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Iron ore declines due to tepid China demand and higher shipments
The price of iron ore futures fell for the fourth session in a row on Wednesday. This was due to a combination of a lower demand for this steelmaking ingredient from China, the world's largest consumer, and increased shipments by Australia and Brazil, two major producers. By 0300 GMT, the most traded September iron ore contract at China's Dalian Commodity Exchange was trading 0.21% lower. It was 698 yuan (US$96.94) per metric ton. The benchmark June Iron Ore traded on the Singapore Exchange fell 0.18% to $95.9 per ton. Mark Ferguson, Director of Metals and Mining Research at S&P Global Commodity Insights, told a conference in Singapore on Wednesday that China's crude output is expected to drop to 968 millions metric tons in 2025, down 37million tons from 2024. Lange Steel, citing data from the China Iron and Steel Industry Association, said that daily crude steel production at key steel companies in May decreased by 0.3% on a month-to-month basis to 2.2 millions tons. Data from Mysteel revealed that the total volume of iron-ore shipped from Australia and Brazil increased by 0.9% week-on-week as of 25 May, reaching 27.3 million tonnes. Mysteel attributes the increase to increased ore shipments by Australia. They increased their shipments to China from 10.4% to 17.4 millions tons week-on-week. The Brazilian government also dampened sentiment by renewing 25% tariffs, which were originally imposed on 19 steel products last year. Official data released on Tuesday showed that China's industrial profit increased in April. This gives policymakers reason to be optimistic, as recent stimulus measures are helping keep the economy afloat, despite the trade tensions between the United States and China. Coking coal and coke, which are used to make steel, also fell by 0.99% and 0.75%, respectively. The Shanghai Futures Exchange saw a decline in most steel benchmarks. Rebar fell 1%, while hot-rolled steel coils lost 0.74%. Stainless steel also slipped 0.82%.
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France's Macron and Indonesia's Prabowo discuss defense ties
The French president Emmanuel Macron and his Indonesian counterpart Prabowo Subito will meet in Jakarta on Tuesday, with a focus on strengthening defence ties between Paris and its largest arms client in Southeast Asia. Indonesia is the second stop on Macron's regional tour after Vietnam where both countries signed deals valued at over $10 billion. He will fly to Singapore Thursday. Sjafrie Sjamsoeddin welcomed Macron to Indonesia on Tuesday evening. He said that the two countries will sign a letter of intent on defence and work together on "strategic weapons hardware". He cited fighter jets, submarines, and other military hardware. The Foreign Ministry had said earlier that the two sides will discuss "existing partnerships" but did not give specifics about the topics of discussion. In 2022 the two countries will sign an $8.1 billion deal in defence that includes an order for 42 Rafale jet fighters manufactured by France's Dassault aviation, as well a number of agreements, including sub-development and ammunition. "Some commitments require follow-up and Indonesia showed interest in other military hardware but there have been no advances yet," said Khairul FAHMI, a military specialist at the Institute for Security and Strategic Studies, an Indonesian-based institute. Rafale jets are not yet delivered to Indonesia. In February, Mohamad Tonny Harjono, the chief of Indonesian Air Force Mohamad Tonny Harjono stated that six jets will arrive in Indonesia by early 2026. In addition to the Rafale agreement, Indonesia has also announced that it will buy 13 Thales long-range air-surveillance radars in 2023 and two "Scorpene' submarines in 2024 from France. Prabowo was Minister of Defence when these deals signed. Paulo Castellari, the new CEO of Eramet, is part of Macron's delegation to Indonesia's mineral-rich Indonesia. Eramet Chairwoman Christel Bories said that they would be looking to discuss mining permissions in relation to Weda Bay Nickel Mine. Indonesia has the largest known nickel reserves and is the world’s leading producer. Eramet, among other companies, has complained about the reduction of volume allowances. Eramet is still interested in nickel processing, despite having dropped a plan last year to build a BASF plant. (Reporting and writing by Ananda Teresia in Jakarta and Stanley Widanto, in Paris. Editing and proofreading by John Mair.
