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Severstal warns that Russian steel plants could close due to low export profits.
Alexander Shevelev said that the Russian steel industry could close down due to low demand at home and the high rouble, which reduces profitability for exports. A Russian Railways document, seen by us last month, showed that the high rate in Russia, which was 21% for many months before it was reduced to 20 % earlier in June has caused steel producers to reduce their loading volumes. This is a reflection of the slowing Russian economy and its subdued demand. Shevelev stated that high rates could cause the demand for steel to drop by 10% to 39 million tonnes this year. Analysts attribute the rise to the ease of geopolitical tensions with President Donald Trump and his administration. Shevelev stated that the overly strong rouble makes metal exports unprofitable, a fact that is affecting an industry which has relied on it for years. He added that "the weakness of the export markets, and a strong Russian rouble, simply don't allow most metals manufacturers to cover variable costs." Shevelev stated that it is possible for some metallurgy factories to stop production due to the excess supply of metals on the domestic market. "I hope that it will not come to that. In time, we'll be able loosen up the monetary policy. But for now, everything is pointing towards the closure of certain facilities that do not manage costs well." Severstal is also burdened with a heavy logistical burden because it cannot sell into nearby European markets. (Reporting from St Petersburg by Anastasia Lyrhikova, Writing by Alexander Marrow and Editing by Ed Osmond).
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Greenland grants EU-backed critical Metals Project Permit to Mine
Greenland granted a permit for a project backed by the European Union to mine molybdenum. This metal is used in aerospace, defence, and energy, and China has placed export restrictions on it. After U.S. president Donald Trump expressed interest in buying it earlier this summer, the resource-rich Arctic Island has seen increased activity in its mining industry over the last month. The government of Greenland said that the permit was given to Toronto-listed Greenland Resources, a company supported by the European Raw Material Alliance and which holds the license to the Malmbjerg Project in eastern Greenland. According to the company, an open pit mine in Malmbjerg can produce 32.8 million pounds per year of molybdenum concentrated. This could supply around 25% of Europe’s molybdenum needs. Molybdenum, a white metal with a silvery luster, is used to improve the resistance of steel to heat and corrosion. It's therefore essential for industries such as defence and clean energy. China implemented export controls on five metals in early February, including products containing molybdenum, as a response to U.S. president Donald Trump's tariffs on Chinese goods. According to the U.S. Geological Survey, China accounted about 40% of molybdenum global production in 2013. Molybdenum has been deemed a critical metal by the European Union as well as the United States. Greenland Resources has signed agreements to off-take coal with Finland’s Outokumpu, and Italy’s Cogne Acciai Speciali. Greenland has a rich natural resource base, but the mining industry is slow to develop due to bureaucracy. Greenland granted an exploitation license to a Danish and French mining group last month, while this month the EU selected 13 new critical materials projects, including graphite in Greenland to increase metals, minerals, and supply. The U.S. export credit agency announced last week that the company building a large mine of rare earths in Greenland had met the initial requirements for applying for a loan worth $120 million.
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Trackers report that Iran has adapted to maintaining oil exports in conflict.
