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Russell: Divergent demand factors are driving China's steel production.
China's steel production dropped to its lowest level this year in the month of July, which fits with the narrative that China is struggling to maintain growth momentum. Steel demand is 'uneven across the economy,' as per usual. The world's biggest producer of industrial metal saw its steel output drop to 76.93 metric tons in July. This is a 3.6% decrease from the same period in 2025. It was also the lowest July since 2017. China produced 577.04 millions tons of steel in the first seven months, a 3.1% decrease from the same period last year, according to data released by the government on Monday. The market is always looking for the downside, and in the case of steel, this is the construction industry, which is still plagued by overcapacity and weak housing prices, as well as reluctant buyers. Conditions are important because construction accounts for about a third China's demand for steel. In July, new home prices were down 0.1% from the month before and 3.2% from a year ago. The picture is not as bleak if you look at the other two-thirds. Exports are the main focus of vehicle manufacturing. Exports are booming, despite a slowdown in domestic sales, which has been a trend for the past 10 months. July's exports of 1.043 millions units were up by 81.3% compared to?the same period in 2025. This is also the second consecutive month that shipments exceeded 1 million. China's exports have generally held up despite the economic uncertainty caused by the U.S. War against Iran and tariffs imposed?by the administration of President Donald Trump. In July, exports in U.S. dollars rose by 23.9% compared to the previous year. This was mainly due to shipments of technology and vehicles. China prioritizes technology industries, such as toys and white goods, over traditional manufacturing industries like cars. Overall, China's growth path is becoming more diverse. This will make the outlook for steel more difficult. EXPORTS EASE Exports have been a bright spot for the industry, but they can't be relied on as a constant source of growth in demand, as the 4% drop in steel shipments during the first seven month of the year, to 64.99 millions tons, shows. The steel industry will likely have to either hope for a stronger stimulus from Beijing in order to spur a recovery of construction or rationalise its capacity. Steel mills have already struggled to stay afloat. According to data from MySteel, only one-third were profitable by the end of July. This is down from about half at the beginning of June. Steel inventories have also reached high levels, as reported by SteelHome. At 5,07 million tons during the week ending August 14, this is up from the low of 4,67 million at mid-June, and higher than the 4,11 million for the same week 2025. During the peak construction period, which lasts from September until winter begins, steel inventories usually increase until September. Iron ore prices and imports have not yet reflected the struggles of the steel industry. The key raw material is showing a stable to slightly better picture. China imports 736.84 millions tons of seaborne iron ore in the first seven month of this year, an increase of 6% over the same period of 2025. Kpler estimates August imports at 111.16 millions tons, up from July's official number of 108.08million. Since June, iron ore prices are also largely stable between $93-$100 per ton. The?Singapore Exchange ended Monday at $95.10. The iron ore prices are largely a function of the available supply. And the recent steady history shows that the new Simandou Mine in Guinea has a long way to go before it reaches its 120 million tons per year capacity. China's imports of Guinean gold were only 2.1 million tonnes in July. However, as Simandou increases production this could increase. This will lead to a drop in prices because top producers Australia and Brazil may be forced to compete. 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, an author for.
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Climate damage: The next blow to Europe's finances
The public purse will be liable for the damages caused by Europe's volatile weather. Since the majority of these economic losses are not insured, they will fall on the government unless urgent action is taken. The wildfires that raged in the southwest of Europe this year, and the severe floods that struck Spain in 2024 as well as?Germany in 2021 and its neighbors show that climate damage is adding to a long list of financial strains that include?higher?defence expenditures and increasing costs associated with aging populations. Federico Barriga Salazar, Fitch's head of Western Europe sovereign rating, explained that catastrophes are becoming more frequent. Previously, they were viewed as expensive budget one-offs, rather than a regular expenditure. He said that if a government was already fiscally conservative, then it would have to make some trade-offs in terms of other expenditures. Although the current fiscal impact is small, it is widely accepted that the situation will worsen in the future. This is because the region is on the fastest-warming continent of the world. According to the European Environment Agency, extreme weather and climate events caused an estimated EUR822 billion ($953billion) in economic losses in the European Union from 1980-2024. A quarter of this damage was inflicted just in the last four year. The average public deficit in the eurozone is currently around 3%. Barriga-Salazar quoted estimates that the Spanish floods of 2024 -- Europe's most severe flooding event in 50 years -- would require reconstruction costs of 0.7% of GDP from 2024-2026. The EU estimates that only one quarter of climate-related catastrophe losses in the EU are insured, and in some countries, coverage is as low as 5%. Many fear that insurance coverage as a percentage of total costs will continue to decrease as extreme weather events become more frequent. David Zahn, Franklin Templeton's head of European Fixed Income, said: "I think that this simply means that the more risks you have, the less they will be insured." "This is an important issue and will affect some countries