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The Gulf countries are recovering from the conflict between Iran and Israel.
The major stock markets in the Gulf recovered some of the losses they suffered in previous sessions, when the conflict between Israel and Iran escalated. Saudi Arabia's benchmark Index gained 1.2%. This was mainly due to a 1.9% increase at Al Rajhi Bank, and a 3.2% rise at Saudi Arabian Mining Company. Sunday, the index fell 1%. After a 7% increase on Friday, oil prices were volatile. Israel and Iran renewed their strikes over the weekend, raising fears that the conflict could spread across the Middle East and disrupt oil exports. The Qatari Index rose 1.7%, a day after it fell more than 3%. This was boosted by a 2.4% jump in the Gulf's largest lender Qatar National Bank as well as a 1.5% rise in the petrochemical manufacturer Industries Qatar. Iranian missiles destroyed homes in Tel Aviv, Israel and Haifa, the port city. This sparked fears among the world leaders attending this week's G7 summit that the conflict could spread to other regions. Israel announced that it began a long-term operation on Friday to stop Tehran from developing an atomic bomb by targeting Iran's ballistic missile factories, nuclear facilities and military commanders. Iran has promised to respond harshly. Dubai's main stock index rose 0.8%. Parkin Company, which manages public parking operations, rose 2.3%. Toll operator Salik gained 0.7%. The index in Abu Dhabi edged up 0.2%. (Reporting and editing by Topra Chopra in Bengaluru, Ateeq Sharriff in Bengaluru)
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Japan's Nikkei ends higher despite Middle East conflict; Advantest soars
The Nikkei 225 index rose more than 1% in Japan on Monday. This was largely due to the 9% increase by Advantest following an upgrade of its brokerage target price. Traders also shrugged off geopolitical tensions with Iran and Israel. The Nikkei closed at 38,311,33, up 1.26%. The Topix rose by 0.75%. Shuutarou Yasuda is a market analyst with Tokai Tokyo Intelligence Laboratory. He said that Japanese shares are strong despite concerns about geopolitical risk in the Middle East. He said that investors were relieved because oil prices did not spike today, which would have affected the local economy. Global investors closely monitored the Israel-Iran dispute for signs that it could escalate into a wider regional conflict. Advantest shares in Japan jumped 9.63% on Friday after JPMorgan Securities raised its target price from 10,500 to 11,000 yen. The Nikkei gained the most from the shares. SoftBank Group, the technology investor, and Uniqlo brand owner Fast Retailing both rose 2.5%. Yasuda, Tokai Tokyo, also cited a weaker yen as a factor that influenced sentiment. Last week, the yen fell as investors looked for safe havens such as the US dollar. This trend continued on Monday. The dollar was up by 0.1% last against the Japanese yen, at 144.235. Exporters benefit from a weaker yen, since it increases the value of overseas profits when they are returned to Japan. Nippon Steel shares rose 1.5% on Friday after U.S. President Donald Trump approved the $14.9 billion offer for U.S. Steel. Steelmakers' sector grew by 1%. Shipping sector rose 1% as a result of expectations that freight rates will rise amid the Middle East conflict. Kawasaki Kisen shares rose by 1.38%. On the TSE's Prime Market, out of more than 1,600 shares traded, 69% were up, 26% were down, and 3% were flat.
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Tariffs cap the rise in iron ore prices as China's demand grows.