Two vessel tracking companies said that Iran maintains crude oil supplies by loading tanks one at atime and moving floating storage closer to China. The country is trying to keep its main source of income while being attacked by Israel. The conflict that erupted between Iran and Israel last week is a new obstacle for Iran. It uses a fleet of shadow tankers to hide their origins and avoid U.S. sanctions imposed in 2018 due to its nuclear program. Iran is the third largest producer of crude oil in OPEC. Most of its exports go to China. The trackers reported that the conflict with Israel has not affected the loadings. The latest data from analytics company Kpler shows that Iran has so far loaded 2.2 millions barrels of crude oil per day, a record for the past five weeks. The missile exchanges between Israel and Iran have targeted energy infrastructure in both countries. This includes the Haifa refinery in Israel, as well as the South Pars Gas Field in Iran. However, Iran's main crude exporting facility on Kharg Island has so far been spared. Homayoun Falikshai is the head of crude analysis at Kpler, a tracking company. Kharg Island lies 30 km south-west of the Middle Eastern country's south-west coast, deep in the Persian Gulf. Falakshai, referring the National Iranian Oil Co., Iran's oil company, said that "NIOC" may think it is safer than the other main jetty on the west side in open water. The large oil tankers have now begun to approach Kharg Island, one at a moment, and the second jetty, on the western side, has been left unused for a few days. 15-16 other Iranian tankers are scattered throughout the Persian Gulf. The International Energy Agency reported on Tuesday that Iranian oil exports were steady this year, at around 1.7m bpd despite U.S. Sanctions on Chinese Customers since March. Ship tracking firm Vortexa reported that Iran has moved a part of its 40-million barrel floating storage fleet closer to China in order to minimize the impact on buyers. Vortexa reported that ten tankers carrying 8 million barrels each of Iranian crude oil are now stationed offshore China. They are moving from Singapore, where another 20 million barrels were located. Vortexa said that the remaining 12 million barrels or so were in the Persian Gulf when the month began, but the current location of these barrels was unknown. Tankers can load crude oil into floating storage without having to go to a specific destination. Emma Li, Vortexa’s senior China analyst, said: "Iran is moving barrels to the east even without orders in order to strategically position the barrels nearer to end-buyers at a time when geopolitical risks are high." Vortexa said that moving barrels closer would help offset the disruption of Iranian loadings for up to two weeks. (Reporting and editing by Alex Lawler. Dmitry Zhdannikov, Elaine Hardcastle, and Robert Harvey)
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Eni unveils plant to recycle plastic waste chemically
Versalis is the chemical division of the Italian energy company Eni. On Thursday, Versalis unveiled a new demonstration plant for the chemical recycling mixed plastic waste based on its proprietary technology. The technology, called 'Hoop,' allows for the conversion of mixed plastic waste to a material which can be used in order to create new plastic materials that are suitable for any application, including packaging intended to come into contact with food and pharmaceutical packaging. The move is part a larger strategy by the state-controlled company to revamp its losing chemical business. The high cost of energy and raw materials, coupled with the increase in production capacity in China, has put European petrochemical companies under unprecedented pressure. Eni, TotalEnergies, and BP have all shut down or sold old facilities. Eni announced last year that it would invest two billion euros ($2.3billion) by 2029 in order to turn around the chemicals business. The last five years saw a loss of three billion euros. The overhaul will include new activities such as plastic recycling, energy storage and bio-refining. It will also involve the closure of several primary petrochemicals including steam crackers. Eni will build a new steam cracker in Priolo in Sicily by the end this year, based on 'Hoop technology'. Adriano Alfani, Chief executive officer of Versalis, said that a final investment decision could be made on the new recycling facility in Priolo next year. Versalis developed its new technology in a joint venture with the Italian engineering firm S.R.S. The system developed by S.R.S. (Serviceizi di Ricerche e Sviluppo) is a high-yielding material recovery system with flexibility of input materials.
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South Africa's leading banks pass the first climate stress test, but data gaps are identified
The six South African systematically important banks that are deemed to be the most significant passed the first climate-risk stress tests of the central bank. However, the exercise revealed some modelling shortcomings as the institutions had not fully incorporated climate-risk indicators in their frameworks. Losses on the long-term could be hidden by gaps. The central bank releases a bi-annual review of the financial system every two years. The latest edition of the review was released on Friday. Six banks, Absa Capitec FirstRand Investec Nedbank Standard Bank of South Africa Standard Bank of South Africa used the climate-scenario models from the Network for Greening the Financial System to model possible losses on climate-sensitive loan. The NGFS (Global Group of Financial Supervisors) is a global alliance of central banks. Around one-third (33%) of the bank books are in the sectors most vulnerable to climate change, namely real estate lending, household loans and transport. Vafa Avari, the division head of the Financial Stability Department's macro financial vulnerability section said that it was difficult to give general recommendations because each organization faced different challenges. We were comfortable with their plans to close the gap in the next two years. In that context, it was very insightful. "This was the first exercise in South Africa of this kind. You expect to shake the tree and see what comes out." Earlier this month torrential rains and gale-force winds inundated South Africa's Eastern Cape province, triggering property and business-interruption claims.
