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China's data weakens and iron ore falls to a 2-month low in response to Trump's tariff increase plan
Tuesday, iron ore futures dropped to their lowest level in almost two months due to fears about demand sparked by President Donald Trump’s plan to double the tariffs on imports of steel and weak factory data from China, the top consumer. The September contract for iron ore on China's Dalian Commodity Exchange ended the daytime trading 1.14% lower, at 695.5 Yuan ($96.69). Early in the session, the contract reached its lowest level since April 10, at 690.5 Yuan per ton. As of 0700 GMT the benchmark July iron ore traded on the Singapore Exchange was down 1.13% at $94.15 per ton, after hitting its lowest level since April 10, when it hit $93.8. Trump announced his intention to impose 50% tariffs on steel and aluminum imports. This will increase pressure on steel producers around the world and escalate global trade tensions. On Monday, U.S. steel and aluminum prices spiked while the shares of foreign steelmakers fell. Due to a holiday, Chinese markets were closed Monday. The ongoing tariff war between two of the largest economies in the world has affected the Chinese manufacturing industry, and cast a shadow over the outlook for steel demand. This sector has now overtaken infrastructure and real estate as the largest steel consumers in the country. A private sector survey revealed on Tuesday that China's manufacturing activity contracted for the first month in eight in May. Official data had reported a second contraction. Coking coal and coke also fell, falling by 3.03% and 1,1% respectively to levels nearing nine-year lows. The Shanghai Futures Exchange has seen a decline in the steel benchmarks due to lower raw material costs. Rebar fell 1.18%. Hot-rolled coil dropped 1.04%. Stainless steel slipped 0.59% while wire rod remained unchanged. ($1 = 7.1932 Chinese Yuan) (Reporting and editing by Amy Lv, Lewis Jackson and Sonia Cheema).
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Britain faces race to avoid $1 Billion in EU Carbon Tax Costs
Market experts say that Britain will have a difficult time linking its carbon market with the EU's within the next seven months to avoid UK companies being charged the carbon border tariff by the EU and facing annual bills of around 800 million pounds ($1.08billion) for the UK. As part of the "reset" after Britain's exit from the European Union in 2016, the two sides announced that they would link their carbon emission trading systems last month. The two sides have not set a deadline or described the steps that need to be taken before the European carbon border tax takes effect in January. It will probably take several years for the linkage to become effective. Ben Lee, senior emission analyst at Energy Aspects, said that the earliest date is 2028. However, it's likely to be 2030 or 2029. The UK government stated that a major benefit of joining the EU carbon market (or emissions trading system, ETS) is the ability to avoid being charged by the EU carbon border tariff, which will be implemented next year. This fee will be imposed on CO2 emissions associated to imports of goods such as steel, cement, and others. The UK government claimed that avoiding these costs could save them 800 million pounds a year. EU officials claim that in order to be exempt from the border tax on carbon, Britain must link its carbon market with the EU. Yan Qin, ClearBlue's carbon analyst, said that a full linkage would take several years due to the technical complexity of the process. He added that if the scenario is "optimistic", the link could be formed in 2027. A British government spokesperson said that the British government will try to reach an agreement on a carbon market connection as soon as possible. They said that they would not be providing a constant commentary on the negotiations. A spokesperson for the Commission said that the EU executive will "follow up quickly" on the agreement and propose to EU countries a negotiating mandat to start talks with Britain about the carbon market connection. TECHNICAL HURDLES For the UK to make this link, it must adjust its national rules on carbon trading permits. It also needs to bring its emission permit auctions into line with EU regulations and change the national cap for how much carbon can be emitted by companies that are covered by the market. Not only that. EU and UK schemes have not aligned yet on the number of free CO2 permits that they offer industries. The EU carbon market also has a "reserve", which can add or remove permits to the market in order to stabilize prices. The EU scheme lacks the "reserve" that Britain has, but it does have a mechanism to control costs and set a price ceiling. Ingvild Sörhus, senior analyst at Veyt, said that resolving the issue of an adjustment mechanism for supply will be one of many technical calibrations needed before the two systems are linked. Many businesses claim that these problems are easily resolved. Alistair McGirr is the Head of Policy and Advocacy for British energy company SSE. He said that with the right political will an ETS linking accord between the EU and UK can be signed in 6 months and operational by the year 2028. Energy UK, an industry group, said