Iron ore prices rose on Monday due to a resilient steelmaking demand, but U.S. tariffs capped gains. The daytime trading price of the most traded September iron ore contract at China's Dalian Commodity Exchange was 704.5 yuan (US$98.11). As of 0709 GMT, the benchmark July Iron Ore traded on Singapore Exchange increased by 0.31% to reach $94.45 per ton. Mysteel, a consultancy firm, reported that 60% of China's blast furnace steel mills had positive margins by June 12. Mysteel data shows that the average daily hot metal production, which is typically used to gauge iron ore consumption, remained stable on a week-to-week basis at around 2,42 million tons by June 13. China's crude output of steel fell sharply in May, surprising analysts, and keeping steelmakers in line for lower production in this year as Beijing pushes to reduce output in the industry. In May, factory output growth in the country reached a six-month high, while retail sales grew. From June 23, a wide range of household appliances imported from the United States, such as dishwashers, washing machine, refrigerators, and others, will be subjected to President Donald Trump’s steel tariffs of 50%. Official data released on Monday showed that China's new house prices declined in May, continuing a two-year stagnation. This highlights the challenges facing this sector, despite several rounds policy support measures. Coking coal and coke, which are used to make steel, have both gained in price, rising by 2.84% each and 1.9% respectively. The majority of steel benchmarks traded on the Shanghai Futures Exchange increased. Rebar was up by 0.98%. Hot-rolled coils were up 1.07%. Wire rod increased by 0.15%. Stainless steel decreased by 0.08%. ($1 = 7.1808 Chinese Yuan) (Reporting and editing by Rashmi aich; Michele Pek)
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Euro zone yields little changed, Middle East, Fed meeting in focus
Investors waited for the U.S. Federal Reserve policy meeting this week to assess the impact of the Middle East war on inflation and growth. Overnight, Iranian missiles hit Israel as part of a wave retaliatory strikes by Tehran in response to Israel's preemptive attacks last week against its nuclear and missile programs. At this week's G7 summit, world leaders expressed concern that the conflict between two old enemies could spark a wider regional conflict. Analysts say that a rise in the price of oil will cause inflation. However, there are downside risks to the economy. Brent crude futures fluctuated on Monday after a 7% rise on Friday. The yields on German 10-year government bonds were unchanged at 2.54% - 2.53%. They had been 2.422% last Friday, their lowest level since March 3. The yields of the two-year Schatz bond were down by 0.5 basis points at 1.85%. Market pricing for the European Central Bank's depo rate in December was at 1.75%. This is the same level as after the ECB meeting early June. This week, the Bank of England and Bank of Japan will also be announcing their monetary policy decisions. Investors are focusing on the central bank's new projections. The spread between Italian and German 10-year bond yields was 92 basis points, down 1 bps. Last week, it reached 84.20 basis points (bps), its highest since March 2015.
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Sri Lanka to hold IMF discussions on ways to attract foreign investors
Anura Kumara dissanayake, the president of Sri Lanka, said that the country plans to discuss with the International Monetary Fund strategies to attract foreign investment. This comes in response to the financial crisis affecting the Indian Ocean nation. Sri Lanka is recovering strongly from a crisis brought on by a record dollar shortage, thanks to an IMF bailout of $2.9 billion and its efforts to reduce inflation, build reserves and stabilize the currency over a four-year period starting March 2023. Dissanayake stated that beyond the 5% economic growth last year, Sri Lanka needs to focus on deeper, more fundamental reforms, such as reforming state-owned enterprises which are losing money and trimming an overburdened public service. He said at a Colombo conference that as part of his efforts to achieve sustainable growth, he would offer incentives to encourage foreign investment. Discussions with the IMF will be held in this regard. Sri Lanka defaulted in its foreign debt during the peak of the crisis, 2022. However, it is nearing completion with the help of a global lender. Colombo increased power prices by 15% in an effort to get the IMF Executive Board approval for its fifth tranche, which is about $334 millions. Gita Gopinath is the IMF’s first deputy managing Director. She said that Sri Lanka was among the open economies with major risks, such as geopolitical conflict, tariffs and economic fragmentation. She added that "there is no room for mistakes in policy" and pointed out that half of Sri Lanka’s 16 previous IMF programs ended prematurely. Reform fatigue had set in, and the hard-earned gains were reversed. Sri Lanka began talks with Washington in April after the United States imposed 44% tariffs on its exports worth about $3 billion. These were suspended later. (Reporting and Writing by Uditha Jaisinghe, Editing and Proofreading by Sudipto Ganuly, Clarence Fernandez, and Sakshi Dayal)
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Sources say that China has sold coking coal to Indonesia, a rare trade.