by 1%-2% of their GDP." The economic?think tank Bruegel calculated the majority of damage in 2021 would be covered by insurance in Belgium but that in Germany, due to the low insurance coverage, it would have been necessary to use public funds worth EUR30 billion. ADVANCED AND SHARE RISKS The European Union is due to publish proposals on climate resilience and risk-management this autumn. Attention has been focused on potential solutions. Greece, which is heavily dependent on tourism and is therefore at risk from heatwaves and fires, is exploring ways to increase insurance coverage and improve the infrastructure of tourist hotspots. Portugal announced plans for mandatory home insurance, backed by an earthquake and natural disaster disaster fund as well as a solidarity mechanism that will guarantee universal access. This follows the huge floods of early 2026. Some may turn to 'catastrophe bond' investments, which offer handsome returns, but can also result in the loss of part or all their principal, if an event such as a tornado or earthquake occurs. Zahn, a Franklin Templeton analyst, noted that this gamble could be expensive for the sovereign: "If it happens, the payoff is immediate." You could have five years without anything, but you would only pay 8% per annum. Heather Grabbe, Senior Fellow at Bruegel said that governments should put in place more systematic arrangements than emergency?spending which could create a perverse 'incentive' for households and business to not take out insurance. Grabbe stated that all governments in Europe must assess their risk and develop comprehensive plans for reducing future damages through investments, as well pooling risks across the borders. Many studies show that early investments to make economies more resilient to climate change will save money over time. This can help avoid what an Oxford University 2025 study called the "adaptation trap", in which repeated climate disasters increase debt, leaving less money available for protection measures. The Spanish Prime Minister Pedro Sanchez argued that investments in green technologies worth 0.1% GDP could help prevent economic losses of eight times this amount and tax revenue losses three times as large. The ECB proposed a?EU joint public-private reinsurance system pooling private risk from natural disasters. This scheme is backed by a?EU fund for public catastrophe financing. The question is whether the 'heatwaves' of this summer will inspire the political will for governments and the EU to shoulder some of the initial costs of such an action. According to a spokesperson for the European Commission, the EU executive is looking at ways to close the gap in climate insurance protection as part of a set of measures that will be adopted before the end of this year.
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The planned Indonesian commodity exchange is likely to include palm oil, nickel and coal
A presidential spokesperson revealed that the planned Indonesian exchange for "minerals and strategic 'commodities'" would likely include palm oil and coal. The government is preparing to launch the bourse on January 1. The plan was announced by President Prabowo in his budget speech for 2027 on Friday. He said that Indonesia aimed to establish its own benchmark price for many?of its key commodities. This was his latest attempt to use?the vast reserves of natural resource to boost the country's growth. Southeast Asia's largest economy is the world’s biggest exporter of thermal coal, nickel, and palm oil products. It's also a major producer of coffee beans, copper, tin, and bauxite. On Monday, the presidential spokesperson Prasetyo hadi informed reporters that the government was currently working out the details of the plan. This includes the commodities to be traded at the exchange. He said: "Certainly, it will cover commodities such as CPO, nickel, and coal, which are our primary products." Friderica Widyasari dewi, the chief of OJK's Financial Services Authority, told reporters that rules would be introduced for the new bourse on September?17. She said that the OJK will have rules for a phased transition to the new bourse. A separate presidential decree will list the commodities which will trade at the bourse.
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Gold falls on higher oil and Treasury yields; Fed minutes are in focus
The gold price was 'under pressure' on Tuesday due to a rise in oil prices and higher treasury yields. Traders were also waiting for the minutes of the U.S. Federal Reserve policy meeting held in July for any clues about the future interest rate outlook. As of 0423 GMT spot gold fell 0.5% to $4,391.14 an ounce. U.S. futures for December delivery were down 0.6% at $4,446.70. The yields on the benchmark U.S. Treasury 10-year note increased, increasing?the cost of non-yielding gold. The oil prices rose after Iran announced that it would "shift to a fully offensive" military position following the failure of negotiations to reach a permanent settlement to the war with the United States. Washington also ruled out the extension of a temporary ceasefire. Soni Kumari, an ANZ analyst, said that oil?prices would continue to be one of 'the main factors' keeping gold under pressure if the Middle East situation continues to remain uncertain. The expectations of traders around the Fed's policy rates will be crucial for gold. Kumari also said that technical levels would be important. Energy prices that are higher tend to increase inflationary fears and expectations for higher interest rates from the Fed. Gold is often seen as a hedge to inflation but higher interest rates tend to reduce its appeal. Market pricing for a quarter-point hike in September has flipped from a 65% chance to "hold" due to unexpected job losses, lower than expected consumer price inflation, and weaker retails sales. Investors are also waiting for the minutes of the Fed's latest policy meeting, which is scheduled to be released on Wednesday. According to technical analyst Wang Tao, spot gold could test support at $4381. A break below this level?could lead to the $4320 to $4351 range. Silver fell 1% per ounce to $65.11, platinum dropped 1.2% to 1,748.56, and palladium was down 1.2% at $1,317.01.