that linkage negotiations might be concluded within a year. However the UK should request a waiver from the EU border carbon tax until the link has been sealed in the event the talks drag on into 2026. "It's not a matter of major political roadblocks but rather of technical processes," said Adam Berman, Energy UK Policy Director. Adam Berman, Energy UK's Policy Director, said that the problems were not small, but not insurmountable. The UK is planning to introduce its own carbon-border tariff in 2027, a year after the UK. Brussels might be less in a hurry. Britain's carbon markets are less than one tenth the size of those in the EU, so any link would give British businesses access to a more liquid market. Although EU officials claim that the EU wants to extend carbon pricing to as many countries as is possible, in order to ensure they all put a price tag on greenhouse gas emission. The companies also claim that the move will reduce costs and avoid competitive distortions for EU and UK consumers. Pascal Canfin is a French member of the European Parliament who said that the benefits for Britain are more evident than those for the EU. Canfin said that the EU was motivated by a "political move". "The UK used to be part of [the EU] ETS." It's not a big deal. $1 = 0.7387 lbs. (Reporting and editing by David Evans, Susanna Twiddale, Kate Abnett)
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Vietnam firms sign MoUs for the purchase of $2 billion worth of US farm products
The Agriculture Ministry announced on Tuesday that Vietnamese firms would sign memorandums with U.S. counterparts to purchase $2 billion of American farm products. This is part of the efforts to seal a trade agreement between the two nations. The Trump administration has imposed "reciprocal tariffs" of 46% on Vietnam. The tariffs have been suspended until July but if they are implemented, they could severely undermine a model of growth that relies on the exports to its largest market, the United States. The agriculture ministry announced that the new deals were signed by 50 Vietnamese companies, led by Agriculture Minister Do Duc Duy. They include five Memorandums of Understanding (MoU) to purchase $800 million worth of products from Iowa in the next three years. It added that the Iowa MoUs include purchases of corn and wheat, dried distillers grain, soybean meal, and other grains. Vietnam and the Trump Administration have been in negotiations over a trade deal, with Vietnam promising to allow more U.S. imported goods to reduce the trade deficit between the two nations. The United States recorded a $123 billion trade deficit with Vietnam in the past year. Vietnam News Agency reports that Vietnam exported agricultural products worth $13,68 billion to the United States last year, while buying $3.4 billion in farm produce from the United States. Vietnam has also promised to purchase other American products including Boeing planes, liquefied gas and natural gas. It has also pledged to Crackdown on counterfeits After the U.S. accused Canada of being a major center for illegal activities, including digital piracy.
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VEGOILS - Palm oil prices rise as Dalian Oils firm and India cut import duties on crude edible oil
The price of Malaysian palm oil futures increased on Tuesday as a result of the stronger Dalian edible oil market, and India's reduced basic import tax for crude edible oils. By midday, the benchmark contract for palm oil delivery in August on the Bursa Derivatives exchange had gained 89 Ringgit or 2.29% to $3,967 Ringgit ($934.07) per metric ton. The Chinese edible oil market is a major driver of palm oil futures, and the demand outlook has improved since India, the largest importer of crude edible oils, announced a decrease in import duties. India reduced the basic import duty on crude edible oil to 10%, Friday. The country is trying to lower food prices and support the local refinery industry. Lim added that a recent increase in crude oil price has increased palm's appeal for use as a feedstock for biofuel, which is contributing to the bullish sentiment. Dalian's palm oil contract, which is the most active contract, gained 1.53%. Chicago Board of Trade soyoil prices rose 0.3%. As palm oil competes to gain a share in the global vegetable oil market, it tracks price changes of competing edible oils. According to AmSpec Agri Malaysia, an independent inspection company, exports of Malaysian products containing palm oil rose by 13.2% in May. Intertek Testing Services, a cargo surveyor, said that the increase was 17.9%. Data from the Statistics Bureau showed that Indonesia exported 6,41 million metric tonnes of crude and refined Palm Oil in the period January to April, a decrease of 5.37% compared to the previous year. Prices rose on supply concerns, as Iran is set to reject the U.S. proposal for a nuclear deal that would ease sanctions on the country's largest oil producer. The dollar was also weaker, which helped to support prices. Palm oil is a better option as a biodiesel feedstock because crude oil futures are stronger. Technical analyst Wang Tao stated that palm oil is neutral within a small range between 3,860 and 3,886 ringgits per metric ton. An escape from this narrow range could indicate a direction.
