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EU changes carbon market to reduce price volatility
After pressure from various governments, including Italy, to change the system in order to reduce soaring energy costs triggered by the Iran War, the European Commission made a proposal on Wednesday. The EU proposal would stop the automatic cancellation of excess carbon allowances in the ETS. Instead, spare permits will be kept in a "special reserve" as a buffer for future supply, and could then be released if the price of carbon spikes. If there are currently more than 400 millions permits in the ETS's "market stability reserve", then the excess will be invalidated. The EU has designed the supply to be tightened over time to reduce emissions. This plan, which was previously reported by?by, is part of an EU response to the surge in energy costs triggered by the war with Iran. The ETS was launched in 2005 and is the main EU policy to reduce CO2 emission. It does this by forcing around 10,000 factories and power plants to purchase permits to cover their emissions. This cost accounts for around 11% in the average electricity bill of EU industry. (Reporting and editing by Bart Meijer, Louise Heavens, and Kate Abnett)
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Trackers report that PetroChina fills Singapore's shortfall in crude oil with crude stored in China.
PetroChina supplied a rare shipment of nearly?2million barrels of crude from its storage facility in China to the refinery it owns half of, located in Singapore. The?firm is attempting to fill'shortfalls caused by the iran war. According to tanker trackers Vortexa & Kpler the tanker New Merit delivered 1.8 million barrels in crude oil to Dalian, northeast China, in mid-March. It then transported it to Singapore Jurong Island, where PetroChina & U.S. giant Chevron run a joint venture refinery. Sources declined to name themselves as they were not authorized to speak to the media. China exports crude oil very rarely. According to Vortexa Analytics, and another trade source, the shipment was Murban crude oil from the UAE. PetroChina is an equity partner in the?Murban oil production. PetroChina declined to respond immediately to a comment request, while SRC refused to comment on the refinery's operations. PetroChina and Chevron alternate quarterly in supplying crude oil to the Singapore Refining Co.'s 285,000 barrels per day plant, according to a source familiar with its operation. SRC, the third refinery in Singapore, processes crude oil primarily from the Middle East. Since early March, the supply of crude oil has been disrupted by the war. Refineries in Asia, which purchase the majority of Middle Eastern oil exports have reduced runs to deal with feedstock shortages. PetroChina Chairman Dai Houliang stated last week that his company is able to maintain its normal oil and gas operations because it does not rely on the supply that passes through the Strait of Hormuz. This has been blocked for over a month.
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Minister: Romania is on track to reach deficit target this year
Romania is on track to reach its 6.2% GDP deficit goal for this year, despite the war in Iran. However, it will need to adjust its growth assumptions, if the conflict continues much longer. The country is trying its best to reduce the budget deficit, which was over 9% in 2024 (the highest of all European Union members) to 6.2% by this year and 3% at the end of the decade. This will help it maintain an investment grade rating. It also has a limited fiscal space available to offset the impact of the war on energy prices and debt costs. The broad coalition has capped fuel price markups and approved a scheme of state aid to offset the rise in gasoline prices for road transporters for cargo and passengers. It also plans to do so for farmers. Prime Minister Ilie Bolojan announced in March that the government would temporarily lower excise duty on fuels. Nazare said that if the conflict continues and this takes longer, "the assumptions will be affected. We are talking about higher inflation, less growth...than projected." The markets, the?Commission and investors view us differently. The budget for 2026, approved in March, was based on a 1% economic growth assumption. (Reporting and editing by Emelia Sithole Matarise; Luiza Ilie)
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Coal India sales increase for the first time in 6 months due to gas shortage and summer demand
