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Japan records record temperatures; rice crops are threatened
The government has warned residents to stay inside and promised to take steps to reduce weather-related damage in rice crops. The readings in Isesaki in Gunma Prefecture in the east have surpassed last week's high of 41.2 C in Tamba, Hyogo Prefecture in the west. According to the Fire and Disaster Management Agency, over 53,000 people were hospitalized for heat stroke so far this summer. Takeshi Ishikawa (63), an auto worker in central Tokyo, said: "Today's sweltering hot." He was filling up his water bottle from a fountain. "If it reaches 42 degrees, that would be hotter even than the bath I prepare for 40 degrees." The average temperature in Japan continues to rise after reaching a record-high in July, for the third consecutive year. Meanwhile, the northeastern area along the Sea of Japan recorded critically low rainfall levels, causing concern over the rice crop. The government will adopt a new policy of increased rice production on Tuesday to avoid future shortages. Shinjiro Koizumi, the Minister of Agriculture in Japan, said during a press briefing that "we need to act quickly and with a sense a crisis to prevent damage". He said that the government would offer assistance for pest control, and to combat drought. The extreme heat of 2023 damaged the quality, leading to a severe shortage of rice last year. This was made worse by the government misreading supply and demand. This led to the price of rice, an important staple food, reaching historic highs. A national crisis was triggered. (Reporting and editing by Christian Schmollinger; Muralikumar Aantharaman, Kim Coghill, and Irene Wang. Additional reporting by Miyu Arishima and Irene Wang.
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Saudi Aramco second-quarter net profit drops 22% on lower revenue
Aramco, the Saudi Arabian oil giant, reported on Tuesday a 22% decline in its second-quarter profits, due mainly to lower revenues, and increased debt. The top oil exporter in the world reported a net loss of $22.7 billion for the three-month period ended June 30. This was below a median estimate of $23.7 billion provided by 17 analysts. Aramco’s average realized crude oil price for the quarter was $66.7 per barrel, down from $85.7 a barrel during the second quarter in 2024 and $76.3 a baril in the first three months of this year. Total borrowing increased to $92.9 billion by June 30, up from $74.4 billion a year earlier. Gearing, which is a measure of debt, increased to 6.5%, up from minus 0.3% one year ago and 5.3% in the previous quarter. The company has been a major cash cow for Saudi Arabia for many years. It confirmed the previously announced $21.3 billion total dividends in the second quarter. Of this, approximately $200 million is performance-linked, a system introduced in 2022 after the oil price boom following Russia's invasion in Ukraine. Aramco announced in March that it would pay out $85.4 billion as total dividends for 2025, a drop of 37% from the $124 billion paid out last year. As the company's cash flow shrinks, Aramco will reduce its performance-linked component by 98% to $900m. In the second quarter, free cash flow fell by nearly a fifth compared to last year. Reports last month indicated that Aramco was close to signing a deal with a group headed by BlackRock to raise $10 billion. The company is also considering selling five of its gas powered power plants in order to raise $4 billion. Riyadh is pressing the company to boost profits and payouts. Dividends are an important source of income for the Saudi government. It owns Aramco directly in 81.5% and through the PIF sovereign wealth fund, another 16%. This is especially true as the Saudi government spends money on diversifying the economy from oil. Last year, oil accounted for 62% of government revenue. According to the International Monetary Fund, oil prices must be at least $90 per barrel for the Kingdom to balance its budget in 2025. Brent crude oil, the global benchmark, was trading at $68.83 as of 0625 GMT. Reporting by Yousef Taba and Luke Tyson from Dubai; editing by Mark Potter and Christopher Cushing
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Naturgy raises free float by selling 5.5% of its shares
The Spanish power utility Naturgy announced on Tuesday that it had sold approximately 5.5% of its stock through an accelerated sale and a bi-lateral sale, as part of a plan to increase the free float of its shares and return to its main indexes. A bookbuilding accelerated, which opened on Monday, raised 500 million Euros ($577.30 Million) by selling 2% of the company's shares at 25,90 euros. Morgan Stanley advised on the bookbuilding. The company did not disclose the price of each share. In another transaction, Naturgy sold 3.5% its shares to a "financial entity" that was unidentified. The company had previously stated that the operations would increase Naturgy’s free float, or the number of shares available for public trading, to 15%. This should be sufficient to reach its goal to return to the main indexes. Naturgy announced in February that it would buy almost 2,5 billion euros worth of its own stock at 26.5 euro per share. This represents about 9,08% of the equity of Naturgy. These shares would then be resold on the market. The plan was supported by its four major shareholders, who agreed to reduce their holdings. The company has reduced its shareholdings from 9.99% to just 4.5% with these two sales.
