were sent to help. The police have closed the road to the north and the south, putting a stop to traffic in the village. Luglon lies about 100 km (62 mi) south of Arcachon Bay. Two major fires destroyed more than 124,000 acres of land, forcing 220,000 people to evacuate in July. In France's unheard of wildfire season, temperatures will soar to 36° Celsius (97° Fahrenheit) this Friday afternoon. The area burned so far is greater than the previous record of?2022. The Landes region is surrounded by pine forests that are highly flammable once they dry. (Reporting and writing by Stephanie Lecocq, Jean-Stephane Brosse, Inti Landauro; editing by Clarence Fernandez).
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Wildfires in Germany force the evacuation of 1,800 people after reaching a border village
In the early hours of Friday morning, authorities in Germany ordered about 1,800 residents to leave their homes after a wildfire spread from the west to a village near the Belgian border. In a statement issued at 4 am (0200 GMT), officials from the municipality of Strass said that residents should immediately leave the village?of Gey and head to the assistance centre set up in the nearby village Strass. The 'only essentials' were identification documents, medicines and essential belongings. Authorities said that a wildfire in the nearby woods affected about 25 hectares (62 acre) and triggered a major response. The B399 road through the area, which was closed by emergency services and firefighters, was shut down. Weather officials warn that large swathes of Germany face dry conditions with high fire risks. A wetter winter, which fueled growth in vegetation, dried up during rolling heatwaves. (Writing and editing by Clarence Fernandez; Friederike Heine)
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Asian stocks are on track for a strong week-end gain as US rate hike expectations fade
Asian stocks rose on the Friday as they prepared to?have their strongest week in 2 months, as benign inflation data dented expectation of an imminent U.S. interest rate hike. However,?failing talks to end?the war in 'the Middle East will likely keep risk sentiment under control. Brent?futures remained 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, so far, shrugged off the lackluster progress made in ending the Iran War and instead focused on the AI theme following strong earnings which calmed investors' concerns about massive AI expenditure. European stock futures showed a higher opening, while Nasdaq?futures fell 0.1%. The U.S. Inflation Reports this week indicated that pricing pressure was under control. This lowered the chances of a Federal Reserve rate hike next month. Charu Chanana is the chief investment strategist at Saxo. He said that risk appetite has held for now, as the immediate Fed rate hike risk was repriced lower. Chanana said, "This is 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 gained?0.16%. This is its best performance since mid-June. Japan's Nikkei rose 1.5%. South Korea's KOSPI - a barometer of investor sentiment in the AI trade - rose 1.8%. It is on track to snap a 7 week losing streak by gaining nearly 11%. John Sidawi is a senior portfolio manager at Federated Hermes for fixed income. He said that a feature of the markets over recent months was a growing disconnect between geopolitical uncertainties and asset price 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. A meaningful escalation of conflict or a path to resolution could finally force the investors off the sidelines. This could trigger a larger volatility reaction than current market pricing implies. YEN STUCK IN INTERVENTION LOOP The yen is at 159.36 to the dollar. This level is close to 160, which traders believe will trigger a new round of yen purchases from Tokyo after last month's joint intervention with the U.S. failed to stabilize the fragile currency. The idea that the Bank of Japan might finally start to "support" the yen has gained traction, with traders pricing in the prospect of a rate increase next month. However, investors could be disappointed by the BOJ's September meeting if it is not perceived as hawkish. Padhraic G Garvey is the head of ING's global rates and debt strategy. He said that the yen was weak because of "an uber cautious Bank of Japan" and a policy interest rate?that remained too low. Garvey said that rate increases can ease this tension. The sooner they are implemented, the better. While this could be construed negatively for the economy, there is also a choice. Do you want to protect the yen or not? Gold was down 0.6% to $4,325 an ounce in commodities. Traders locked in profits following the yellow metal's highest level since June early in the previous session. This is due to a dimming expectation of a short-term increase. CME FedWatch showed that traders now price in a 35% probability of the Fed raising rates next month compared to 55% one week ago.