Sources familiar with the situation said that China shipped at least three cargoes worth of coking coal in May to processors on Indonesia's Sulawesi, invading a market dominated by Australia and Indonesia. China, the world's largest importer of coal for steelmaking, isn't a major exporter. It has only exported the fuel to Indonesia three times since 2024 began, according to monthly Chinese customs statistics. Three sources claim that the state-run Shanxi Coking Coal Group exported coking coal from China to Indonesia in last month. Risun operates one of Indonesia's largest coke-processing facilities in the Sulawesi area. Sources said that the state-run group had sold another cargo for export to Indonesia to Hong Kong Jinteng Development Ltd. A second source confirmed this and added that a third shipment was also sold to an Indonesian Dexin Steel Plant. Sources requested anonymity because they weren't authorized to speak about the matter. Shanxi Coking Coal China Risun, and Dexin Steel have not responded to our requests for comment. Hong Kong Jinteng Development Ltd. could not be reached. According to an independent consultant, Lawrence Yan, the move was designed to test economic feasibility of Chinese supplies and show that traditional sellers such as Australia had other options. He added that the high costs and fierce competition from Russia and Mongolia would make it unlikely for this trade to become mainstream. A Chinese trader Winsway stated last week that the slowdown in China's steel industry may allow for a greater supply of coking. This could make it a more regular export, in the long term. In April, China exported the first shipment of coking coal since July last year. The data for May has not yet been released. INDONESIAN Coke Overcapacity Coke processing facilities in Sulawesi are a major source of metallurgical coal, a raw material for steelmakers. This has boosted demand for the coking coal used to produce coke. Kpler data shows that Indonesian met coke exports reached a record in 2024. One source said that the region was now suffering from overcapacity with only 60 to 70 percent of its capacity being used. India, a major buyer of met coke in Indonesia, imposed import restrictions on December.
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EIB supports Spain-France energy link with 1.6 Billion Euros
The European Investment Bank announced on Monday that it would invest 1.6 billion euro ($1.84 billion) in a power interconnector planned between Spain and France. This comes after the governments of Spain and Portugal sought EU assistance to improve their electricity links following an April blackout. The European Investment Bank announced on Monday that it would invest 1.6 billion euros ($1.84 billion) in a planned power interconnector between Spain and France. This comes after the governments of Spain and Portugal sought EU help to improve their power links following a massive blackout in April. The EIB (the European Union's lending body) said that it would support the Bay of Biscay Interconnector through loans to Spain's and France's energy system operators, Red Electrica y RTE. They aim to launch this 400-kilometre project by 2028. Subsea links would allow France and Spain to exchange more power, increasing it from 2.8 gigawatts up to 5 gigawatts. In a press release, EIB Group president Nadia Calvino stated that "EIB's support for the France/Spain interconnection of electricity will be crucial to ensure that the Iberian Peninsula no longer is an energy island." Causes of the Iberian blackout are still under investigation. A letter revealed that, following the blackout, the governments of Spain and Portugal asked the EU to intervene last month in order to move forward with new interconnections projects with France. This year, the work to improve an existing interconnector will be completed. France's RTE also evaluated two additional interconnections between Spain and France over the Pyrenees. However, the beneficiaries of the projects would be located outside France. Thomas Veyrenc said that the Bay of Biscay Project would increase solidarity between France and Spain. Beatriz Corredor is the chairwoman of Red Electrica parent company Redeia. She said that the countries should continue with their planned interconnections across the Pyrenees. Iberia's electricity capacity is only 3% connected to the neighbouring countries. This is far below the EU target of 15% by 2030.
