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Xi praises Belarus, which is under sanctions, as China's true ally
Xi Jinping, Chinese president, praised Belarus for being a true Chinese friend when he met Alexander Lukashenko on Wednesday, the leader the sanctions-hit European country. He also urged his Russian ally, Alexander Lukashenko to join Beijing and oppose "hegemony" and "bullying". Lukashenko made his first visit to Beijing since he won the presidential election in January, which extended his 31-year reign of the former Soviet Republic. Western governments rejected his win as a fake. Belarus' economy has suffered from Western trade tariffs and sanctions due to its support of Russia's conflict in Ukraine. Minsk has become increasingly orientated towards the east after being cut off from Western markets. Minsk had allowed Russian forces use its territory as a staging ground for their invasion of Ukraine. Xinhua reports that Xi congratulated Lukashenko on his reelection in Zhongnanhai in Beijing. He also added that China and Belarus are "true partners and friends." "The friendship between China and the United States has been enduring for a very long time. The mutual political trust is unbreakable," Xi stated. Xi said that both countries must also "oppose hegemony and bullying and defend international fairness, justice and equity". Belarus' official news agency BelTA quoted Lukashenko saying, "You have accurately highlighted the main feature of our times - the unprecedented Western pressure on us, in particular on the People's Republic of China." Lukashenko stated, "Today, many countries including Belarus are looking at you, Beijing." Last month, Xi met with Vladimir Putin in Russia. He vowed that they would remain "friends of iron" in a world no longer dominated by America. Since Donald Trump's return to the White House in 2017, Washington has increased its pressure on Russia and China. Moscow is being urged to end the conflict in Ukraine quickly, while Beijing faces new tariffs. Lukashenko has been to China 15 times in the past years and has relied on Beijing for credit and investment despite Belarus being considered part of Moscow's traditional influence sphere. Minsk also looks to Beijing for assistance in transforming and upgrading its industries. Last year, Minsk became a BRICS member state and a partner nation. Despite China's pledge to increase bilateral cooperation, there are still economic imbalances. China's surplus in trade with Belarus increased by 47.6% from the previous year to $4.77bn, according to Chinese data. China's exports of cars, digital TV receivers, and washing machines outweighed its purchases of Belarusian goods, including farm fertilisers. (Reporting from Beijing by Ryan Woo and Melbourne by Lidia Kelly; Additional reporting provided by Beijing Newsroom. Editing by Jacqueline Wong, Raju Gopalakrishnan and Jacqueline Wong)
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Austria's Voestalpine predicts small profit increase, dented due to tariffs
Voestalpine, an Austrian specialty steelmaker, forecasted a modest increase in its core earnings for the year on Wednesday. It attributed this to a direct impact from U.S. Tariffs and high levels of uncertainty caused by the trade war. Voestalpine's annual report stated that President Donald Trump’s tariffs will have a negative impact on earnings of a few millions euros in the mid-double digits during the first quarter of 2019. The steel manufacturer, which supplies primarily the automotive industry with its products, expects to earn between 1.4 and 1.55 billion euro ($1.59 billion to $1.76 billion), before interest, tax, depreciation, and amortization. This compares with 1.35 billion euro in the previous years and the analysts' median estimate of 1.5 billion Euros in an LSEG survey. Voestalpine reported a lower revenue for the full year, due to a challenging economic climate and reorganization. These measures, it said, should increase its core earnings for the next year. The company's revenue dropped from 16.68 billion euros to just 15.7 billion euro a year ago. Analysts polled at LSEG expected a lower drop, to 15.85 billion euro. $1 = 0.8800 Euros (Reporting and editing by Milla Nissi-Prussak in Gdansk)
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As trade uncertainty persists, Asian stocks are rising and the dollar is fluctuating.
