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Britain to be first to reach a deal on Trump tariffs
Thursday, the United States and Britain are expected to announce an agreement that will lower tariffs for some goods. This is the first such deal since U.S. president Donald Trump started a global war of trade with his universal levies. Trump announced on Truth Social that he will hold a news conference in the Oval Office at 10:00 am EDT (1400 GMT), on Thursday, to discuss a "full-and-comprehensive" trade deal with Britain. Keir starmer, the British Prime Minister, will give an update on Thursday. He has described the United States as an essential ally. The agreement is expected to be limited, as Britain will likely only get lower tariffs for cars and steel. These are the two sectors that have been hardest hit. Trump said that it was an honor, because of the long history and loyalty we share together, to announce our FIRST deal with the United Kingdom. Many other deals are being negotiated and will follow! Investors have been pressing the United States to reach a deal to de-escalate their tariff war. Trump's chaotic policies, which disrupted global trade and impacted both friends and enemies, threatened to ignite inflation and trigger a recession. Since the president imposed on April 2, a 10% tariff for most countries and higher tariffs for many trading partners, which were then suspended for 90-days, top U.S. officials are in a frenzy of meetings with trading partner. The U.S. also imposed tariffs of 25% on automobiles, steel, and aluminum, as well as 25% on Canada, Mexico, and 145% on China. On Saturday, U.S. officials and Chinese officials will hold discussions in Switzerland. Starmer has forged a warm bond with Trump, despite his struggles in government after being elected with his Labour Party last July. His government will be celebrating becoming the first to reach a deal. The British car industry exports high-end brands to the U.S., and the 25% tariffs have hit them hard. Jaguar Land Rover suspended shipments to the U.S. of its vehicles for a whole month as it looked at ways to minimize the impact. Aston Martin shares rose 8% Thursday after the company announced it would share the tariff costs with its customers, and limit shipments into the U.S. NARROW SCOPE An official from the British government had stated that any agreement would likely be limited, and Britain was expected to achieve lower tariffs for a certain amount of autos and steel exports. In exchange, Britain will likely agree to lower their own tariffs on U.S. vehicles and reduce a digital tax that is imposed on U.S. technology giants. The UK refused to lower their food standards which are aligned closely with those of the European Union. However, Britain's agricultural trade union said that certain U.S. farmers meet British standards because they do not use growth hormones or antibiotic washes and may be granted greater access to the market. Starmer's Government has been on a tightrope when it comes to trade. As an independent country following Brexit, they are trying to establish new ties with China, the U.S. and the EU, without going too far in one direction. On the domestic front, there are also threats. The government is still unpopular, despite its efforts to reduce pensioners' energy bills and increase taxes for households and businesses. Any move that would lower taxes on multinational tech companies is a risk. POLITICAL RISK In response to a public outcry over tax avoidance, the UK introduced a digital service tax in 2020, which is based on 2% of UK revenues for online marketplaces and search engines, as well as social media platforms. A 2023 report from lawmakers predicted that it would raise 800 million pounds ($1.1billion) this year. More than 90% of the money will come from five large tech companies. It was not clear what would happen to the 10% "baseline tariff" imposed by Trump against most countries, including Britain, and any tariffs threatened on the pharmaceutical industry. The British Parliament reported that Britain exported 9.6 billion dollars worth of pharmaceutical and medicinal products to the U.S. during the year ending September 2024. This is the second-largest sector after cars. One FTSE 100 CEO and economists said that the immediate impact of a trade deal would be limited, but trade agreements generally - the UK signed a free-trade agreement with India this week – will help produce growth on the long-term. The CEO, who spoke on condition of anonymity, said that the deals with the US, India and other countries would be important for the UK's long-term economy. However, don't expect euphoria to happen overnight. Allan Monks, JPMorgan's economist, said that the benefits would be limited should the 10% tariff remain in place. He said that the UK has a broadly balanced trade relationship with the U.S. and a good political relationship. There is no real threat from Westminster of retaliation, and there have been extensive bilateral discussions. It's not clear what the UK will do next. (Additional reporting by James Davey, Paul Sandle and Kate Holton. Writing by Kate Holton. Editing by Toby Chopra.)