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Australia sets a price floor for rare earth minerals to boost the industry
Madeleine King, Minister of Resources, said that Australia was considering a price-floor to support vital minerals projects. This includes rare earths. Her comments led to an increase in the share prices of Australian listed rare earths mining companies. Australia is positioning itself to be a source of minerals that are critical for sectors like the automotive and defence industries. On Tuesday, it offered a $87 million lifeline for Trafigura's metals-processing operations. Nyrstar has assessed the potential of its smelters at Port Pirie, Hobart, and Port Pirie to produce antimony bismuth germanium indium. This support is due to the fact that prices for certain metals, such as rare earths, have been too low in Western countries to finance processing capacity. As a result, China has become the world's largest supplier. Last month, the U.S. Government offered a price floor as part of a landmark agreement with its largest producer of rare earths to support an industry that is viable in the U.S. King, in a Monday night statement reported first by an Australian newspaper, said that "pricing certainty" would reduce the risk of companies and investors being exposed to volatile and opaque markets and prices. Australia wants to ensure price certainty through its role of a buyer for emerging critical minerals after it pledged A$1.2billion ($775.08m) earlier this year to build a critical strategic mineral reserve. "Mechanisms to establish a price floor that is appropriate are being actively considered," King said. She said that the focus would be on creating agreements for national offtake, or purchase deals. These will be voluntary. The agreements will be focused on minerals that have demonstrated applications in defence, strategic technologies and minerals for which Australia is particularly well placed to supply due to supply chain problems. This includes heavy rare earths. The rare earths group consists of 17 elements. There is a subset called heavy rare earths. These include terbium, dysprosium and other elements that are classified by their higher atomic mass, less abundant and more expensive than others. The shares of Australian producer Lynas Rare Earths - which began producing heavy rare Earths earlier this season - rose more than 6%, reaching their highest level in 13 years. Iluka Resources shares and Arafura Rare Earths's shares both rose close to 10% Tuesday. Luke Winchester is a portfolio manager at Merewether Capital. He said: "I believe the market now views rare earths miner and processors as strategic asset given the involvement of the (Australian government)." Last month, U.S. rare-earths producer MP Materials announced a multibillion dollar deal with the U.S. Government to increase output of rare-earth magnets and loosen China's hold on materials used in the construction of weapons, electric vehicles, and many electronic devices. Analysts said that the pricing agreement, which set a floor price for a buyer, would have global effects. Analysts said that the move would be beneficial for producers but increase costs for automakers, and their customers. Reporting by Melanie Burton and John Biju from Melbourne and Bengaluru, and editing by Alasdair Pala and Jamie Freed.
