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After colossal rainfall in China's Shandong, two people are dead and 10 others missing
The local government in China's eastern Shandong province reported that heavy rains in the Laiwu District in Jinan had soaked the area in just five hours. This was equivalent to half a year of rain. From midnight on Tuesday until 5am local time the area received maximum rainfall of 364 millimeters (14.3 in), which is half of Jinan’s average annual precipitation, 733 millimeters (28.1 in). Near the mountain villages of Shiwuzi & Zhujiayu in Jinan, flash floods washed away or damaged 19 houses. Authorities said that rescue efforts are in full swing and they were deploying all resources to find missing persons. The East Asia Monsoon has been causing disruptions to the second largest economy in the world. After Typhoon Wipha, which pounded Hong Kong Sunday, heavy rains have also flooded the southern regions. Meteorologists have linked climate change to extreme rainfall and severe floods. These events pose a major challenge as they threaten to overwhelm the ageing flood defences and displace millions of people, and wreck havoc in a $2.8 trillion agriculture sector. Reporting by Farah Masters and the Beijing Newsroom. Editing by Jacqueline Wong, Lincoln Feast.
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VEGOILS-Palm edges up, uncertainty over US trade deals keeps market volatile
The price of Malaysian palm oils futures increased slightly on Tuesday despite the fact that the market was volatile due to uncertainty surrounding potential trade agreements between major Asian nations and the United States. At midday, the benchmark palm oil contract on Bursa Derivatives Exchange for October delivery gained 25 ringgit or 0.59% to 4,250 Ringgit ($1,004.73) per metric ton. The contract fell by about 2.1% Monday. Anilkumar bagani, the research head at Mumbai-based Sunvin Group, said that crude palm oil futures had risen overnight following strength in Chicago soyoil and South American futures. Bagani stated that the market volatility is fueled by the fact that there has been no confirmation of any deals between the U.S.A. and other major Asian countries. This excludes Indonesia. He said that the weakness in Chicago soyoil, and rapeseed oils, coupled with a stronger Malaysian Ringgit, had capped gains. Dalian's palm oil contract, which is the most active contract, fell by 0.31%. Chicago Board of Trade soyoil prices were down by 0.91%. As palm oil competes to gain a share in the global vegetable oils industry, it tracks the price changes of competing edible oils. Investor sentiment was impacted by concerns that a brewing trade conflict between the U.S., the European Union and other major oil consumers would reduce fuel demand growth through a reduction in economic activity. Palm oil is less appealing as a biodiesel feedstock due to the weaker crude oil futures. The palm ringgit's trade currency strengthened by 0.07% against dollars, making it slightly more expensive to buyers who hold foreign currencies. Technical analyst Wang Tao stated that palm oil could retest its support level of 4,198 ringgits per ton. A break below this level would open the door for 4,150 ringgits.
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Aluminium producer Norsk Hydro trims 2025 spending despite quarterly profit beat
Norsk Hydro, a Norwegian aluminium manufacturer, cut its capital expenditure guidance for 2025 by 1.5 billion crowns (roughly $147.5 million), and frozen external white-collar employment on Tuesday amid volatile input prices and uncertain demand. Tariffs imposed by the United States on aluminum have disrupted trade and driven physical market premiums up to record levels, increasing cost pressures and changing global supply lines. Hydro Extrusions plans to reduce more than 100 jobs by 2025. Prioritizing operational efficiency and cost reduction, the division will focus on cutting costs. "We have not yet seen major changes in our business operations due to tariffs or potential trade wars." "Our main concern is whether uncertainty will lead to an economic downturn globally," CEO Eivind KALLEVIK said in a press release. Hydro reported a 33.4% increase in its second-quarter core profits, aided by higher energy and aluminium prices, as well as internal gains. This was despite the cost pressures of more expensive raw materials (notably alumina) and currency effects. The company reported that early signs of improvement were seen in some areas, particularly for the domestic producers who benefitted from lower imports. The U.S. is heavily dependent on imports. Canada alone supplies over two thirds of the aluminum it uses. With the new levies of 50%, it is now more expensive to import foreign metals into the largest economy in the world. Barriers in the West, which have lifted regional premiums to curb low-cost competition and helped companies like Hydro to temporarily benefit from record-breaking aluminium production by Chinese smelters. Hydro's adjusted earnings, before interest, tax, depreciation, and amortization, rose from 5.84 billion Norwegian crowns to 7.79 billion crowns between April-June, up from 5.84 billion crowns the year prior. According to an internal consensus, analysts had predicted a core profit in the range of 7,30 billion crowns. (1 dollar = 10.1730 Norwegian crowns). (Reporting and editing by Mrigank Dahniwala; Tomasz Knik and Jesus Calero)
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Vaar Energi, Norway's largest energy company, is looking to cut spending as its Q2 operating profits lag.