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Dollar firms focus on US-China discussions as copper slips
Copper prices fell on Thursday, as the dollar remained steady and market attention shifted to U.S. China talks this weekend. As of 0950 GMT, the benchmark copper price on London Metal Exchange (LME), fell by 0.8% to $9 345 per metric ton. The U.S. Dollar index increased by 0.2%. The dollar's strength makes commodities priced in greenbacks more expensive for currency holders. The copper price is slightly under pressure, as traders secure "short-term profit and a marginal turnaround of the U.S. Dollar". John Meyer, analyst at SP Angel, said that he believes the market will not take large positions in such an environment. This weekend, U.S. Treasury secretary Scott Bessent will meet with China's economic tsar He Lifeng. The news that the U.S.A. and Britain will announce a deal on reducing tariffs for certain goods added to the positive sentiment. "The dichotomy in copper remains between the strong demand for Chinese copper in the present versus the macro-bearish outlook of the street," said Alastair Murro, senior metals strategist with broker Marex. Yangshan Copper Premium The key indicator of Chinese import demand is $100 per ton. This is the highest level since December 20,23. The Shanghai Futures Exchange monitors warehouses for copper stocks Inventory levels in COMEX warehouses have dropped dramatically recently The highest levels since late 2018 "Amid U.S. Tariff Expectations, all metal is being pulled to CME creating an tight supply situation elsewhere in the world." Munro said that the Chinese situation was exacerbated by the shortage of scrap. Goldman Sachs raised its quarterly copper forecast, citing a de-escalation of trade tensions as well as resilient Chinese demand for copper. LME Aluminium increased 0.1%, to $2.385.5 per ton. Two sources with knowledge in the matter said on Wednesday that Guinea had initiated a procedure to revoke Emirates Global Aluminium’s mining license. LME zinc fell 0.2% to $2,611, while lead dropped 0.8% to 1,941.5. Tin rose 0.3% to $30,755 a tonne, and nickel remained flat at $15 545.
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ADNOC Drilling first-quarter profits jump on the strength of oilfield services
ADNOC Drilling is the subsidiary of Abu Dhabi’s state oil company. It reported on Thursday a 24 percent increase in profit for its first quarter, driven by a strong growth in oilfield services. ADNOC Drilling increased its net profit to $341 millions in the March quarter, up from $275 in the same period of last year. The revenue rose by almost a third, to $1.17 Billion. Oilfield Services' revenue increased by 134%, to $342 Million. This was mainly due to an increase in activity for unconventional and integrated drilling. The board of directors also approved quarterly dividends instead of semiannually. The first payment, $217 million for 2025's first quarter, is expected to be made on May 28. This amount will serve as a minimum for all subsequent quarterly payments made in 2025. ADNOC Drilling stated that despite recent volatility on the global markets, its previously announced guidance for 2025 and the medium-term remains unchanged. Recent contract awards also support this. The company expects a net profit of between $1.35 billion and $1.45 trillion in 2025, and revenues of $4.6 to $4.8 billion. ADNOC Offshore has recently won a contract worth $1.63 billion for five years of integrated drilling services and a contract worth $806 million for three island rigs. ADNOC Drilling’s joint ventures Enersol & Turnwell are driving its growth. Turnwell was founded to access unconventional energy resources, such as oil and gas, which require advanced extraction techniques. Enersol is a joint venture between Alpha Dhabi and Abu Dhabi that invests in drilling powered by artificial intelligence. Youssef Salm, the Chief Financial Officer, said that it is expected to spend $700 million this year on at least two acquisitions and mergers, with a focus on the United States. Alpha Dhabi will contribute about half of the $700 million, as it is part of an Abu Dhabi business empire headed by Sheikh Tahnoon Bin Zayed Al-Nahyan. Salem stated that ADNOC Drilling expects to spend around $500 million on capital expenditures this year, and another $500 million for mergers and purchases, $350 of which would be for Enersol. Out of a total of 144 wells, the company has already drilled over 40 unconventional ones. The CFO stated that it expects to drill more than 80 wells by the end the year. The company also drills about 800 conventional wells per year. (Reporting and editing by Emelia Sithole Matarise; Yousef SABA)