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Gold prices rise as investors purchase gold on dips, and look to US economic data for clues
The gold price rose on Wednesday as investors bought at the bottom. However, gains were capped due to easing U.S. - EU trade tensions. Now, the market is awaiting the upcoming U.S. Personal Consumption Expenditures Report for clues on interest rates. As of 0237 GMT spot gold rose 0.3% to $3,308.99 per ounce. This was a slight recovery from the 1% drop in the previous session. U.S. Gold Futures increased 0.2% to $3.308.00. Donald Trump, the U.S. president, has backed off his threat to impose a 50% tariff on the European Union. He will now delay its implementation until the 9th of July, in order to allow time for negotiations between White House officials and the 27-nation group. Gold's drop below $3300 attracted some buyers. The broader market, however, is still generally optimistic now that US-EU tensions have eased. This is capping gold's upward run for the moment," said Tim Waterer. If support continues to hold in the $3.250-$3,280 range, gold could make another move towards $3.400, if risk appetite declines. Market participants are now awaiting the U.S. PCE for April data, which is due on Friday, in order to determine if Federal Reserve will be reducing interest rates. Data show that U.S. consumer sentiment rebounded in may, ending a five month slide. This was aided by a temporary truce between the U.S. and China trade war. Since December, the Fed's policy rate has remained unchanged at 4.25% to 4.50% as officials wait for more clarity about the economic and pricing impact of Trump’s tariffs. "More definitive moves in gold may need to be delayed until we have a better read on Nvidia's results and U.S. Waterer stated that Core PCE will be released on Friday. Spot silver remained at $33.31 per ounce. Platinum was up 0.4% to $1,084.07, and palladium was down 0.2% at $976.22.
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Copper prices rise as risk appetite increases after tariff relief
The copper price in London was stable on Wednesday. This was due to an improved risk appetite in the financial markets after President Donald Trump’s latest tariff relief. However, a strong dollar held gains in check. The London Metal Exchange's three-month copper price remained at $9,593.5 a metric ton as of 0214 GMT. The Shanghai Futures Exchange's (SHFE) most-traded contract for copper edged up 0.1% to 78.390 yuan per ton ($10,886.29). Copper prices have traded in line with the overall sentiment on the global stock exchange in the past two weeks. The US stock market has been lifted by trade optimism, and this has had a ripple effect on copper prices, said Kelvin Woong, senior market analyst for Asia Pacific, OANDA. Trump reversed his decision to impose tariffs of 50% on EU imports next month. He restored the deadline of July 9 to allow time for negotiations. The risk-taking sentiment on the financial markets was boosted. Tuesday, data showed that U.S. consumers' confidence improved in May after five months of declines. This was due to a truce between Washington and Beijing in their trade war. The dollar index also added to the overnight gains. This made dollar-denominated investments more expensive for holders of other currencies. In its latest monthly bulletin, the International Copper Study Group reported that the global refined copper market had a surplus of 17,000 metric tonnes in March compared to a surplus of 180,000 metric tonnes in February. Other London metals include aluminium, which fell 0.3% at $2,478.50 per ton. Zinc also fell 0.1% to $2703, while lead declined 0.3% to 1,979.5, and nickel fell 0.3% at $15,370. Tin rose 0.1% to $22,630. The SHFE aluminium price rose by 0.5%, to 20,165 Chinese yuan per ton. Lead was down by 0.2%, at 16,765 Yuan. Nickel was 0.4% lower at 121,870 Yuan. Zinc was unchanged at 22,415 Yuan. Tin fell 0.3%, to 264440 Yuan. ($1 = 7.2008 Chinese Yuan) (Reporting and editing by Sherry Jacobi-Phillips in Bengaluru)
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Asian shares and the U.S. Dollar climb on positive data, technology optimism
The dollar gained on Wednesday, as the United States economy showed promising signs and speculation about strong tech earnings. The markets welcomed the apparent easing of trade frictions between Europe and the U.S., while global bond market settled after an alarming surge in long term yields. The U.S. consumer sentiment surprised to the upside before Thursday's closely watched employment figures. Nvidia's shares jumped by more than 4% on Tuesday and it will be the final of the Magnificent Seven tech giants in the U.S. to announce earnings after the close of U.S. markets. Chris Weston is the head of Pepperstone's research and said that there was renewed confidence in Nvidia to beat consensus estimates. He said that if Nvidia delivers better than expected sales and profit margins, "the rally will be on." According to LSEG, the chipmaker will report that its first-quarter revenues grew by 66.2% and reached $43,28 billion. According to two sources with knowledge of the situation, European Union officials are asking companies about their U.S. investments plans. MSCI's broadest Asia-Pacific index outside Japan rose 0.3% during morning trading, while Japan's Nikkei gained 0.6% for a fourth consecutive session. The dollar index (which tracks the greenback versus a basket currencies) rose by 0.1% on Tuesday, adding to the 0.6% gain of that day. The dollar rose 0.1% against the euro to $1.132. Australian shares rose 0.17% but the currency fell 0.2% as April consumer prices data exceeded expectations. The kiwi currency fell 0.3% as the Reserve Bank of New Zealand reduced rates, as expected. Japanese bonds fell, trimming an increase yesterday, in advance of a bid for 40-year-old securities and amid speculation that the Ministry of Finance would reduce the issue of long-dated instruments. Early trading saw oil prices rise as the U.S. banned Chevron CVX.N's export of crude from Venezuela due to a new authorization for its assets in Venezuela, raising the possibility of a tighter supply. Brent crude futures increased 0.4% to $64.37 per barrel while U.S. spot gold rose 0.1% following a drop of more than 1% Tuesday.
