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Morning bid Europe-Inflation will wipe out UK's rate-cutting bets
Rae Wee gives us a look at what the European and global markets will be like tomorrow. The Bank of England's (BoE), which is expected to cut rates again this year, will likely be disappointed if the consumer prices in Britain are higher than expected. The BoE expects the inflation rate in September to be 4%, which is the highest of all the big economies around the world and twice the BoE target. The markets currently price in a chance of nearly 15% that the central banks will ease rates by 25 basis point at their November meeting. A positive surprise in the Wednesday figures will almost certainly wipe out these bets. This would also cloud the central bank's rate outlook into the end of the year, as policymakers are divided between those who wish to take aggressive action in order to counter the slowing down of the job market and others who are concerned about the persistent inflation pressure. A majority, however, is in favour a gradual rate cut. The rapid pace of UK price increases, which continue to put pressure on households and raise borrowing costs, adds to the challenges facing Finance Minister Rachel Reeves. She has promised to ease cost-of living pressures and accelerate economic growth. Reeves, who is trying to reach her fiscal goals and avoid disappointing investors that have already driven up borrowing costs in Britain sharply, has indicated she will increase taxes and reduce spending as part of her budget plan for November 26. Investors were also reeling in other markets from the sudden drop in gold prices that has stopped the metal's explosive rally, despite the lack of an obvious cause. Asian shares also declined, but Japan's Nikkei recovered from its early losses and traded higher following a report that Sanae Takaichi is preparing a stimulus package for the economy that will likely exceed last year’s 13.9 trillion ($92.19) billion yen to help consumers tackle inflation. Money managers from around the world are returning to Japan's debt and stock markets because of its reflationist promises and to diversify away from more expensive U.S. or European markets. The following are key developments that may influence the markets on Wednesday. UK Inflation (September) - Barclays, Tesla earnings
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Oil prices rise more than 1% due to supply risks and US-China trade negotiations
The oil prices rose for the second day in a row on Wednesday. They increased by more than 1 percent, boosted by supply risks related to sanctions and hopes of a U.S. China trade agreement. Investors also took note of news that the U.S. was seeking oil deliveries for its strategic reserves. Brent crude futures were up 94 cents or 1.5% to $62.26 a barrel as of 0400 GMT. U.S. West Texas intermediate crude futures were up 92 cents or 1.6% to $58.16. Oil prices have recovered from a five-month low, which was reached on Monday. Producers increased supply and trade tensions dampened demand. News that the summit between U.S. president Donald Trump and Russian president Vladimir Putin had been put on hold, as well as fears of disruption fuelled by Western pressures on Asian oil purchases from Russia, led to a supply risk. Mukesh S. Sahdev, CEO and founder of energy market consulting firm XAnalysts, said that despite the general bearish sentiment, a glut of oil and weak demand in the Middle East, Venezuela, Colombia, and Russia still prevents the oil price from falling below $60. Investors monitored the tension between Venezuela, an important oil producer and the U.S. The U.S. attacks against Venezuela in international water are a dangerous escalation, and they amount to "extrajudicial killings", a group independent United Nations experts stated on Tuesday. As part of the campaign to combat a "narcoterrorist threat" emanating from Venezuela, U.S. president Donald Trump ordered strikes against at least six vessels that were suspected by the U.S. of transporting drugs in the Caribbean. Investors will also be closely monitoring the progress of U.S. China trade talks, as officials from both nations are due to meet in Malaysia this week. Trump said Monday he expected to negotiate a fair deal with Chinese President Xi Jinping whom he intends to meet next week in South Korea. Trump's comments on trade negotiations are likely to provide some support for the market. The cancellation of the Trump and Putin summit is also likely to provide some support, said ING commodities analysts on Wednesday. Market sources cited American Petroleum Institute data on Tuesday to confirm that U.S. crude oil, gasoline, and distillate stock levels fell in the last week. In a note to clients on Wednesday, ANZ analysts found that oil was also in favor of a U.S. strategy for replenishing strategic reserves. The U.S. Department of Energy announced on Tuesday that it plans to purchase 1 million barrels of oil to replenish its Strategic Petroleum Reserve. It is hoping to benefit from the relatively low prices of oil to do so. (Reporting and editing by Muralikumar Anantharaman in Singapore and Christopher Cushing; Siyi Liu, Jeslyn Lerh)