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Markets on hold in Europe as they wait and see what happens with the Middle East
Wayne Cole gives us a look at what the future holds for European and global markets. While Israel and Iran continue their missile exchange, the markets have been resilient on Monday so far with most Asian indices in the green. Chinese retail sales exceeded forecasts but there was no reaction. Oil initially jumped by 4%, but then settled down to a gain of around 1%. The Middle East's war is not unexpected, and so far it does not appear to be spreading. Investors seem to assume that Iran won't threaten to close down the Strait of Hormuz, as this could potentially drag the United States into a conflict. Saudi Arabia, and the rest OPEC can also increase supply if necessary to keep prices down. The G7 meeting, taking place in Canada this year, will be a headache to the host country. They already have enough problems with President Trump's tariffs against allies. The progress made on trade agreements has been slow, and the U.S. China tariff truce last week may not have resolved the most important restrictions on minerals that are closely linked to national security. The rise in oil prices will complicate the Federal Reserve's meeting this week. However, it must be a sustained increase in price to pose a real inflationary threat. The Fed's dots plots are the key to determining whether they will keep the two rate cuts this year or reduce them to one, as some believe. The central banks are busy this week. Bank of Japan is expected to remain steadfast on Tuesday, but may signal a slowdown of its bond-tapering for next year. Bank of England, Norges Bank and Riksbank are all expected to hold steady. The markets are fully priced in for the Swiss National Bank to ease by a quarter-point, going down to zero. Market developments on Monday that may have a significant impact - Appearances of ECB members Joachim Nagel, and Piero Cipollone. (Reporting Wayne Cole; Editing Jacqueline Wong.
China iron ore imports head for record even as steel output slips: Russell
China is on track to import record volumes of iron ore in October, increasing the divergence between the need for the steel raw material and the still weak output of the ended up product.
China, which buys practically three-quarters of global seaborne iron ore, is likely to import as much as 120 million metric loads this month, according to vessel-tracking and port data.
This would be a strong increase from the official custom-mades number of 104.1 million heaps in September, and likewise represent an all-time high, eclipsing the previous record of 112.7 million in July 2020.
The strength in iron ore imports stands in sharp contrast to the softness in steel production, which moved for a 4th successive month in September, dropping to 77.07 million tons, down 1.1% from August and 6.1% from the very same month in 2023.
China's steel output for the first 9 months of the year was 768.48 million tons, down 3.6% from the very same duration in 2023, according to information released by the National Bureau of Data last week.
If there is a positive from the September steel production information, it's that the speed of decline slowed from the 10.4%. on-year drop in August.
Whether the drop in steel output can be raised to show an. boost in the next few months mostly depends upon whether steel. mills see rising demand on the back of Beijing's stimulus. efforts.
September was prematurely for any kick greater in steel need,. offered the major stimulus statements were right before month. end.
Nevertheless, if the steps to improve the ailing property sector. do flourish, it's likely to just lead to an increase in. real need in 2025.
This makes the rush to purchase more iron ore seem rather. early.
PRICE DRIVEN IMPORTS
October's imports are on track to reach 120.5 million heaps,. according to data put together by commodity analysts Kpler, while. LSEG analysts expect arrivals of 117.3 million heaps.
It's most likely that steel mills and traders took heart from the. stimulus efforts announced by Beijing, but lower spot rates for. iron ore might likewise have actually enhanced purchasing.
The price of Singapore Exchange agreements dropped. to the lowest in 22 months in September, hitting $91.10 a ton on. Sept. 10.
They then traded in a narrow range around that level until. completion of the month, implying that much of the iron ore showing up. in October would have been protected at reasonably low costs.
Iron ore prices did surge in the wake of the stimulus. announcements, reaching a three-month peak of $110.55 a ton on. Oct. 7, before relieving back to end at $104.21 on Monday.
A more sober reflection of when China's stimulus is likely. to in fact result in increased steel demand might have caused. iron ore costs moderating, but it's worth noting they have. still held onto most of the gains made since the October low.
The threat is that the strong import volumes end up being. added to inventories, which might serve as a drag on additional rate. gains even if steel output does begin to recover.
Port stocks kept track of by consultants SteelHome. << SH-TOT-IRONINV > increased in the week to Oct. 18, hitting 147.2. million tons, up from a five-month low of 145.8 million the. prior week.
Stockpiles have increased highly in the past 12 months, rising. from a seven-year low of 104.89 million lots in the last week of. October 2023 to a current high of 151.8 million in late July.
The opinions revealed here are those of the author, a. writer .
(source: Reuters)