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Draft shows EU countries want to reduce red tape in energy laws
According to draft conclusions of a summit on EU energy ministers to be held next month, the EU wants to include energy policies as part of its efforts to reduce red tape and help struggling industries. The European Commission is launching a campaign to eliminate layers of bureaucracy, which European businesses claim puts them at a competitive disadvantage with China and the United States where the Trump Administration is aggressively rollingback regulation. The Commission has now assessed which other EU laws can be simplified to reduce red tape. According to the draft conclusions of the Ministers' Meeting on June 16, EU countries will show their support to add energy policies to this initiative. The draft conclusions supported the plans to simplify EU laws and stated that this "is expected have a profound effect on lowering regulatory burdens for companies in energy sector and energy-intensive industries while maintaining alignment to the original policy goals." Diplomats in the EU are still working on the final conclusions. They could be changed before they are approved by ministers. So far, the EU's efforts to simplify have been met with mixed reactions. The EU's simplification efforts have met with mixed reactions so far. EU diplomats have told countries that they want to simplify the EU's methane emission rules and energy savings obligations. Diplomats say that the final conclusions will likely not reveal much about Brussels' plans to propose legislation in June to ban all Russian imports of gas by 2027. This is because EU member states must unanimously approve conclusions, which means that one government could block them. Hungary and Slovakia both rejected the plan to stop using Russian energy. (Reporting and editing by Kate Abnett, Andrew Cawthorne).
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Gold drops as Trump signals possible trade deal with Britain
Gold prices dropped on Thursday as U.S. president Donald Trump hinted that he might sign a trade agreement with Britain. This lowered trade tensions, and reduced the appeal of gold as a safe haven investment. As of 0858 GMT, spot gold dropped 0.7% to $3339.32 per ounce. Bullion had risen by more than 1% in the early part of the session. U.S. Gold Futures fell 1.4% to $3345. Nitesh Sha, commodities strategist at WisdomTree, said: "As confirmation comes that there's some sort of deal on the horizon that could help firm up the dollar and take a little steam off gold." On Thursday, the U.S. will announce an agreement to lower tariffs for some goods. Trump announced on Truth Social that, later in the afternoon, he would hold a presser regarding a major trade deal. Meanwhile the British Prime Minister Keir starmer will also provide an update about the U.S. and UK trade talks. Investors are also on edge as the U.S.-China trade talks in Switzerland this week keep them on their toes. Trump stated that China was the initiator of these talks, and reiterated his refusal to lower import tariffs for Chinese goods as part of a negotiation strategy. As its policymakers deal with the impact Trump's tariffs, the Federal Reserve kept interest rates unchanged on Wednesday. However, it warned of an increased risk of inflation and unemployment. In a low interest rate environment, gold, a non yielding asset, which serves as a hedge to political and financial uncertainty, thrives. Two people with first-hand knowledge of the situation said that China's central banks has allowed commercial banks to purchase foreign currency in order to pay for imports of gold under newly increased quotas. The Pakistani military confirmed that 12 Indian drones violated Pakistani airspace and were shot down by Pakistan. This comes a day following Indian attacks on several targets across the country. Ole Hansen is the head of commodity strategy for Saxo Bank. He said that rising tensions between India, Pakistan and other countries will continue to draw attention. This could lead to an unquantifiable amount of demand for safe havens. Silver spot fell by 0.4%, to $32.34 per ounce. Platinum rose 0.1% to $975.08 while palladium dropped by 1.5% to $957.50. (Reporting and editing by Ed Osmond in Bengaluru. Anmol Choubey is based in Bengaluru.