Coal India said on Wednesday that its sales in March grew 'for the first six months.' This indicates a build-up of coal stock ahead of the peak summer, amid a'shortage in gas -supply due to the U.S./Israeli war against Iran. Coal India said that its offtake or sales to clients rose by 0.7% in March to 69.5 millions tons, despite the 1.5% decline in its provisional production to 84.5million tons. State-run 'company' accounts for more than 80% of country's coal production. It is also the largest coal miner in the world. Coal India’s offtake has fallen for six months in a row after a 7.6% increase?in august, increasing inventory levels at power stations as temperate weather dampens India’s demand for power in 2025. Vasudev Pamanani, director of iEnergy Natural Resources, a Gujarat-based coal trader, explained that the higher?stocks kept import demand low despite summer's peak season?approaching. He said that domestic coal was still more appealing in certain segments. Disruptions in the supply of liquefied gas and reduced gas-based electricity generation will likely increase the reliance on coal to generate power. India, where coal is used for almost?75% its power production, will likely rely more on this polluting fuel in the summer months due to a gas shortage reported in March. Gas accounts for less than 2% of India's total power generation. However, during heatwaves or peak demand periods the country consumes 8-10 gigawatts. India, in the absence of natural gas, has asked its coal plants to operate at full capacity to avoid planned outages. It has also asked industry to generate?their?own power using their captive generating plants to release?supplies to households. India will experience a warmer-than-normal season this year. Heat wave days are expected to surpass the average for the season in May. Sethuraman N R; Varun H K, Editor
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Iron ore companies on positive China data and hopes for stimulus
Iron ore futures prices increased on Wednesday. This was due to the positive factory data and hopes that stimulus measures in China, the top consumer of iron ore, could brighten up demand. After a 0.8% decline on Tuesday, the most traded iron ore contract at China's Dalian Commodity Exchange closed daytime trading up 0.12% to 812 yuan (118.14 dollars) per metric ton. By 0751 GMT, the benchmark May iron ore traded on Singapore Exchange was up 0.64% at $106.15 per?ton. China's factory output expanded at its fastest rate in a year in March. This was a relief to an economy that has been struggling with global supply chain tensions and volatile energy markets. China's central?bank pledged to maintain a loose?monetary?policy on Tuesday, igniting hopes for fresh stimulus measures that would boost domestic?consumption as well as counter external shocks. Xin Ge said that a strong demand and a relatively high rate of operation at domestic steelmills also helped to support ore prices. The price potential was limited by the elevated iron ore stock levels at port, which were nearing a record level. Lange Steel's Ge said that the lowering of steel prices kept a lid upon any further price gains. The Shanghai Futures Exchange has been unable to maintain steel benchmarks due to the falling coal prices. Rebar fell 0.32%. Hot-rolled?coil dropped 0.42%. Wire rod retreated by 0.88%. Stainless steel also retreated by 0.32%. As heightened expectations of an end to the 'Iran war' arose, there was a rise in energy supply unrest. Coking coal and?coke, two other ingredients used to make steel, continued their declines, falling by 5.19% and 2.62 %, respectively. U.S. Secretary of State Marco Rubio and President Donald Trump said that the end of 'war on Iran' could be near. Washington indicated the possibility of both direct talks with the leadership of Tehran and the winding down the conflict without a deal.
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Sources say that India has no immediate plans to restart offshore mining auctions
Two'sources' familiar with the issue have said that India will not 'go ahead with auctioning off deep-sea mine rights due to a lack in technological preparedness, and a low response from potential bidders. India announced its first offshore mineral block auction in November 2024. It included three lime mud, three construction sands, and seven polymetallic blocks. The blocks contained minerals such as cobalt and copper that are essential for solar panels and electric vehicles. In December of last year, the government cancelled the auction because there was a lack of interest. Reports said that the first batch of offshore minerals were worth "more than 1.5 trillion rupees". One source, who declined to be named due to the nature of the discussions being confidential, said: "Our impression is that it's not economically feasible for the companies." The sources also said that Indian companies lack the technology to carry out the process, which requires specialist mining. Sources added that domestic mining companies are unwilling to make the necessary investments for these activities. One source said that Indian authorities may explore the option of auctioning off different blocks to test the interest of miners. The Federal Mines Ministry did not reply to an email seeking a comment. New Delhi has also had a limited success in its onshore auction of critical minerals, with only 60% of the 76 block successfully awarded to bidders. (Reporting and editing by Kevin Buckland; Neha Arora)
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Imports of Brazilian fuel oil from Southeast Asia are robust, easing supply concerns fueled by war.