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Dollar steadies as Fed rate-cut bets boost Asian shares
The U.S. Dollar steadied on Tuesday as investors bet that the Federal Reserve would act to support the largest economy in the world. U.S. stocks rallied Monday, boosted by generally positive earnings reports. Bets on a Fed rate cut in September increased after Friday's disappointing jobs report. The oil prices fell after OPEC+ increased their output, but gold remained near a week-high and Vietnamese stocks reached a record high. Rodrigo Catril is a senior currency strategist with National Australia Bank. He said that there are signs of weakness within the U.S. The broadest MSCI index of Asia-Pacific stocks outside Japan grew 0.6% while Japan's Nikkei gauge rose 0.7%, after falling the most in over two months on Monday. Euro Stoxx futures in the pan-regional market rose by 0.2%. German DAX futures also increased by 0.3%, and FTSE Futures rose by 0.3%. U.S. S&P 500 e-mini stock futures rose 0.2%. The dollar was unchanged at 147.09yen and the euro fell 0.1% to $1.1557 on the same day. The dollar index, which measures the greenback's value against a basket major counterparts, rose 0.2% following a two-day drop. The soft U.S. payroll data on Friday added weight to the argument for a Fed cut, and gained another level of drama when Trump fired the director of labor statistics who was responsible for these figures. CME Fedwatch says that the odds of a rate cut in September are now at 94%. This is up from 63% on July 28. The market participants expect at least two quarter point cuts before the end of this calendar year. The news that Trump will fill the Fed governorship early has also increased concerns about a politicization of interest rates policy. Trump threatened again to increase tariffs on Indian goods above the 25% level announced by Trump last month over its Russian oil purchase. New Delhi, however, called Trump's attack "unjustified", and pledged to protect its own economic interests. Oil prices fell on mounting Oversupply Concerns are growing after Trump stated that he would impose secondary tariffs of 100% on Russian crude purchasers such as India. Brent crude futures < LCOc1> The price of a barrel dropped 0.1%, to $68.67. U.S. West Texas intermediate crude > dropped 0.1% to $66.21 per barrel. Investors are eagerly awaiting the earnings reports of Walt Disney, Caterpillar and other companies this week. Palantir Technologies' revenue forecast was raised for the second time in this year, as it expects to see sustained demand for artificial intelligence services. Michael McCarthy, Moomoo Australia's market strategist, said in a recent note that "Company earnings continue to drive market movements." Today's data from Asia's largest economies revealed resilience in the service sector. S&P Global's final services purchasing managers’ index (PMI), which measures the performance of the service sector in Japan, grew to 53.6 from 51.7 in the previous month. This is the largest increase since February. China's service sector expanded last month at the fastest rate in over a year. The blue-chip CSI300 Index in China rose 0.4% while the Shanghai Composite Index grew 0.6%. Vietnam's stock index soared by 2.4%, reaching a new record high. Bitcoin dropped 0.4% to 114448.59, while spot gold fell slightly at $3,368.44 an ounce.
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Henan Province in China receives new funding to help the drought-hit grain industry
Henan Province, known as China’s Granary for its wheat production, announced that it had received funding of 131.5 million Yuan ($18.3million) from the central government to support its drought-stricken agriculture sector. This was more than double the amount that the province of central China had raised on its own between mid-July to early August in order to protect the fall grain harvest. The autumn harvest accounts for approximately three quarters of the annual grain production of the country. The Henan Finance Department said on its website that the total amount of funds allocated since then to repair wells, maintain irrigation equipment, and construct water projects has reached 260 million Yuan. Since July, the North China Plain, which includes provinces like Henan and Shandong as well as Hebei, has experienced persistently high temperatures with lower than normal precipitation. The Ministry of Agriculture and Rural Affairs warned that drought conditions could worsen in certain areas due to the hot weather and low rainfall expected in August. Rice-growing areas in the lower and middle reaches of Yangtze River have also been flooded by unprecedented rainfall. The ministry warned that China's fall grain production is at risk and faces challenges due to overlapping droughts and floods. According to a statement released on Monday, the ministry has taken 34 measures to reduce yield losses in areas that are severely affected, stabilize production in areas that are mildly affected, and increase output for areas not affected. Reporting by Ryan Woo, Editing by Michael Perry. $1 = 7.1821 Chinese Yuan Renminbi
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Aurubis beats profit expectations despite earnings dip
Aurubis reported a core profit of $1.2 billion for the first nine-month period of its financial year 2024-2025, which exceeded market expectations. Contributions from copper products, sulfuric acid and precious metals helped to boost this figure. The largest copper producer in Europe reported that operating earnings before taxes (EBT) dropped to 286 millions euros ($330.44) during the first nine-months of its fiscal year from 333million euros a year ago. This was higher than the 281 million euro estimate of analysts in a poll provided by the company. Aurubis expects the contribution from sulfuric acids, copper products, and metals will continue throughout the remainder of the financial year. However, it is also expecting a continuing shortage of copper concentrates, and recycling materials. The Hamburg-based firm has narrowed their forecast for 2024-2025 and expects an operating EBT of between 330 and 370 millions euros, down from the previous range 300 to 400 million euro. Aurubis stated in a press release that it anticipated the result to be in the middle of the range. Aurubis has also narrowed the range of its operating return on capital used, a measure for analysing profit, from 7% to 11%.