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COP30 Brazilian presidency calls for new global climate governance
According to a letter released by the Brazilian presidency on Thursday, COP30, which is this year's global climate summit, has called for new global governance mechanisms in order to help countries implement their commitments and curb global warming. The summit in the Amazonian town of Belem, in November, will mark the 10th anniversary since the Paris Accord when signatories agreed that warming should be kept well below 2 degrees Celsius compared to pre-industrial levels. Many nations are still struggling to bring their plans to life and reduce carbon emissions to the level necessary to prevent the planet from reaching catastrophic levels of warming. In a letter from the COP30 Presidency, it is stated that "the international community must investigate ways in which climate cooperation can be improved to accelerate" the implementation. Luiz inacio Lula da So, the Brazilian president, first made this proposal during the G20 summit held in Rio de Janeiro last November. Lula suggested at the time creating a “United Nations Climate Change Council” to help countries implement the commitments they made in 2015 to combat climate change. Lula stated that "negotiating new commitments is pointless if we do not have an effective way to accelerate the implementation" of the Paris Agreement. "We need stronger climate governance." Andre Correa do Lago will be the Brazilian ambassador at COP30. Correa do lago said that the UNFCCC Climate Convention has been the subject of decades-long debates. However, it lacks the implementation capability. Lago, a journalist on Wednesday, said: "The UNFCCC or the Paris Agreement do not have the power or the mandate to move this forward. We propose to reconsider how institutionally we can strengthen implementation." The COP Presidency Letter suggests that this discussion should take place at the United Nations General Assembly and not COP30. The letter says that "debates at U.N. General Assembly can explore innovative governance approaches for endowing international cooperation with the capabilities of rapid sharing data, knowledge, and intelligence as well as leveraging networks, aggregate efforts, and articulating processes, mechanisms, and actors both within and outside the U.N." According to sources in the Brazilian Government, the creation of an U.N. Lula has discussed the creation of a Climate Council in his diplomatic talks with world leaders. However, there are no immediate results expected in the near future. One source stated that "it's still a first convincing effort." (Reporting by Lisandra paraguassu; editing by Manuela andreoni, Lincoln Feast)
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US and Britain to announce tariff agreement on Thursday
Thursday is expected to see the United States and Britain announce an agreement to lower tariffs for some goods. This will be the first such deal since U.S. president Donald Trump began imposing levies to countries all over the world. Trump announced on Truth Social on Thursday that he will hold a news conference in the Oval Office at 10:00 a.m. ET (1400 GMT), to discuss a "major deal" with representatives of an important and highly respected country. A spokesperson for the British government said that Prime Minister Keir starmer will give an update about U.S.-UK trading talks later on Thursday. Two British sources familiar with the situation have said that the outline of an accord will be announced. A spokesperson for Downing Street said that the United States was an essential ally to our national and economic security. The Prime Minister will provide an update on the progress of negotiations between our two countries. On Tuesday, a British official said that both sides were trying to reach an agreement on lower tariff quotas (a portion of exports that are subject to lower duty) on steel and automobiles. These two sectors were affected by 25% U.S. duties. In exchange, Britain will likely agree to lower their own tariffs on U.S. automobiles and reduce a digital tax that impacts U.S. technology groups. It refused to lower food standards to allow U.S. producers to have greater access to the market. It was not clear what the status of Trump's 10% "baseline tariff" on Britain and most other countries would be. It will have political significance for both countries, despite the potential narrowness of any agreement. Investors are watching to see if Trump can deescalate the trade war he started after the global tariffs threatened to reignite inflation and slow economic growth. The British government tries to minimize the worst effects of Trump's tariffs, without compromising its efforts to reset the trade relationship with the European Union. The UK also signed a new deal with India this week. Trump's trade conflict has shaken financial markets, and fears of recession have been raised. Central bankers and executives are grappling with sometimes chaotic policymaking which is affecting world supply chains as well as a wide range of industries. Last month, the International Monetary Fund slashed their growth forecasts