The dollar weakened as U.S. tariffs on steel and aluminum increased, and Asian stocks rose. This marks the latest chapter of the trade war which has roiled the markets throughout the year. Investors have been focused on the pace and lack of progress in trade negotiations. The deadline for U.S. trade partners to submit proposals for deals in order to avoid Trump's "Liberation Day", hefty tariffs, is Wednesday. The European Stock Futures market pointed to an opening higher as the European Central Bank began its two-day meeting, where it was expected to reduce rates on Thursday. South Korea's currency and stocks surged in Asia after the liberal candidate for president Lee Jae Myung won his election. This victory raised expectations of a rapid economic stimulus and market reforms, as well as easing policy uncertainties. The benchmark KOSPI rose more than 2%, reaching its highest level since August 2024. The MSCI broadest Asia-Pacific share index outside Japan was nearly 1% higher. Japan's Nikkei gained 0.8% while Taiwanese stocks rose 2%, after artificial intelligence giant Nvidia helped boost U.S. stock prices on Tuesday. The data showed that U.S. jobs opened up in April but that layoffs also increased, which indicates a slower labour market due to tariffs impacting the economy outlook. Investors have been watching a potential phone call between U.S. president Donald Trump and Chinese leader Xi Jinping this week, as tensions simmer between the two world's largest economies. Trump accused China on Friday of violating the Geneva Agreement to reduce tariffs and trade barriers. Beijing has said that it will protect its interests, and that this accusation is unfounded. The blue chip index in China rose by 0.58% on Wednesday, while Hong Kong’s Hang Seng index rose by 0.56%. The Trump-Xi negotiations remain the focus of attention, even though markets may have become numb to headlines about trade. "A grand deal seems unlikely, but any escalation may still cause a bout risk aversion", said Charu Chanana. Chief investment strategist at Saxo, Singapore. Trump also signed an executive order that will take effect on Wednesday the surprise announcement he made last week, that he would increase tariffs for steel and aluminum imports from 25% to 50%. Thierry Wizman is a global FX & Rates Strategist at Macquarie. He said: "We think that the steel & aluminum tariffs are a good example of other strategic tariffs which are likely to'stick.'" "With this, there is still little incentive for a U.S. Dollar rally to take root." DOLLAR WEAKNESS Investors have fled U.S. assets in search of safe havens this year, including gold, as they anticipate trade uncertainty to have a negative impact on the global economy. The Organisation for Economic Cooperation and Development (OECD) has revised its March estimates, due primarily to the impact of the Trump administration’s trade war. The dollar rose 0.18% against the yen on Wednesday to 144.225. The euro was unchanged at $1.1368. The dollar index (which measures the U.S. currency against six major currencies) was 99.31 on Monday, not too far away from the six-weeks low of 98.58 that was reached on Monday. The index has fallen 8.5% in the past year. Oil prices fell in commodities due to a loosening of the supply-demand equilibrium following an increase in OPEC+ production and lingering worries about global economic prospects because of tariff tensions. Brent crude futures fell 0.38%, to $65.38 per barrel. U.S. West Texas Intermediate crude crude dropped 0.41%, to $63.15 a barrel. Gold's gains this year have been staggering, reaching 28%, thanks to safe-haven flows.