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Corporate concern over El Nino hits multi-year high
According to an analysis of company filings and earnings calls, the risk of a particularly strong 'El Nino' and how to adapt have risen to the top of discussions in companies. Scientists say that a "very strong" El Nino event is becoming more likely. It could be one of the most disruptive events since 1950. They also said that the impact of El Nino is difficult to predict, as the man-made global heating compounds the natural phenomenon. Companies are challenged to reduce the impact of crop disruptions and changes in energy demand, and to sometimes even profit from them. AlphaSense, a market intelligence company, reviewed 1,443 corporate documents and conference calls from May 1 to August 4. 478 companies mentioned weather phenomena in these documents. 316 companies made mentions during the calls - the highest number since 2019. Companies in the banking, food and chemicals sectors are leading this trend. They focus more on the scope of their exposure, and contingency plans, than they do on a precise estimate of how it will affect sales, earnings, or cash flow. Nearly 900 documents were mentioned by Indian companies, which heavily depend on monsoon rain. This is nearly ten times more than the number of mentions from U.S. based firms. The Philippines, Malaysia, and Brazil followed. Climate change is fueling warmer, drier and more erratic weather conditions, making predictions more difficult, both from a scientific and business perspective. She said that clients are increasingly focused on risk and preparedness, with the firm helping them to stress-test their supply chains. Dartmouth College's study of 2023 found that previous El Ninos had a negative impact on the economy, with losses for 1982-83, 1997-98 and the two events in between being $4.1 trillion and $5 trillion respectively over the next five years. INCREASED CAPITAL EXPENDITURE Juan Carlos Ortiz said, in a July 31, earnings call, that Compania de Mines Buenaventura, a Peruvian mining company, had added $12 million to their capital expenditure plan, to cover El Nino related risks. He added that each mine's safety committee has mapped out the flood risks and will spend their share of extra money on preparation, such as increasing pumping capacities. Bikash Pradosad, Chief Financial Officer of UPL Limited in India, said on a 3 August earnings call that delays in plantings both in India and Europe would push some demand to 'later quarters. Shrikant Kanhere is the chief executive officer of AWL Agri Business Limited. One of India's biggest consumer goods companies. He said El Nino was a "serious concern" and that rural sales could be at risk if agricultural disruptions reduced people's income. Climate Monitor reported that on August 10th, parts of India had already reached temperatures 8 to 9 degrees Celsius higher than the 1961-1990 average. The average temperature in Asia was 3.9 degrees Celsius higher. El Nino is a positive development for some. AES, a U.S.-based energy company, said that higher spot electricity prices and sales in Colombia increased second-quarter revenue by $67 million. Benjamin Bahr of First Eagle Investments, a U.S.-based portfolio manager, says that the prospect of lower harvests in Asia could also boost farmers in the United States. The U.S. harvest will also be completed, I think. "Those who have crops in storage will have less risk, and could even have a greater upside, if crop prices react positively," said he. (Reporting and editing by Barbara Lewis; reporting by Simon Jessop)
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MORNING BID EUROPE-Yen stuck in twilight zone
Ankur Banerjee gives us a look at what the day will bring for the European and global markets. The yen is back in the intervention area, but it's fate now seems to depend on the Fed's policies and the Bank of Japan's aggressive hikes, after the joint operation with the U.S.' failed to stop the currency's fall. The currency is heading for its worst three-month period, with the rate hovering around 159.37 dollars per U.S. Dollar, moving ever closer to 160, which could trigger another round of intervention. Tokyo spent billions to prop up the yen between April and May, as well as with the U.S. by the end of July. It has said repeatedly that it is ready to step in again if necessary. The yen has remained weak, in part because of the interest rate differential between Japan and the other major currencies. The math is not enough. The yield on the 10-year U.S. Treasury is still close to 4,7%, while it's only 2.9% for Japanese government bonds. This gap is large enough to maintain the carry trade, no matter how much money is thrown in defense of the yen. The markets now bet that it's the Bank of Japan who will help stop the yen from falling, and traders are betting on an increased pace of interest rate hikes by a central banking institution which some analysts claim has been relatively slow to increase rates. Mitsuhiro Furusawa, Tokyo's former top currency diplomat said that most market players believed the BOJ would raise rates in September. I agree with him. But what is important is for the central bank to communicate the likelihood of an accelerated pace of rate hikes. A recent run of 'benign U.S. inflation data has also helped the yen, lowering the odds of an imminent rate increase from the Federal Reserve. However, the risk remains as long as a deal to end the conflict in the Middle East is still elusive. European stock futures indicate a modestly increased open, as risk appetite was bolstered this week by economic data which showed little pricing pressure. The following are key developments that may influence the markets on Friday. France: July inflation figures * EU: Q2 GDP and employment data (Editing Sonali Paul).
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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.
Human hair is a water-saving device in Chile, a country that has been hit by drought.
The small mats of hair at the base of the plants help to lock in moisture in orchards in Chile, which have suffered from drought for many years.
According to the Matter of Trust Chile Foundation, who makes the mats, the hair is turned into sheets or discs of compostable mulch through mechanical weaving. This reduces direct evaporation of up to 71%, and can save as much as 48% of irrigation.
"Hair is interesting. "Hair is very interesting.
Maria Salazar, a farmer in Taltal in the arid Antofagasta Region of Chile, said that the hair had helped her get optimum crop yields from the lemon trees. Taltal is located about 900 km (560 miles north) of Santiago.
Salazar stated that the hair mats were a great benefit for our system, and they also helped to reduce water stress. By providing shade, the hair mats maintain a high level of humidity. They also prevent the sun rays from evaporating our little water.
In 2020, the foundation was established to encourage conservation and regeneration by creatively using waste. The hair comes from 350 salons in Chile and 10 pet groomers. About 2% of hair used for the mats is from pets.
The foundation also produces a liquid fertiliser made from recycled hair, and an absorbent based on hair that can be used to remove contaminants such as metals, oils and other pollutants from water. (Reporting and additional reporting by Fabian Andres Cambero, Editing by Alexander Villegas & Rosalba OBrien)
(source: Reuters)