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The European Union is prioritizing rare earth access at the China summit
Four sources familiar with plans say that European Union leaders are planning to use their summit with China in the coming month to push for better access to Chinese minerals and rare earths. The two sides will also be tackling a range of tariff issues. China has held a near-monopoly in rare earth production for years. After the announcement of tariffs by U.S. president Donald Trump on April 2, China increased its export controls for the minerals in response to demand from automakers and the defence industry, as well as producers of renewable energies. China has also complained to the EU, as the EU has tried to protect the auto industry from cheap imports from China. Meanwhile, China has taken measures against the brandy industry in France. The European Commission's Ursula von der Leyen, and the European Council's Antonio Costa will be traveling to Beijing on July 24-25 for a summit. The event will mark 50 years of EU and Chinese relations. It will also be held two weeks after the deadline set by United States to most trade partners for them to reach agreements to avoid higher tariffs. According to an EU official who declined to identify himself, European leaders will press their case in separate meetings with President Xi Jinping, Premier Li Qiang and other Chinese officials. According to two EU sources, the EU mission in China will focus solely on rare earths up until the summit. In May, the Chinese ministry of commerce announced that a "green-channel" had been established to expedite rare earth licenses for EU companies. One EU diplomat, however, said that only half of the several hundred applications had been processed. The situation is improving although the percentage cleared licenses does vary. Adam Dunnett said that delays in clearance of customs can occur even after the license is granted. Trade conflicts between Europe, China and the quest to solve supply shortage are among them. China has responded by imposing anti-dumping measures against EU brandy after Brussels imposed tariffs for unfair subsidies on Chinese electric vehicles. Beijing has launched trade investigations into EU dairy products and pork. BRUXELS NOT BEIJING The run-up to this summit has been a bit rocky. Beijing had been the original host, but when China said that Xi wouldn't travel to Brussels, Beijing was selected. One EU official commented that China "played its cards very effectively". China, according to the official, had identified rare Earths as a vulnerability and waited until the very last minute before making any concessions. The EU wants China either to extend the period of rare earth licenses or scrap them to export to the EU. Beijing should make a clear distinction between the EU, the United States and any other country. During talks in London, earlier this month, China offered to give U.S. companies priority for rare earth export licenses. "If China wants to have the EU at the same distance as the Trump administration, China’s trade regimes can't equate the U.S. with Europe," said Hosuk Le-Makiyama of the trade think tank ECIPE. He met senior Chinese officials in the past week. A second EU official stated that the impending deadline for securing an agreement with the United States could force the EU into being tough on China in return for lowering U.S. Tariffs. This would make it difficult for EU to negotiate a deal with Beijing. Officials said that it was possible for the deadline of July 9 to be delayed or details of any U.S. agreement could come out later, which would limit the chances of EU progress in China. China has asked the EU to replace the import tariffs it imposed on Chinese electric cars with minimum price commitments, and make other concessions. This is after the EU delayed the imposition on EU brandy. China says the talks are nearing their end, while EU officials claim that progress has been minimal.
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Denmark will push for Ukraine to join the EU during its presidency
Denmark will continue to prepare Ukraine for EU Membership in spite of Hungary blocking the negotiations when it takes over the Presidency of the European Council on July 1. This was announced by the European Affairs Minister of Denmark. Marie Bjerre, European Affairs Minister at a Copenhagen press conference said: "Unfortunately Hungary is blocking. We are trying to exert as much pressure as possible on Hungary and do all we can to ensure that Ukraine continues with necessary reforms." Hungarian Prime Minister Viktor Orban has Strongly opposed Providing NATO military and EU assistance to Ukraine while claiming that the country's EU Membership would destroy Hungarian farmers The wider economy Ukraine has already taken the necessary steps Reforms The negotiations will be accelerated. Bjerre stated that "when we reach the point where we are able to open the specific chapters of negotiation, we will be ready to close these very quickly." Denmark will also try to reach an agreement with EU nations regarding the planned climate goals for 2040. The European Commission intends to propose, in July, a legally-binding target of reducing EU country emissions by 90 percent by 2040 compared to 1990 levels. Faced with Pushback Brussels is not a government, but a federation of governments Assessing options The target set for domestic industry can be lowered, and international carbon credits used to close the gap up to 90%.