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Palm oil prices fall due to a projected buildup of stocks and weaker rival oils
Malaysian palm futures fell on Wednesday, as the market anticipated that stocks would rise for a third consecutive month in the month of May. They were also pressured by the declines in edible oils on Chicago and Dalian. By midday, the benchmark contract for palm oil delivery in August on the Bursa Derivatives Market had fallen 8 ringgit (0.2%), to $3,926 ringgit (US$923.11) per metric ton. A Kuala Lumpur based trader stated that "if end stocks rise, this will pressure palm oil futures price, which is why the markets are down." A survey on Wednesday showed that Malaysian palm oil inventories will rise for the third month in a row in May. This is due to a modest increase in production, despite strong export demand. AmSpec Agri Malaysia, an independent inspector, estimated that exports of palm oil products from Malaysia had risen by 13.2% in the month of May. Cargo surveyor Intertek Testing Services predicted a 17.9% increase. Dalian's palm oil contract fell 0.88%, while the most active soyoil contract decreased 0.03%. Chicago Board of Trade soyoil prices fell by 0.45%. As palm oil competes to gain a share in the global vegetable oils industry, it tracks the price fluctuations of competing edible oils. In May, India's imports of palm oil reached a six-month record. The price of oil fell in Asian trade due to concerns over rising OPEC+ production and tensions on tariffs, which threaten global economic prospects. However, worries about Canadian supplies provided a floor. Palm oil is less appealing as a biodiesel feedstock due to the weaker crude oil futures. The palm ringgit's trade currency strengthened by 0.31% to the dollar. This made the commodity slightly cheaper for buyers who hold foreign currencies. Technical analyst Wang Tao stated that palm oil could retest the resistance level of 3,968 Ringgit per metric tonne. A break above this would lead to an increase to 3,998 Ringgit.
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Top sources of U.S. imports of steel and aluminum
On Wednesday, the U.S. tariffs on steel and aluminum imports doubled as President Donald Trump intensified a global trade conflict. Here is a list of major trading partners that will be affected. STEEL: About a quarter (25%) of the steel used in America is imported. The bulk comes from Mexico and Canada, or other close allies such as Japan, South Korea, and Germany. China is the largest producer and exporter of steel in the world, but it only sends a small amount to the United States. In 2018, tariffs of 25% were imposed on Chinese steel, which effectively shut the market out. Last year, China exported 508,000 tons of steel net to the U.S. This is 1.8% of all American steel imports. ALUMINUM: The U.S. relies more on imports for aluminum. Approximately half of the aluminum used in the U.S. comes from imports, the majority of which is Canadian. Canadian aluminum imports exceeded the combined total of nine other countries by 3.2 million tonnes last year. United Arab Emirates (UAE) and China are the next two largest importers, with 347,034 metric tons and 222,872 respectively. According to global standards, the U.S. aluminium smelting sector is relatively small. According to the U.S. Geological Survey, the total smelter capability in the country is just 1.73% the global total.
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Wall Street Journal, June 4,
These are the most popular stories from the Wall Street Journal. These stories have not been verified and we cannot vouch their accuracy. The Chinese government's stranglehold over rare-earth magnetic materials has led to the closure of many factories in Europe and North America. The White House on Tuesday sent Congress a $9.4 Billion rescission package that codifies some of the spending cuts made by Trump's administration. In essence, it asked lawmakers to reverse expenditures they had previously voted in law. Post Holdings has agreed to purchase 8th Avenue Food & Provisions, including assumed debts, for $880,000,000. This will reunite the company with private brands that it had previously owned. Elon Musk, SpaceX's CEO, said on X Tuesday that the Texas-based firm is expected to generate $15.5 billion of revenue by 2025. North Face and Cartier informed their customers in recent days that their names and emails had been stolen. Victoria's Secret was forced to close its website for 3 days after another cyber-attack and delay the announcement of quarterly earnings that had been scheduled for this week. - Meta is turning to nuclear power for the massive amounts of electricity it needs to fuel its artificial-intelligence ambitions.