Shipping data reveals that Brazilian fuel oil imports to Southeast Asia jumped by a whopping 80% in March. This eases concerns about a tight marine 'fuel supply in this month, after the U.S. and Israel 'war with Iran crimped shipments. Data from Kpler & Vortexa shows that Southeast Asia's fuel imports from Brazil increased by more than two-fold in February compared with the previous month. Most of these fuels are headed to Singapore and Malaysia, which is the top ship refuelling centre for Southeast Asia. Kpler data shows that the volume has reached an all-time record of about 1 million metric tonnes (about 205,000 barges per day). Vortexa says it is the highest for a whole year, at around 800,000 tones. Analysts and traders say that the widening price gap between East and west is driving South American fuel oil to Asia. LSEG data show that the East-West VLSFO Swap - the price differential for Asia versus the supply from the United States or Europe - widened on March 31 to a new record of over $160 a tonne, which is more than 170% higher than the end-of-February. "Favourable East-West VLSFO Arbitrage economics along with strong refinery run in the 'Atlantic Basin could continue to push fuel oil towards Asia", said Xavier Tang senior market analyst at Vortexa. ROBUST BRAZILIAN SUPPLY CAPS PREMIUMS After the U.S. - Iran conflict, the Strait of Hormuz was closed to traffic. This is a crucial route that handles around 5% of global energy shipments every day. The cost of refuelling all marine fuels, including VLSFO (high-sulfur fuel oil), HSFO (high-sulfur fuel oil) and marine gasoil has increased. Singapore, Asia's main oil trading hub, has seen spot fuel oil premiums and marine fuels capped by the Brazilian fuel oil inflow, which is mainly very low-sulphur fuel used for bunkering. Spot Premiums for VLSFO LSEG data shows that the price of a ton of coal dropped to around $50 on Tuesday after reaching a'record high' of $140 in March?18. Prior to the start up to war, premiums were only a few tenths. Vortexa's Tang stated that the region's VLSFO exports in March were relatively flat compared to last month despite a heavy influx of Brazilian products. Tang stated that "supplies from Kuwait's al-Zour refining plant have dropped significantly, as the 'Strait of Hormuz' remains largely closed, and Dangote’s RFCC unit (residue liquid catalytic cracked) is operating at full capacity, reducing straight-run low-sulphur inflows to 'Singapore' in March." The spot premiums in Singapore for 'bunker fuel' have fallen to pre-war levels due to increased supply from Brazil, Russia and other countries. However, traders say the outlook remains tight because of a lack of heavy crude oil used to produce HSFO as well as gasoil blending stock that is used to make VLSFO. (Reporting and editing by Florence Tan, Kevin Buckland and Jeslyn Lerh)
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Topps Tiles will close 23 UK stores due to low demand
Topps Tiles, a British tile retailer, announced on Wednesday it would close 23 underperforming stores as part of cost-savings measures. The goal is to boost medium-term profits amid a weakening demand. Topps Tiles, for example, has seen their sales volume and revenue grow as a result of a slowdown in home improvement and DIY. The UK's largest tiling retailer reported a 0.1% drop in revenue for the first half of this year, to?142.7million pounds ($189.31million). The company's?initiatives will?have an impact on revenue but it is focusing on measures that support profitability. Alex Jensen, Chief Executive Officer of the company, said that the team was implementing a?programme of targeted self-help initiatives geared towards the second half of the year. The group, which has approximately 300 stores in the UK, said that its tile retailer CTD is on track to return to profitability?in this current financial year.
Brazil recruits bank managers to fight deforestation
Brazil has been fighting to protect the Amazon for many years, but now it is enlisting new allies to help in this fight: bankers.