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Putin hosts Indonesian Prabowo to Russia as part of a bid to strengthen ties
On Thursday, the Indonesian president Prabowo Subianto held talks with Russian President Vladimir Putin at St Petersburg in northern Russia. They discussed ways to strengthen what some officials called a growing strategic partnership. Some powers, such as Australia, have been disturbed by the deepening of relations between Russia and Indonesia. This is part of Moscow’s attempt to establish new relationships with the Global South, amid Western attempts at isolating it due to the Ukraine War. Putin, who met with the Indonesian delegation at the Constantine Palace in Moscow, noted that Indonesia had joined BRICS and was certain it would have a major impact on the grouping. Prabowo expressed his gratitude to Putin for his support in Indonesia's membership of BRICS, and noted that relations between the two countries are improving. In a speech in Moscow this week, Sergei Lavrov, the Russian foreign minister, and Sugiono from Indonesia, spoke of a potential strategic partnership between their two countries. Russia proposes to deepen military, security and trade ties, as well as nuclear ties, with Indonesia. Indonesia has the fourth-largest population in the world. Prabowo visited Russia before in August 2024 when he served as defence minister and President-elect. He described Moscow as "a great friend" and expressed his hope for stronger collaboration on defence, education, and energy. Indonesia announced that it plans to build a 500 MW nuclear power plant in 2032. It hopes to have it online within the next decade. The authorities said that developers interested in the project included Russia's Rosatom and China CNNC as well as NuScale, a U.S. manufacturer of small modular reactors. Indonesia, Southeast Asia’s largest economy, relies primarily on coal for power, despite having a massive potential in renewable energy sources like hydro, solar, and geothermal. Indonesia, anticipating a high demand for energy in the future and aiming to reduce carbon emissions while increasing power generation, is looking at nuclear power as a solution. Prabowo, Indonesia's foreign minister, has maintained Indonesian non-aligned policy and pledged to befriend any country including Russia and the United States. He said that Indonesia would not join any military alliance. China is Indonesia's biggest trading partner. However, Prabowo recently announced a number of concessions to trade with the U.S. in an effort to counter the effects of tariffs. Russia has praised Indonesia for its 'balanced position' on the Ukraine conflict. Last November, Russia and Indonesia held their first joint maritime exercises in the Java Sea. Reporting by Guy Faulconbridge from St Petersburg, Russia and Stanley Widianto, Gibran Peshimam and Mark Trevelyan in Jakarta
Copper nears a one-week low due to stronger dollar and growth concerns
Copper prices fell to a new low Thursday, and other base metals followed suit. The strong dollar and growing global growth concerns - amidst escalating tensions with Iran and Israel - contributed to the decline.
As of 0852 GMT the LME's 3-month copper fell 0.5% to $9,608 per kilogram, its lowest since June 13.
A stronger U.S. Dollar on the rise due to geopolitical worries tends weaken U.S.-dollar-based prices. John Meyer, an analyst at SP Angel, said that long-only funds were sitting on the sidelines because of elevated risk concerns.
He added that the pullback is also due to reduced activity because U.S. traders will be away on Juneteenth Thursday.
Oil prices and rising Middle East tensions boosted the dollar, which was also bolstered by Federal Reserve Chair Jerome Powell’s cautionary tone regarding inflation.
Israel attacked a nuclear site in Iran and Iranian missiles struck an Israeli hospital as U.S. president Donald Trump kept the rest of the world guessing whether the U.S. will join Israel to attack Tehran's nuclear sites.
Inflation, high oil prices, and war tend to cause supply chain disruptions, raise costs, and reduce investment, slowing down global growth.
LME copper inventories
Copper has been flooding into the United States in recent months. It is now fetching a premium because of the expectation that Trump will impose tariffs.
LME Aluminium fell by 1.2% to $2.515.5
Metal industry sources reported that premiums for customers buying aluminum on the physical market of the United States dropped by more than 7% Wednesday, as traders speculated on possible reductions in U.S. tariffs on Canadian shipments.
LME tin fell 0.4% at $32,240. Zinc dropped 0.4% at $2,625.5. Lead dipped 0.2% to $1,988.5. Nickel gained 0.6% to $15,140.
The International Lead and Zinc Study Group said on Wednesday that the global surplus of zinc decreased in April, while the surplus of lead increased. Ashitha Shivaprasad, Bengaluru. Edited by David Evans.
(source: Reuters)