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Dutch car-sharing firm adds Renault electric vehicles capable of powering the local grid
This week, MyWheels, a Dutch car-sharing company will add the first 500 Renault EVs that are grid-connected to its fleet. The technology is gaining traction in Europe and the number of cars capable of strengthening power grids has increased. The Vehicle-to Grid technology (V2G) allows electric cars to store energy and deliver it to the grid during times of high demand. It has been around for several years, but it was only recently that the technology became commercially viable. This was due to smart charging and batteries capable of sustaining intensive use. MyWheels' roll-out will be the biggest V2G car sharing scheme in Europe, and the addition of the most V2G enabled cars in the region. Kees Koopen, investor at We Drive Solar (the Dutch manufacturer of the chargers) said that the project was a response to the growing concern over grid stability following a major power outage in Spain and Portugal in this year and the sabotage of power supply during the Cannes Film Festival this year. Koolen said that it felt like the project in Utrecht, Netherlands had cost approximately 100 million euros (114 million dollars) to develop. Global Market Insights estimates that the global V2G market will reach $80 billion by 2034, up from $3.4 billion. The Netherlands has been a pioneer in the adoption of V2G due to its ambitious plans to electrify and heat their transport systems, while moving towards renewable energy. Nissan, a Japanese automaker, has recently delivered dozens of Leaf and Ariya models with V2G capabilities to France and Spain. MyWheels reports that 500 Renault V2G compatible cars, including the electric R5, will hit the roads by next year. The cars will be charged bidirectionally by We Drive Solar when not in use. Operators will receive payment for the electricity consumed and sold back to the grid. As grids become more electrified and renewable energy sources are added, they have become unstable. Our research shows that the vehicle-to grid technology could enable the electric vehicle fleet to be a significant asset for the grid. Electric vehicles have a vast storage capacity, said Madeleine Brolly. She is an advanced transport analyst with Bloomberg New Energy Finance. She added that standardisation will be a key challenge for manufacturers to adopt the technology at large scale. (Reporting and editing by Dominique Patton, Christian Schmollinger and Dominique Patton; Gilles Guillaume and Anna Hirtenstein)
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PMI data shows that the growth of non-oil businesses in the UAE slowed down in May.
A survey released on Wednesday showed that growth in the UAE’s non-oil sector has slowed down to its lowest pace in almost four years. Demand remained high but moderated from recent peaks. The S&P Global UAE Purchasing Managers' Index fell from 54.0 to 53.3, its lowest level since September 2021. However, it remained above 50.0, the threshold for growth. In May, the rate of growth in production was the lowest in 44 months. This reflects a softerening in the non-oil sectors despite the fact that demand conditions were still supportive. The sub-index for output dropped to 57.3 from 59.4 readings in April and was the lowest since September 2021. Although the pace of growth in new orders remained strong, the sub-index fell to 56.2 in may from April's reading of 56.9 and was the lowest in seven months. David Owen, Senior Economist at S&P Global Market Intelligence said that although businesses continue to be pleased with the strong demand they receive from clients, some reports indicate that competition pressures and a weaker trade due to US tariffs have weighed down on growth. In the survey, firms reduced their inventories to a record low as they streamlined their holdings in response to a slowing economy. Backlogs fell to their lowest level in 16 months, which indicates a slower pace of demand. The business outlook for the future is subdued. The optimism level has fallen to its lowest since January. The growth of Dubai's private non-oil sector remained stable, with the headline PMI in May at 52.9, the same level as in April. However, demand momentum increased, with new orders growing at a faster pace than ever before. (Reporting and Editing by Toby Chopra).
US manufacturers in halting recovery but diesel utilize warm: Kemp
U.S. makers are slowly emerging from an extended however shallow downturn over the last two years, but progress has actually been fitful, and their intake of diesel stays tepid, which is weighing on oil costs.
The Institute for Supply Management's manufacturing index slipped to 48.7 (22nd percentile for all months since 1980) in May from 49.2 (26th percentile) in April and a recent high of 50.3 (34th percentile) in March.
The March reading was the first time the index had climbed up above the 50-point threshold, signalling growth, since October 2022, however it has actually given that slipped back into contraction territory for the last 2 months.
The study's production sub-index fell to 50.2 (21st. percentile) in May from a current high of 54.6 (45th percentile). in March, as activity rates faltered.
Showing the expansion might remain desultory for a couple of. more months, the new orders component plunged to 45.4 (9th. percentile) in May from 51.4 (27th percentile) in March.