Norwegian oil company Vaar Energi reported a lower than expected operating profit for the 2nd quarter on Tuesday. It said that it intends to cut costs, while maintaining dividend payments totaling $1.2 billion in this year and next. The company's earnings before tax and interest (EBIT) rose from $992 to $1.2 billion in April-June, but still fell short of the $1.34 billion average forecast by nine analysts surveyed. Vaar, majority-owned by Italy's Eni in a press release, said that it planned to cut spending by $500,000,000 "for the period of 2025-2026", to improve its competitiveness and resilience in an unstable market. Vaar CEO Nick Walker stated that "with current production exceeding 350,000 barrels equivalent per day (boepd),we expect to reach approximately 430,000 boepd by the fourth quarter. This will help us achieve our plans for transformational growth in 2025." He added that the company is on track to maintain production between 350,000 and 400,000 boepd by 2030, with a portfolio of 30 new projects. Of these, more than 10 will be sanctioned in this year. (Reporting and editing by Terje Solsvik, Nerijus Adomiaitis)
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Investors focus on tariff negotiations and earnings to cause Asian stocks to fall
Investors took note of the tariff negotiations between America and its trading partners, as Asian stock markets dipped after reaching a peak of nearly four years on Tuesday. In Europe, the dithering mood will continue as earnings of firms such as SAP and UniCredit are expected to be a major focus. The EUROSTOXX Futures, DAX Futures, and FTSE Futures all fell by 0.5%. MSCI's broadest Asia-Pacific share index outside Japan reached its highest level in October 2021 during early Asian hours, but it was down 0.4% at the time of writing. The index has risen by nearly 16% in the past year. S&P 500, Nasdaq and Dow Jones both closed at record highs on Monday. After a long weekend of elections in which the ruling coalition lost in the upper house, Prime Minister Shigeru ishiba has vowed to stay in office. Japanese shares initially jumped, but then reversed their course and traded lower on Tuesday afternoon. The election results had been priced in by that time and weren't as bad as investors feared. The yen rose 1% on Sunday, recovering some of its losses in the past weeks. It was slightly weaker last at 147.73 dollars. Kristina Clifon, economist at Commonwealth Bank of Australia said that the weakening of Ishiba’s leadership would open the door for more fiscal expansion, which is bad for Japanese assets including the yen. The bottom line is that the yields on longer-term Japanese government bonds and JPY could fall if worries about Japan's fiscal expenditures intensify. Investors have focused on tariff negotiations in advance of the deadline of August 1, with the European Union exploring an broader range of possible countermeasures to the United States, as the prospects of an acceptable agreement with Washington diminish. CBA's Clifton says that the EU and Japan are the two most important countries for global growth. Clifton said that the USD's reaction to trade deals announced with these countries will depend on their details. He noted the dollar may fall again against the British pound and the euro. The euro remained steady at $1.1689 after gaining 0.5% the previous session, but was still far from the four-year high that it reached at the beginning of the month. Investors are looking for alternatives to U.S. stocks that have been hurt by tariff uncertainty. The euro is up 13% in 2018. The dollar index was 97.905. Investors await results from Wall Street giants Alphabet, Tesla, as also from European heavyweights LVMH and Roche this week, while uncertainty about tariffs clouds the outlook. Investors have been on tenterhooks for the past few weeks due to the rumblings about whether President Donald Trump would fire Fed chair Jerome Powell. Trump was on the verge of firing Powell last week but backtracked, citing the likely market disruption. U.S. Treasury secretary Scott Bessent stated on Monday that the Federal Reserve as an institution needed to be reviewed and to determine if it was successful. This further exacerbated concerns over the independence of the U.S. Central Bank. It is expected that the Fed will hold rates at their July meeting, but may lower them later in the year. The market will focus on Powell's address on Tuesday to get clues as to when the Fed may ease policy. Goldman Sachs' strategists predict that the Fed will deliver three consecutive 25 basis-point reductions starting in September "provided inflation expectation remains in check amid concerns about Fed independence." Brent crude futures dropped nearly 1%, to $68.56 per barrel. U.S. West Texas intermediate crude fell 1%, to $66.51 a barrel. (Reporting and editing by Shri Navaratnam in Singapore, and Jamie Freed.)