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Vard Picks SMST to Supply Equipment for North Star’s New SOVs
Dutch offshore equipment supplier SMST has secured a new contract from Norwegian shipbuilder Vard for the delivery of two sets of mission equipment to be installed on an additional two of North Star’s newbuild Service Operation Vessels (SOVs).These vessels are part of a long-term charter agreement between shipowner and operator North Star and energy company RWE.SMST previously supplied similar equipment for the first two CSOVs, the Grampian Eagle and Grampian Kestrel, which are also set to operate for RWE.RWE, North Star Ink Long-Term SOV Charter AgreementsFor these new hybrid-powered SOVs, safe and efficient transfer of technicians working offshore is ensured through the integration of SMST’s Telescopic Access Bridge (TAB) L2, a motion compensated gangway equipped with advanced automation packages.Additionally, the inclusion of a 5t Motion Compensated Crane will enable streamlined and reliable cargo handling operations.“We are proud to contribute to such a significant collaboration between two leading industry players. Above all, we value the continued partnership with North Star and VARD’s ongoing trust in SMST, now reflected in the selection of our equipment for a fifth and sixth vessel,” said Jochem Tuinstra, Sales Manager at SMST.
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Offshore Industry Majors Join Forces for Next-Gen Subsea Flowline Tech
A consortium of offshore energy companies including TotalEnergies, Equinor, Aker BP, DeepOcean, Tenaris, and LS Cable & System has launched a joint industry project to commercialize a new subsea flowline heating technology designed to cut costs and carbon emissions related to deepwater oil and gas subsea tie-back projects.The system, named FlowHeat, aims to lower manufacturing and installation costs by up to 35% and reduce carbon emissions by 30% through separating pipeline and heating installation processes.Subsea tiebacks are key to connecting remote wells to processing facilities, but cold, deepwater environments pose challenges such as wax and hydrate formation. FlowHeat simplifies the heating process by allowing the installation of power cables after the pipeline is laid, or as an alternative, integrating them into a reeled pipeline.“The patented design represents a breakthrough in subsea pipeline heating, offering significant cost savings, improved efficiency, and environmental benefits. The key advantages include reduced topside weight, lower power consumption, and less complex installation. The cable is also repairable and enables real-time monitoring via optical fiber,” said Andries Ferla, DeepOcean’s Technology Director and project owner.The system can be deployed after pipeline installation and is suitable for tiebacks of up to 30 km, potentially extending to 50 km, and water depths reaching 3,000 meters. It allows heating installation using smaller remotely operated vehicles (ROVs), reducing project complexity and vessel requirements.“After a very important phase progressing from idea to proof-of-concept, TotalEnergies is very enthusiastic to enter in a full-scale validation with this group of highly skilled specialists, for qualification of the technology. Together, we believe we can unlock longer tiebacks and access to remote reserves,” added Florent Boemare, Offshore Solutions and Technology Research Manager at TotalEnergies.Initial trials have demonstrated the system’s electrical efficiency and reliable cable installation over obstacles and long distances. FlowHeat can be deployed from various vessel types, supporting a 30% emissions reduction by optimizing pipeline use, cutting installation days, and allowing smaller vessels to be used.Industry participants see strong market potential on the Norwegian Continental Shelf and globally, with more than 300 potential electrically heated flowline projects identified by 2030 in regions such as Brazil, the United States, and Africa.Each company brings distinct expertise - DeepOcean leads project management and subsea integration; Tenaris provides advanced thermal insulation coating solutions; LS Cable & System contributes its experience in power and fiber-optic cables; and TotalEnergies, Equinor, and Aker BP offer operator-level support, infrastructure, and validation capacity.The project has received funding from the Research Council of Norway to conduct pilot testing under real operating conditions, supporting the technology’s qualification and eventual commercialization.