The new rule, which takes effect Wednesday, requires that banks check whether rural loan applicants have deforestation in their farms by using government tools based on satellite images.
Farmers applying for government-funded rural credits must provide proof of deforestation permissions if bank managers detect clearing in the Amazon or Woodlands since?2019.
Andre Lima is the head of Brazil's Environment Ministry, which leads efforts against deforestation.
Brazil's powerful agricultural sector has reacted negatively to the new policy. Their deep pockets and increasing opposition against the government could influence elections in October. The Agriculture Ministry argued for the repeal of this rule in late 2017.
However, advocates claim that the government should have more tools in its arsenal to combat deforestation. The rule change is aimed at bringing deforesters under control by denying them billions of dollars in public credit.
According to an analysis by Climate Policy Initiative (a Rio de Janeiro-based think tank) of satellite images and public data, 17% of rural loans disbursed between?2020 and 2024 were for farms located on land that was deforested in the period 2020-2023.
According to data from the central bank, this 'new rule' will cover approximately $53 billion worth of loans made with federal subsidies to Brazilian farmers, or about a third rural credit.
This will also affect the fast-growing private lending to farmers, known as agribusiness letter of credit. These letters are a popular investment for individuals who do not pay income tax, since around half goes through rural credit channels at banks. By 2025 the investment in letters-of-credit would have reached $114 billion. Farmers use the funds to cover their operational costs and invest in new crops.
"This sends a signal to the sector that the financial system won't be involved in these (deforestation activities)," said Juliano Assuncao. He is the executive director at the Climate Policy Initiative.
The policy, and the backlash it has generated, reflect Luiz Inacio Lula Da Silva's commitment towards one of his most important global pledges: ending deforestation by 2030 in Brazil -- a lofty goal for a country which still loses tropical forests at astronomical rates every year.
FARMERS PUSH BACK
Denial of public credit to farmers in Brazil's rapidly expanding agricultural frontier could increase resistance among rural powerbrokers who are already critical of Lula. It may also hurt his appeal as he runs for election in states like Mato Grosso or Goias. New policy blocks subsidized loans to farms that use the funds to clear native vegetation. This is true even if farmers have permission to do so.
Lima stated that "you can still do it but with your own money and not public money." The debate over the new rule could end up in Congress. Lula has lost numerous battles on the environment including a law which gutted the country’s permitting process.
The largest farm lobby group in Brazil, the National Confederation of Agriculture and Livestock of Brazil (CNA), said that it would work to change the rules at Congress, where there is a powerful caucus for agriculture.
The group stated that satellite images used by the government to detect deforestation are inaccurate and can lead to banks withholding credit.
Two academic studies conducted between 2019 and 2020 showed that the satellite tracking system of deforestation by the government, called Prodes, was 93% accurate. Prodes is more likely to make mistakes by ignoring deforested areas than reporting deforestation that never occurred, according to the studies.
CNA's statement argues that, beyond technical limitations and financial system responsibilities that are not theirs, the new policy "shifts responsibility to the financial systems that?are not [theirs]".
But prior government regulations had already involved banks with environmental policy. In 2008, government officials blocked credit for farms that had received environmental fines. A new rule in 2024 will prevent farms located within protected areas from receiving any credit.
Financial industry groups have not complained about the new rule because they say it reinforces the sustainability commitments that they already have.
In a press release, the banking lobby Febraban stated that these measures would strengthen its sustainability commitments as well as ensure safe decisions are made by banks.
A senior executive at a major bank, who asked to remain anonymous in order to discuss internal procedures, explained that the measure could reduce risks for banks by refusing loan applications from those farmers who might later be barred from supply chains due to environmental issues.
The banker stated that "my risk of being repaid decreases" when environmental offenders are subject to boycotts or blacklists. (Reporting and editing by Brad Haynes, Aurora Ellis and Lisandra Andreoni)
(source: Reuters)