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Copper prices fall as China's disappointing data and the Mideast crisis weigh.
The market was digesting a string of disappointing economic reports from China and the U.S., as well as the fact that a truce between Iran and the U.S. had expired with no longer-term agreement. Benchmark 'three-month' copper on the London Metal Exchange fell 0.39% to $14,102 per metric ton at 0300 GMT. Shanghai Futures Exchange's most traded copper contract fell 1.19%, to 107 690 yuan (15,971.58) per ton. After copper prices reached a six-month peak on Monday, disappointing economic indicators in China drew attention to the demand outlook. "Weaker-than-expected economic ?data in China weighed on sentiment across the base metals sector," Daniel Hynes, senior commodity ?strategist at ANZ, said in a note. Data from the National Bureau of Statistics revealed on Monday that China's factory production grew by 4.5% from a year earlier in July, a decline from June, and below expectations. Fixed asset investment, which includes investments in copper-consuming industries like real estate and infrastructure in China, declined 6.7% during the first seven-month period of 2026 compared to an expected 6% drop. China's import demand has been affected by the higher prices of copper. The Yangshan Copper Premium On Monday, the price of a ton fell to $85; its lowest level since July 10. However, the premium was still?nearly double what it was at the beginning of the year. Brent crude also increased as the U.S. Iran ceasefire expired and the negotiations to end the conflict remained in a deadlock. The high price of?crude may increase inflationary pressures and lead to higher interest rates, affecting economic activity. Among LME metals, aluminium dipped 0.2%, ?zinc lost 0.74%, lead dipped 0.11%, ?nickel dipped 0.17% and tin dipped ?0.3%. Aluminium, Zinc, Nickel, Lead and Tin all dropped in price.
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Oil prices continue to rise as US-Iran ceasefire ends
The bond yields rose on Tuesday to their highest level in decades. Oil prices also increased for the third day. Stocks in Asia gave up gains made in early trades as a U.S. - Iran truce ended and Tehran warned of a "fully offensive military posture". The 30-year Treasury bond yield rose 1.1 basis points intraday to 5.321%. This is the highest it has been in nearly 20 years. The 10-year counterpart rose 0.4 basis points to 4.724%. "In the past, when the 10-year Treasury bond rate rose above 4,65 percent, the Trump administration would follow up with some comforting words, usually centered around an imminent end to the Iran war," ING analysts noted in a recent note. They added, "This time we are not hearing the same thing." "In fact the latest indications point to no imminent resolution, as the fragile 60-day truce has come to an end." S&P 500's e-mini futures fell 0.2%, as MSCI’s broadest Asia-Pacific index outside Japan dropped 0.3%. This reversed early gains as stocks from Taiwan and China weighed on the benchmark. The KOSPI, the South Korean stock index, erased a gain of over 3% after the Seoul market returned from a long holiday. It traded flat while the Nikkei fell by 1.6%. Brent crude futures rose 0.4% to $91.20 per barrel, as the rally in oil prices continued for a third day straight in Asian trade. In a recent research report, MUFG analysts noted that "the big focus of global macro is on the increase?and stickinginess in longer-end yields in developed markets and in particular a persistent sell-off in U.S. Treasuries." The yield on the 10-year Japanese Government Bond rose by 2 basis points, to 2.94%. This is a three-decade high. The S&P 500 fell 0.5% overnight on Wall Street while the Nasdaq Composite dropped 0.3%. This was due to soft U.S. data including an unexpected decline in retail sales. This led traders reduce their bets that the Fed would soon increase interest rates. Westpac analysts stated in a research note that "Markets adopted a risk-off tone after President Trump reiterated he wasn't interested in extending his truce with Iran." The U.S. Dollar Index, which measures the strength of the dollar against a basket of six currencies, rose 0.1% to 99.60. It has recovered from a recent low. Gold fell 0.3% to $4,402,89, ending a two-day streak of gains. Bitcoin and ether, the two most popular cryptocurrencies, were down 0.3%, at $64,159.76 each and $1,899.34, respectively. (Reporting and editing by Sonali Fernandez, Clarence Fernandez and Gregor Stuart Hunter)
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Markets await Fed minutes as gold extends its gains amid easing fears of rate hikes