for China, the United States and the majority of countries. They cited the impact U.S. Tariffs, and warned that increasing trade tensions could further slow down growth. U.S. officials and Chinese officials will also be holding talks in Switzerland this Saturday. This could be the first step to resolving the potentially damaging trade conflict between the two largest economies in the world. Trump's top officials are in a frenzy of meetings with trading partner since the president imposed the 10% tariff on April 2, along with higher "reciprocal tariff rates" for many trading partners. These rates were suspended later for 90 days. The United States has not imposed additional tariffs on Britain because the country imports more than it exports. Reporting by Alistair Smout, writing by Kate Holton, editing by Topra Chopra
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Outokumpu Finland meets profit forecasts amid muted demand and tariff uncertainty
Outokumpu, a Finnish stainless steel manufacturer, expects that global uncertainties due to U.S. Tariffs will impact its operating environment during the second quarter after its core earnings exceeded market expectations in the previous one. The European steel industry, which is already facing challenges from a weak demand, high costs, and the competition of cheaper Chinese imports are now faced with the added challenge of recent tariff increases on their exports to America. In a recent press release, Outokumpu said that "geopolitics, as well as other important uncertainties related to tariffs," could impact the global economic environment and, consequently, the operating environment of the company, its deliveries, metal prices and foreign exchange rates. Analysts had predicted an average of 48.9 millions euros for the adjusted profit before taxes, depreciation, and amortization (EBITDA). In a statement, CEO Kati Ter Horst stated that "Stainless steel demand was muted throughout the quarter and tariffs created further uncertainty." Outokumpu’s stainless steel deliveries increased 11.4% quarter-onquarter despite being affected by a strike. It is expected that they will be either level or increase by as much as 10% in the second half of this year. The group confirmed its previous estimate that the one-week strike had a negative impact on EBITDA of around 15 million euros. Outokumpu's core earnings in Americas, where it generated almost a third its sales in 2014, increased by 22% compared to the previous quarter. In Europe, they grew from a loss of 6 million euro in 2024 to a profit in 2016 of 6 millions euros. Outokumpu stated that despite a rise in orders at the start of the year in Europe, the company's key market was still in a "wait and watch" mode. Outokumpu, the second largest stainless-steel producer in the United States, said that the economic outlook was uncertain, with a low consumer confidence level and rising inflation expectations. Outokumpu expects adjusted EBITDA for the second quarter to be "at a level similar or higher" than that of the first. The group said that it had also saved 11 million euros out of the 50 million euro target for the year. $1 = 0.8845 Euros (Reporting from Jagoda Drlak, Gdansk. Editing by Milla NissiPrussak).
Iron ore prices fall on China demand fears and Sino-US tensions
Iron ore futures prices fell on Thursday, as traders considered the impact of trade tariffs between China and the United States. They also weighed concerns about a possible slowdown in demand from China's top consumer.
The September contract for iron ore on China's Dalian Commodity Exchange ended the morning trading 2.17% lower, at 697.5 Yuan ($96.43).
As of 0318 GMT, the benchmark June iron ore traded on Singapore Exchange fell 1.19% to $97.15 per ton.
Analyst Zhuo Guqiu at Jinrui Futures said that the price drop of steelmaking components was more dramatic than steel.
China Metallurgical News, a state-backed publication, cited officials of the steel association to say that the relevant authorities were actively advancing national crude steel production control.
China announced its plans to restructure the giant steel industry in March. However, it did not specify when or how much production would be cut.
This statement from the Steel Association has confirmed such expectations. Hot metal production is also expected to reach a high point soon.
Iron ore demand is usually gauged by the hot metal production, which is a blast-furnace product.
Coking coal and coke, which are used to make steel, also fell by 2.35% and 2.58 %, respectively.
The Shanghai Futures Exchange saw a decline in most steel benchmarks. Rebar fell 1%, hot-rolled steel coil dropped 0.87% and wire rod decreased 0.72%. Stainless steel gained 0.12%.
The iron market has seen a significant drop in demand despite Beijing's injection of a number of monetary stimuli on Wednesday to try and mitigate the damage that the trade war between the United States and China had caused.
The stimulus package is not a good sign for Sino-U.S. Trade Talks, as it suggests a readiness for the worst-case scenario. An analyst said this under condition of anonymity due to the sensitive nature of the issue.
(source: Reuters)