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France's Macron and Indonesia's Prabowo discuss strategic partnerships
On Wednesday, French President Emmanuel Macron and his Indonesian counterpart Prabowo Subito will meet in Jakarta to discuss defence ties. This is Paris' largest arms client in Southeast Asia. Indonesia is the second stop on Macron's regional tour after Vietnam where both countries signed deals valued at over $10 billion. He will fly to Singapore Thursday. The Indonesian foreign ministry stated that the two countries would discuss "existing partnerships" without providing specifics about the topics of discussion. In 2022 the two countries will sign an $8.1 billion deal in defence that includes an order for 42 Rafale jet fighters manufactured by France's Dassault aviation, as well a number of agreements, including sub-development and ammunition. "Some commitments require follow-up and Indonesia showed interest in other military hardware but there have been no advances yet," said Khairul FAHMI, a military specialist at the Institute for Security and Strategic Studies, an Indonesian-based institute. Rafale jets are not yet delivered to Indonesia. In February, Mohamad Tonny Harjono, the chief of Indonesian Air Force Mohamad Tonny Harjono stated that six jets will arrive in Indonesia by early 2026. In addition to the Rafale agreement, Indonesia has also announced that it will buy 13 Thales long-range air-surveillance radars in 2023 and two "Scorpene' submarines in 2024 from France. Prabowo was Minister of Defence when these deals signed. Paulo Castellari, the new CEO of Eramet, is part of Macron's delegation to Indonesia's mineral-rich Indonesia. Eramet Chairwoman Christel Bories said that they would be looking to discuss mining permissions in relation to Weda Bay Nickel Mine. Indonesia has the largest known nickel reserves and is the world’s leading producer. Eramet, among other companies, has complained about the reduction of volume allowances. Eramet is still interested in nickel processing, despite having dropped a plan last year to build a BASF plant. (Reporting and writing by Ananda Teresia in Jakarta and Stanley Widanto, in Paris. Editing and proofreading by John Mair.
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Oil prices rise as U.S. bans Chevron's export of Venezuelan crude
The oil prices rose in the early hours of trading on Wednesday, as the U.S. banned Chevron's exports from Venezuela due to a new authorization for its assets there. This raised the prospect of a tighter supply. Brent crude futures gained 47 cents or 0.73% to $64.56 per barrel at 0028 GMT. U.S. West Texas Intermediate crude rose 49 cents or 0.8% to $61.38 per barrel. Sources reported that the Trump administration had issued a new approval for U.S. giant Chevron, which would allow it to retain assets in Venezuela without allowing them to export oil or expand their activities. Robert Rennie, Westpac's director of commodity and carbon strategies, wrote in a report that the loss of Chevron Venezuelan barrels will lead refiners to rely more on Middle Eastern crude. The previous license had been revoked by the U.S. president Donald Trump on 26 February. The licenses granted to Chevron, and other foreign oil companies in recent years have helped to support a small recovery of Venezuelan oil production that was hit by sanctions. This has risen to around 1 million barrels a day. The European Union has begun to ask top EU companies about their U.S. investments plans. This is a sign that Brussels will be advancing trade negotiations with Washington. Trump's move comes after he backed down from his threat over the weekend to impose tariffs of 50% on European goods, which would have hurt demand for oil and economic activity. The gains on Wednesday have largely recovered the losses of Tuesday when prices fell by around 1% following signs of limited progress in the fifth round of Iran and U.S. nuclear negotiations. The market anticipates that any resolution between Iran and the United States could increase Iranian oil supply on the market. The Organization of the Petroleum Exporting Countries (OPEC+) and its allies will meet in full on Wednesday. However, no major policy changes are anticipated. Sources say that eight members of OPEC+ could decide on a July output increase when they meet this Saturday. Rennie stated that the most likely scenario for July would be a 411,000 barrel increase per day. This would "add to the rising inventory as we approach the summer driving season here in the U.S."