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Oil drifts lower on rising supply, concerns about demand
Oil prices fell on Tuesday due to concerns about oversupply. OPEC+ increased production despite a weak outlook for demand. This more than offset the possibility of a tightening Russian oil trade as a result of U.S. policy. Brent crude futures fell 11 cents or 0.16% to $68.65 per barrel at 0424 GMT. U.S. West Texas Intermediate Crude was down 12 Cents, or 0.1%, to $66.17 per barrel. Both contracts fell more than 1% the previous session, settling at their lowest level in a week. Both benchmarks have declined because the extra capacity of OPEC+ acts as a buffer to any deficiencies in Russian barrels. This is according to Priyanka Sackdeva, a Phillip Nova senior analyst. The Organization of the Petroleum Exporting Countries (OPEC+) and its allies agreed to increase oil production in September by 547,000 barrels a day. Analysts caution that the actual amount returned to the market may be lower. Analysts are concerned about the demand side of things, and some predict a slowdown in economic growth for the second half. Analysts at JPMorgan said that the risk of an American recession is high, as the labour demand has stagnated. The analysts noted that the July Politburo Meeting in China signaled no further policy easing, with the focus now shifting to structural rebalancing. Oil prices are now being driven by concerns about possible disruptions in supply, not the weakening of economic fundamentals. Donald Trump, the U.S. president, has stated that he may impose secondary tariffs of 100% on Russian crude purchasers such as India. This comes after Trump announced a 25% tariff in July on Indian imports. Trump threatened to increase tariffs again on Monday over Russian oil purchases. New Delhi branded his attack as "unjustified," and pledged to protect its own economic interests. This further exacerbated the trade gap between the two nations. India is the largest buyer of Russian crude oil by sea. It imported about 1.75 million barrels per day (bpd) from January to June, an increase of 1% compared to a year earlier, according to trade sources. Analysts fear that the latest U.S. trade tariffs could dampen demand for fuel and slow down economic growth. (Reporting from Anjana Anil, Bengaluru; Siyi Liu, Singapore; editing by Christian Schmollinger & Jamie Freed).
Canada's First Quantum signs $1 billion gold streaming agreement with Royal Gold
First Quantum Minerals, a Canadian mining company, signed a streaming agreement worth $1 billion with Royal Gold's subsidiary. The two companies announced the agreement in a joint statement released on Tuesday.
A gold streaming financing method is one in which the buyer pays an upfront amount to a mining company in exchange for future production.
First Quantum, in the agreement, will receive an upfront payment of $1 billion from Royal Gold AG for gold deliveries based on copper production at First Quantum Kansanshi Mine in Zambia. The deal is expected to be finalized on Wednesday.
First Quantum receives 20% of the spot price for every ounce delivered. This will increase to 35% in certain cases, such as achieving credit or leverage targets.
Royal Gold says the agreement provides immediate cash flow on a large-scale, long-term asset. The company anticipates receiving about 12,500 ounces from the stream in this year, and on average 35,000-40,000 ounces per year over the next 10 years.
(source: Reuters)