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Kansai will begin surveys for a new nuclear power plant in Mihama
Kansai Electric Power announced on Tuesday that it would begin the surveys to build a new reactor for its Mihama Nuclear Power Station in Fukui Prefecture, western Japan. The existing facility will be replaced. This is the first concrete step in building a nuclear reactor in Japan after the Great East Japan earthquake in 2011, which resulted in a meltdown of the reactor that forced Tokyo Electric Power to close its Fukushima Plant. As the country relies heavily on imports of fossil fuels, the government wants to see nuclear power contribute more to energy security. Kansai is Japan's largest nuclear power company based on the number of reactors that are online. In a statement, the company stated that the surveys would include topography, geology, and other studies, as well as communication with local residents. An executive at Kansai told a press conference on Tuesday that the company is looking into the SRZ-1200 light water advanced reactor. Mitsubishi Heavy Industries has developed this type of reactor. Japan currently has more than a dozen nuclear reactors with a combined power of 12 gigawatts. Many companies are going through a licensing process to comply with stricter safety regulations implemented after the Fukushima 2011 disaster. Before the disaster, these companies operated 54 reactors. (Reporting and writing by Yuka Obasashi; editing by Chang-Ran Kim, Christian Schmollinger, and Katya Golubkova)
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Russell: OPEC and IEA crude demand forecasts could be too conservative
The International Energy Agency (IEA), as well as OPEC, are both more conservative in their growth forecasts. The numbers contained in the monthly report of the Organization of the Petroleum Exporting Countries and the wider OPEC+ are less optimistic. The IEA has a similar view. In its monthly report for July, it predicted that the global crude oil demand would grow by 700,000.00 barrels per day in 2025. This is the lowest growth rate since 2009. OPEC’s July report is a little more optimistic, predicting that oil demand will rise by 1,29 million bpd by 2025. Of this, 1.16 million bpd will come from countries outside of the Organisation for Economic Cooperation and Development. Both the IEA's and OPEC's forecasts are so cautious now that they run the risk of actually being too pessimistic. This is especially true in Asia, the region with the highest imports. Last year, OPEC was incredibly bullish about its demand predictions, despite the fact that Asia's crude imports fell. The difference between the demand forecasts and the imports are obvious, but it is the volume of seaborne crude imports that is driving the price of crude oil, as this market accounts for 40% of the daily global demand. OPEC's July 2024 Monthly Report forecasts that Asia's non OECD oil consumption will rise by 1,34 million bpd, with China representing 760,000 bpd. According to LSEG Oil Research, Asia's crude oil imports will actually decline in 2024. They will drop by 370,000 bpd and reach 26.51 millions bpd. The first drop in Asia's imports of oil since 2021 occurred at a moment when the demand was impacted by COVID-19-related lockdowns. The difference between OPEC’s bullish predictions for most of 2024 and reality of low crude imports from Asia may have tempered their forecasts for the year 2025. Question is, are they now being too cautious? ASIA RECOVERY OPEC's monthly report for July forecasts that non-OECD Asia will see its oil demand rise by 610,000 bpd by 2025. China, Asia's largest crude importer with 210,000 bpd, and India, Asia’s second biggest crude importer with 160,000 bpd, are the two main contributors. In its report from July, the IEA stated that they expect China's oil demand to increase by 81,000 bpd by 2025. India is also expected to gain 92,000 bpd. The demand for oil in Asia non-OECD is expected to rise by 352,000 bpd. The IEA and OPEC numbers are both modest, particularly since Asia's crude oil imports have actually seen a relatively high growth rate in the first half 2025. According to calculations based upon LSEG data, Asia's imports for the first half of the year totaled 27,25 million bpd. This represents a 510,000 bpd increase over the same period in 2013. Imports rose in the second quarter in particular in China as refiners capitalized on the lower oil prices at the time of cargo arrangements. Some of the increased oil imports were likely used to build up