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France's Macron and Indonesia's Prabowo discuss strategic partnerships
On Wednesday, French President Emmanuel Macron and his Indonesian counterpart Prabowo Subito will meet in Jakarta to discuss defence ties. This is Paris' largest arms client in Southeast Asia. Indonesia is the second stop on Macron's regional tour after Vietnam where both countries signed deals valued at over $10 billion. He will fly to Singapore Thursday. Indonesia's Foreign Ministry said that the two countries would discuss "existing partnerships" without giving any specific details. In 2022 the two countries will sign an $8.1 billion deal for defence that includes an order of 42 Rafale jet fighters from France's Dassault. They also signed a number of agreements, including those relating to ammunition and submarine development. "Some commitments require follow-up and Indonesia showed interest in other military hardware but there have been no advances yet," said Khairul FAHMI, a military specialist at the Institute for Security and Strategic Studies, an Indonesian-based institute. Rafale jets are not yet delivered to Indonesia. According to Antara, the chief of Indonesian Air Force Mohamad Tonny Harjono stated in February that six aircraft would arrive in Indonesia by early 2026. In addition to the Rafale agreement, Indonesia also signed a 2024 agreement with the French shipyard Naval Group for the purchase of two "Scorpene", and announced in 2023 the purchase 13 long-range radars by France's Thales. Prabowo was Minister of Defence when these deals signed. Paulo Castellari, the new CEO of Eramet, is part of Macron's delegation to Indonesia's mineral-rich Indonesia. Eramet Chairwoman Christel Bories said that they would be looking to discuss mining permissions in relation to Weda Bay Nickel Mine. Indonesia has the largest known nickel reserves and is the world’s leading producer. Eramet, along with other companies, have complained about the reduction in volume allowances. The group has also been in discussions with Indonesia's newly established sovereign wealth fund Danantara about investments in the battery supply chain. Eramet is still interested to enter nickel processing, despite having dropped a plan last year to build a BASF plant. (Reporting and writing by Ananda Teresia in Jakarta and Stanley Widanto, in Paris. Editing and proofreading by John Mair.
Toyota's earnings are cushioned by the demand for hybrids but a US tariff threat looms
Toyota's profits are expected to remain steady when it reports its annual earnings on the 15th of this month. However, investors will be alert for any signs that U.S. Tariffs could have an impact.
Investors will pay close attention to the impact of President Donald Trump's Tariffs on Toyota's future profits. The levies will likely deal a severe blow to automakers doing business in the U.S.
What Toyota says about Toyota Industries will also be of interest, after the automaker announced last month that they were considering a possible buyout.
Seiji Sugiura is a senior analyst with Tokai Tokyo Intelligence Laboratory. "The focus will be on the guidance for fiscal year ending in March 2026," he said. "I do not know whether Trump's tariffs will be considered or not."
According to the average seven analysts surveyed, the Japanese automaker will deliver a 2% increase year-on-year in operating profit, which would be equivalent to $7.86 billion. This would be the first rise in three quarters.
The company's sales data has already shown that the momentum was maintained at the beginning of the year. Toyota's sales worldwide rose by 5% between January and March compared to a year ago, thanks to strong demand in the United States and Japan, its two biggest markets.
Toyota's operating profits for fiscal 2024 are expected to be lower than last year's record. The automaker increased its forecast of operating profit for the fiscal year that just ended in February to 4.7 trillion Japanese yen. This would represent a 12% drop year-over-year.
Toyota's strong demand for hybrids like the Prius, Camry and other gasoline-electric vehicles has validated its bet on this technology. However, it also poses a challenge to the automaker as suppliers are struggling to keep up.
POTENTIAL TARIFF HIT
Tokai Tokyo’s Sugiura said that the company's operating profit for fiscal 2025 could be affected by 800 billion yen as a result of the impact of tariffs on Toyota’s U.S. bound exports from Japan.
The estimate doesn't factor in any wider impact of Trump's tariffs such as a possible U.S. economy slowdown, or on Toyota exports from Canada and Mexico to the largest economy in the world, where they have production bases and make some of their most popular models.
Toyota previously stated that it would continue its normal operations and focus on reducing fixed costs. It did not take more radical measures, such as raising car prices to respond to tariffs.
Toyota, according to sources familiar with the situation, is looking at producing its next-generation RAV4 SUV on American soil to protect itself from the potential risk of U.S. exchange rates and tariffs. The demand for this car also appears to be outstripping supply.
Toyota shares are down 13% this year compared to the Nikkei index's 8% drop over that time period.
Analysts are also waiting for an update from Toyota on its strategy to unwind cross-shareholdings, as regulators and investors have been putting pressure on Japanese companies in recent years to sell stakes they hold in business partners and affiliates.
The structure of any deal will determine how Toyota's price is affected by a possible investment into a potential purchase of Toyota Industries. Toyota Industries was a company that has been around for nearly 100 years, from which Toyota Motors was spun-off. James Hong, Macquarie's head of mobility analysis, explained.
Toyota Industries owned around 24% of Toyota as of September of last year. Toyota Industries also held more than 5% Denso, a major Toyota supplier, and a Toyota group company.
He said that investors would view any additional investment by Toyota in its supplier as a negative, but steps to address cross-shareholdings and dual listing concerns could be seen as positives for the entire market, including Toyota. $1 = 143.7500 Japanese yen (Reporting and editing by Muralikumar Anantharaman).
(source: Reuters)