On Tuesday, gold rose for a 'third straight session' as investors looked forward to the minutes of the Federal Reserve meeting. They were hoping for new clues about the direction the Federal Reserve will take with its monetary policy. Spot gold rose 0.2% to $4,424.28 an ounce at 0130 GMT. U.S. gold futures for December delivery also edged up 0.2% to $4480.90. The U.S. Dollar remained near multi-month lows against most major currencies. Dollar-priced precious metals become cheaper for holders of other currencies when the U.S. dollar weakens. Gold's gains are continuing "after last weeks soft U.S. data, which raised hopes that the?"Fed" will hold rates this year," IG Market Analyst Tony?Sycamore stated. Bullion is likely to perform well in an environment of low interest rates, as it reduces your opportunity costs for holding non-yielding investments. According to a survey, most economists believe that the U.S. Central Bank will maintain its key interest rate next month and until year's end. After unexpected job losses, lower than expected consumer price inflation, and weaker retail sales in August, the market pricing for a quarter-point increase in September has shifted to a near-65% chance that it will be held. The focus of Wednesday's market will be on the minutes from the Fed’s latest policy meeting. Sycamore stated that "additionally, gold seems to be regaining a safe-haven position as the hawkish rhetoric of Iran has helped gold 'brush off higher returns. A senior Iranian official said that Iran would shift to a more "fully offensive" military posture as efforts to negotiate an end to the U.S. war have stalled. Washington has also ruled out the extension of a temporary ceasefire. Silver spot rose by 0.9%, to $66.40 an ounce. The platinum price rose 0.2% to $1,772.75, and palladium fell 0.3% to $1,330.05. Reporting by Ashitha shivaprasad from Bengaluru, editing by Subhranshu sahu
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Russian ESPO blend crude oil returns to premium vs Brent due to China's demand, traders claim
Four traders reported that the price of Russia's ESPO blend crude oil for October delivery to China can be up to $1 per barrel higher than ICE Brent. This is due to the strong Chinese demand as well as uncertainty about Middle East and Iranian oil supplies. The traders reported that Asian buyers were looking for alternatives to Middle Eastern crude oil due to concerns about the disruption of shipments across the Strait of Hormuz. Oil prices rose Monday, despite the lack of progress in diplomatic efforts to resolve the Middle East conflict. One of the traders stated that they were unsure how long the Mideast Crisis would last, and how much oil from Iran will be shipped out. Therefore, the Russian supply was the most reliable. The traders reported that ESPO blend cargoes delivered in October have been actively traded. Nearly all volumes were sold at a premium of around $1 per barrel to ICE Brent, based on the price paid by buyers for the cargoes to be delivered into Chinese ports. This compares?with cargoes for September delivery, which traded last month from a $1 per barrel discount to parity against ICE Brent. Last time ESPO Blend traded at a higher price than Brent was June. Two traders said that the strong?demand for Russian oil from Chinese refiners had pushed India out of the market. Two traders said that Indian refiners could not secure October ESPO allocations due to Chinese buyers snatching up all the available cargoes. According to traders, both China's independent oil refiners and major state-owned oil firms have been active buyers of ESPO blend cargoes. Reporting by Siyi Liu in SINGAPORE and Aizhu in MOSCOW. Additional reporting by Nidhh Verma in NEW DELHI. Mark Potter edited the article.
After US tariffs, Canada is expected to divert aluminum to Europe
Physical market traders reported that the price of aluminum for European consumers buying on the physical markets has fallen due to an expectation that Canadian shipments will be diverted under U.S. Tariffs starting Tuesday.
U.S. president Donald Trump imposed tariffs of 25% on Mexican and Canadian goods and 10% on Chinese products starting Tuesday. This could spark a trade conflict that could halt global growth and ignite inflation.
On the physical market, consumers pay the London Metal Exchange benchmark price for aluminium plus an additional premium to cover taxes, transportation and handling costs.
The European premium duty-paid aluminium contract, which expires February 28, has fallen more than 10% from $370 per ton to $322.
According to the U.S. Commerce Department, the U.S. will be a major exporter of aluminum products, which are used in packaging, construction, and transport. In 2023, the U.S. Commerce Department expects that 5.46 million tons of aluminum products will be shipped in.
The Commerce Department reports that Canada imported 3,08 million tons of aluminum products to the United States in 2023 for domestic use, which is the latest data for the full year available.
According to Trade Data Monitor, between January and November of last year, the European Union imported only 2.9% or 158,000 tonnes of aluminum - both primary and alloyed - from Canada.
TDM data shows that in 2023 these numbers were higher by more than 110.000 tons and 1.9%.
(source: Reuters)