inventories. This process may continue into the second half if the oil prices remain low and OPEC+ continues to increase production amid the economic uncertainty caused by President Donald Trump's global trade war. The difference between the cautious oil demand estimates of this year and those of last year, which were more optimistic, shows that price is a much bigger factor in demand. This is especially true in Asia. In part, the low crude oil imports in Asia in 2024 were due to the high prices that persisted throughout the year. Prices peaked at $92 a bar in April before falling briefly below $70 a barrel only in September. Brent futures, the benchmark, peaked at just under $82 per barrel in January and traded as low as $58.50 a barrel as late as May. You like this column? Open Interest (ROI) is your new essential source of global financial commentary. ROI provides data-driven, thought-provoking analysis on everything from soybeans to swap rates. The markets are changing faster than ever. ROI can help you keep up. Follow ROI on LinkedIn, X. These are the views of the columnist, who is also an author. (Editing by Kate Mayberry).
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Sources say Indonesia will sign a $8 billion refineries deal with a US company amid tariffs agreement.
According to two sources with knowledge of the matter, and a presentation from the economic ministry, Danantara, Indonesia's sovereign wealth fund, plans to sign a $8 billion contract with U.S. engineering company KBR Inc. to build 17 modular refining plants. The contract was part of the trade agreement between Indonesia and the United States last week, which led to the reduction in threatened tariff rates from 32% to 19%. Airlangga Hartarto of Indonesia, who is the chief negotiator for the deal, revealed the modular refinery design during a briefing held behind closed doors on Monday night with Indonesian business leaders. Two sources confirmed that the deal was discussed in a presentation. Danantara, formerly Kellogg Brown & Root Inc., and KBR Inc. did not immediately reply to requests for comments. The proposed refinery contract has never been reported before, even though some details have been released, including the increased energy cooperation. Reporting by Stefanno Sulaiman, Dewi Kurniawati and Gibran Peshimam. Editing by Stephen Coates.
Oil prices fall as concerns about trade wars increase fuel demand
Investor sentiment was weighed down by concerns that a brewing trade conflict between the U.S., the European Union and other major oil consumers would reduce fuel demand growth through a reduction in economic activity.
Brent crude futures dropped 24 cents or 0.35% to $68.97 per barrel at 0055 GMT, after closing 0.1% lower Monday.
U.S. West Texas Intermediate Crude was trading at $69.99 a barrel. This is down 21 cents or 0.31% from the previous session, which saw a loss of 0.2%.
The WTI August contract expires Tuesday, and the September contract, which is more active, was down 23 cents or 0.35% to $65.72 per barrel.
The oil market is still struggling to find direction after the ceasefire between Israel and Iran on June 24, which ended the conflict, has removed any concerns about major supply interruptions in this key Middle East region.
Brent and WTI have traded between $5.19 and $5.65 since then. This is because supply concerns were eased as major producers increased output, and investors became more concerned about the global economic situation due to changes in U.S. Trade Policy. A weaker dollar has helped to support crude oil prices as buyers paying in other currencies pay less.
In a recent note, IG analyst Tony Sycamore noted that prices have fallen "as trade-war concerns offset the support provided by a softer dollar".
Sycamore has also suggested that the tariff dispute between the U.S.A. and EU could escalate.
According to EU diplomats, the EU is looking at a wider range of counter-measures that could be taken against Washington as the prospects of an acceptable trade deal with Washington are fading. US has threatened to impose 30% tariffs on EU imports if no deal is reached by August 1.
As the Organization of the Petroleum Exporting Countries (OPEC) and its allies begin to unwind their output cuts, there are signs that the market is also seeing an increase in supply.
Data from the Joint Organizations Data Initiative showed that Saudi Arabian crude oil exports rose in May to their highest level in three months. (Reporting by Anjana Anil in Bengaluru; Editing by Christian Schmollinger)
(source: Reuters)