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Shanghai copper prices fall on weak China demand and strong dollar
Shanghai copper fell on Wednesday. The gains made in the previous session were lost due to a weakening of Chinese demand, resulting from high prices, and a stronger US dollar. As of 0302 GMT, the most active contract for copper on Shanghai Futures Exchange had fallen 0.63% to 84,990 Yuan ($11,931.77) a metric ton. The two sessions of gains were halted by the strong industrial production in China and new attempts to ease Sino U.S. trade tensions. The benchmark three-month futures for copper fell 0.15%, to $10608 per ton. The red metal's demand is muted by the low acceptance of high prices from downstream buyers. It's a good thing the copper price was corrected, because it might encourage some real consumption by downstream buyers. "They were not buying anything before," said a Shanghai copper trader, who requested anonymity because the person was not authorized to talk to the media. The copper price was also affected by the stronger dollar, despite Wednesday's slight decline. The price of commodities in greenbacks is weakened by a strong dollar, as buyers who use other currencies are forced to pay more. Traders also closely followed the China-U.S. Trade Conflict in the lead-up to a meeting planned between U.S. president Donald Trump and his Chinese equivalent Xi Jinping in South Korea next week. Copper prices are still held at a minimum by the supply shortage caused by mine disruptions. Any decline is therefore limited. Nickel was the only metal to lose 0.30%. Zinc and lead also remained unchanged. Zinc and lead, among other LME metals gained 0.23% while aluminium and nickel were barely changed.
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Gold continues to fall from its record high due to profit-booking and trade optimism
Gold prices continued to fall on Wednesday as investors took profits from the recent bullion rally, while they awaited U.S. inflation figures due later in the week. As of 0236 GMT, spot gold was down by 0.4%, at $4,109.19 an ounce. Bullion dropped more than 5% Tuesday, its steepest drop since August 2020. U.S. Gold Futures for December Delivery climbed 0.4%, to $4124.10 an ounce. Matt Simpson, senior analyst at StoneX, said that the "simmering" tensions in trade between the U.S. This is a simple technical repositioning of a market which clearly needed a pullback following an extended move over $4,000. I believe we have seen the worst day-to-day fluctuations as dips are still likely to be purchased." U.S. president Donald Trump said he expects to reach a fair deal with Chinese president Xi Jinping next week when they meet in South Korea. He also played down the risk of a conflict over Taiwan. The Mint newspaper in India reported that New Delhi and Washington were close to a long-stalled agreement which would reduce U.S. import tariffs from 50% to 15% or 16%. The gold price has risen by 56% in the past year. It reached a record high of $4,381.21 yesterday, thanks to geopolitical, economic and rate-cutting bets, as well as sustained central bank purchases. Investors are now looking forward to Friday's release of the U.S. Consumer Price Index report for September. This will provide more clues about the Federal Reserve’s path towards interest rate cuts. Due to the U.S. shutdown, this report was delayed. According to a survey of economists, the Fed will cut its key interest rate next week by 25 basis points and again in December. However, opinions are still divided about where rates will end up by next year. Silver spot edged up 0.1% to $48,82 an ounce. Platinum fell 1.5% to 1,528.15 while palladium rose 0.7% to $1418.09. (Reporting by Brijesh Patel in Bengaluru; Editing by Subhranshu Sahu)
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Iron ore prices rise on signs of eased US-China trade tension
Iron ore prices rose on Wednesday as signs of easing U.S. China trade tensions, and the expectation that Beijing will unveil more stimulus measures to boost economic growth, outweighed worries about a rising ore supply or a decreasing steel demand. After U.S. president Donald Trump stated on Monday that he expects to reach a fair deal with Chinese President Xi Jinping, hopes grew of a deescalation in the trade spat. Trump said that he will visit China in early 2019, at Beijing's request. By 0207 GMT, the most-traded iron ore contract for January on China's Dalian Commodity Exchange rose by 0.78% to $775 yuan (US$108.80) a metric ton. As of 0157 GMT, the benchmark November iron ore traded on Singapore Exchange was up 0.42% at $104 per ton. Analyst Zhuo Guiqiu at Jinrui Futures said that the rise was driven by a macroeconomic factor, as a reduction in U.S. - China trade tensions is expected. This has sparked heightened risk-on sentiment. Investors also bet on more China stimulus after a series