Chartbook: U.S. manufacturing and diesel use
Makers reported weaker conditions than their. counterparts in services, real estate, building and construction, mining and. farming.
The ISM non-manufacturing index in fact rose to 53.8 (33rd. percentile for all months because 1997) in May from 51.4 (14th. percentile) in March.
Production offers fewer tasks and accounts for a smaller sized. share of general financial output but is far more. energy-intensive.
By contrast, services represent a far larger share of. value-added, use more individuals however utilize reasonably less fuel and. electrical power.
The production sector's sluggish performance has. for that reason moistened general energy consumption-- even as the. faster development in services has actually enhanced the overall economy and. employment.
Expectations at the beginning of the year that an. acceleration in manufacturing in the United States and the other. significant economies would raise diesel intake and rates have. not been understood.
DISTILLATE FUEL DOWNTURN
More than three-quarters of all diesel and other extract. fuel oils are used in freight transportation, manufacturing and. building, so distillate intake is generally correlated. closely with the production cycle.
But intake of distillates has been much more drab. than the sluggish and halting healing in manufacturing activity. over the last six months.
The volume of extract fuel oil supplied to the domestic. market, a proxy for intake, was under 3.7 million barrels. each day (b/d) in March 2024.
Volumes provided were the lowest for the time of year considering that. 1998, according to quotes prepared by the U.S. Energy. Info Administration.
Volumes were down by 10% compared to the exact same month last. year and by the same percentage compared to the prior 10-year. seasonal average.
Supply can be volatile from one month to the next. March may. have been an outlier. However distillate usage has been. lagging the upturn in producing for a number of months.
Some petroleum-derived distillate fuel oils are being. replaced by biodiesel and eco-friendly fuel oils, especially in. California.
Even if biodiesel and renewable fuel oils are consisted of,. nevertheless, the volume of extract supplied was down by 4-8% in. March compared to in 2015 and the 10-year average.
Total petroleum and non-petroleum extracts provided were. the lowest given that the very first wave of the pandemic in March 2020. and before that the mid-cycle downturn in March 2016.
Overall distillates supplied have actually been broadly flat over the. past 12 months in spite of the reported enhancement in manufacturing. and freight activity.
EXTRACT INVENTORIES
Showing warm usage and strong refinery crude. processing to make fuel, distillate stocks have actually been. trending greater for the last 3 months.
Stocks were still 10 million barrels (-8% or -0.52. standard variances) below the previous 10-year seasonal average on. May 31, according to information from the EIA.
However the seasonal deficit had actually narrowed from 18 million. barrels (-13% or -1.09 basic discrepancies) at the start of. March.
Stocks have actually been flat or increasing at a time of year when. they would usually be diminishing and have actually climbed to a four-year. seasonal high.
In action, prices for diesel other extracts have actually been. falling faster than for crude, narrowing the gross refinery. margin or crack spread.
The crack spread for making diesel from Brent crude has. narrowed to approximately simply $19 per barrel so far in June. 2024.
The inflation-adjusted spread has narrowed from $46 per. barrel as recently as August 2023 and a record $63 in June 2022. after Russia's invasion of Ukraine.
In real terms, the spread has actually fallen back in line with the. average for the five years between 2015 and 2019 before the. pandemic and invasion.
Traders expect diesel materials to stay plentiful for the. next couple of months, which must help include inflationary. pressures within the supply chain and offer the major central. banks more scope to trim interest rates.
Associated columns:
- Renewable fuels take bite out of US diesel intake. ( May 10, 2024)
- U.S. manufacturers emerge from downturn, set to improve fuel. use (April 4, 2024)
- Worldwide freight velocity will raise fuel costs (March. 27, 2024)
- Diesel costs primed to increase sharply in 2024 (February 6,. 2024)
John Kemp is a market expert. The views expressed. are his own. Follow his commentary on X https://twitter.com/JKempEnergy
(source: Reuters)