of disappointing data. The Communist Party's four-day meeting behind closed doors that began Monday will culminate in an outline of the next five-year strategy. The price increases were tempered by the expectation of a growing supply in the remainder of the year and the seasonal slowdown of steel demand. Vale, the largest iron ore miner in the world, produced 94.4 millions metric tons (the equivalent of steelmaking material) during the third quarter. This is a 3.8% increase on an annual basis and the highest production since the final three months of 2018 Rio Tinto (RIO.L) has also stocked up 2 million tonnes of high-grade ore in Guinea at its Simandou Project for a shipment scheduled to take place mid-November. Both coke and coal, which are used in the production of steel, grew by 0.59%. The benchmarks for steel on the Shanghai Futures Exchange have gained ground. Rebar gained 0.33%. Hot-rolled coil increased by 0.47%. Wire rod gained 0.21%. Stainless steel gained 0.28%. $1 = 7.1230 Chinese Yuan (Reporting and editing by Amy Lv, Colleen Waye)
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Hong Kong stocks rise on signs of eased Sino-US tensions
Hong Kong and China stock prices rebounded on Monday sharply after a large selloff last Friday, as signs that Sino-U.S. tensions are easing boosted bets that U.S. president Donald Trump would once again retreat from his tariff threat. Investors also have their eyes on the Chinese Communist Party's leadership meeting, which will map out China's 5-year vision. On Monday, authorities released economic data for the third quarter that were in line with expectations. Hong Kong's Hang Seng Index, the benchmark index, jumped over 2% on Monday, driven by technology shares. It was its best day for two months. Both the blue-chip CSI300 and Shanghai Composite Index rose by nearly 1%. Scott Bessent, U.S. Treasury secretary, said that he expected to meet with Chinese Vice Premier He Lifeng this week in Malaysia to prevent an escalation in U.S. Tariffs on Chinese Goods which Trump claimed was unsustainable. Last week, China's and Hong Kong's stocks experienced their largest weekly decline since April after Trump threatened to impose 100% tariffs on Chinese imports as a retaliation for Beijing imposing new export controls on rare-earth minerals. Yuan Yuwei is a hedge fund manager with Water Wisdom Asset Management. She said that Trump will certainly back down. He said that a hard decoupling would increase U.S. inflation, and cause pain to ordinary Americans. China's supply chain and social system could help China stay in the game longer. China's economy expanded at a slower pace than expected in the third quarter of this year, according to official data released on Monday. The focus is now on the fourth plenum. This gathering, which will take place from Monday to Friday and include President Xi Jinping, will examine a roadmap for China between 2026-2030. Megan Ie is a senior equity analyst with GIB Asset Management in London. She said that the five-year plan was China's strategic map, which "tells where leaders will be directing talent, capital and subsidies." Investors will be able to gain confidence if policymakers use the same messages about innovation, self-sufficiency and commitment to capital markets. China's chipmaking, robot and artificial intelligence sectors all rebounded strongly on Monday after a recent correction. The Hang Seng Tech Index in Hong Kong jumped by more than 3%. (Shanghai Newsroom; Editing done by Subhranshu Sahu, Lincoln Feast)
Vale expects iron ore production to reach its highest level in 2025 after the strongest quarter since 2018.
Vale, a Brazilian mining company, reported Tuesday that it had achieved its highest quarterly production of iron ore since 2018. It also said that its three main business units are on track to meet the upper bands of their 2025 production targets.
Vale, the largest iron ore miner in the world, produced 94.4 millions metric tons of steelmaking material during the third quarter. This is a 3.8% rise on an annual basis and the highest production since the final three months of 2018.
Vale's performance was boosted both by the record-breaking production in the S11D project, located in the north of Brazil, and the ramping up of other projects.
Iron ore production is expected to reach 325-350 million tons by 2025, according to the company. Production totaled 245.7 millions tons in the first nine months.
Vale's sales and output report stated that its iron ore and copper businesses are "tracking towards the upper-end of the production guidance ranges for 2025."
Sales of iron ore including pellets rose by 5.1% on an annual basis to 86.8 million tons during the third quarter. The realized price of iron fines also increased by 4.2%, to $94.4 per tonne. Reporting by Andre Romani, Sao Paulo; Editing by Natalia Siniawski & Richard Chang
(source: Reuters)