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Higher margins for global oil refiners provide a short-term boost
In recent weeks, refiners around the world have made unexpected profits by producing fuels that are essential to summer demand. This is a welcome respite for a sector in trouble, before a predicted weakening of this year. Fuel markets are strong in contrast to crude oil prices that fell in May to a 4-year low after OPEC+ increased output faster than expected. This also indicates that demand has remained resilient despite concerns over tariffs. Neil Crosby, analyst at Sparta Commodities, said that margins are high because supply and demand balance is tight. The refining margin is the profit a refinery makes by converting crude oil into fuels like gasoline or diesel. Only a few short months ago, the oil majors warned that 2025 would be a difficult year for refinery. TotalEnergies reported lower profits in the first quarter due to weaker fuel earnings. Refiners are struggling with the waning of demand due to economic slowdowns. They also face increased competition from newer plants from Asia and Africa. According to Wood Mackenzie consultancy, global composite refining margins in May 2025 reached $8.37 a barrel, the highest level since March 2024. However, this is still lower than the average of $33.50 in June 2022, when demand recovered after the pandemic and Russia invaded Ukraine. Closures of refineries in the United States, Europe and Asia have helped to slow global net refinery growth below demand growth. This has made operational refineries more profitable. According to FGE, the global diesel supply is expected to decline by 100,000 barrels a day (bpd), while demand will fall by 40,000 bpd. Demand will increase by 28,000 barrels per day, while gasoline supply will decrease by 180,000 barrels per day. "We're seeing a tighter market for transport fuels, which is putting upward pressure on margins. This is much to the joy and relief of regional refiners," said FGE head of refined products Eugene Lindell. Qilin Tam, FGE’s head of refinery, said that all fuel-producing configurations benefit from the current margins. This is because both light fuels like gasoline and heavier products like fuel oils have increased recently. Shell's Wesseling plant and Petroineos Grangemouth refinery, both in Scotland, were closed this year. BP's Gelsenkirchen refining plant was also partially shut down. The refineries of Phillips 66 in Los Angeles and Valero in Benicia are scheduled to shut down in October 2025, respectively, in April 2026. The impact of refinery closures has also been compounded by unplanned shutdowns. JPMorgan reported that a power outage on the Iberian Peninsula on April 28 knocked down around 1.5 million barrels per day of refinery production. 400,000 barrels per day of this capacity were still offline two weeks later. In April, two of the world's largest new refinery projects - Nigeria's Dangote Refinery and Mexico's Olmeca Refinery - experienced unplanned shutdowns on their gasoline-producing units. TIGHTER BALANCES Fuel inventories in key hubs are down this year, causing an increase in demand for refinery production as we head into peak summer. JPMorgan analysts report that stocks in the OECD area, which includes the U.S. EU and Singapore, have fallen by 50 million barrels between January-May. Analysts said that the "significant reduction in product stock has highlighted the resilience of product prices." In the northern hemisphere, fuel demand is at its highest during summer due to an increase in motoring and aviation. Heavy fuel oil is most in demand during the summer months to cool down when temperatures are high. Janiv Shah, Rystad analyst, said that margins are supported by the strength of summer demand in northern hemisphere. Executives in the U.S. refinery industry are optimistic about demand while pointing out that stocks are relatively low. Brian Mandell, executive vice president of Phillips 66's first quarter earnings call, said that the company's current outlook for gasoline supplies is that inventories will continue to tighten. Maryann Mannen, CEO of Marathon Petroleum, said that the company's domestic and international businesses saw steady demand for gasoline and growth in diesel and jet fuel compared to 2020. Analysts warn that current strength could soon be eroded as trade wars hit demand and fuel production increases as plants seek to profit from higher profits. Austin Lin, Wood Mackenzie's analyst, said: "We think there will be a slight short-term bump." According to the International Energy Agency, the growth in global oil demand is expected to be 650,000 barrels per day (bpd) for the rest of 2025. This is down from 1 million bpd during the first quarter, as trade uncertainty has weighed on the world economy. A veteran oil trader who requested anonymity said, "I think that this is the best thing for refining companies."
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Dollar slips, shares cautious as trade concerns persist
Asia shares were slightly higher in Asia on Tuesday, while the dollar dropped to a six week low. Investors turned defensive as the erratic U.S. policies clouded the market sentiment. White House Press Secretary Karoline Laavitt announced on Monday that U.S. president Donald Trump and Chinese President Xi Jinping would likely speak this week. This comes after Trump had accused Beijing of breaking an agreement to reduce tariffs and trade barriers. Markets will closely monitor the call between the leaders, as tensions in trade between the world's largest economies continue to simmer due to tariffs. Monday's data showed that U.S. manufacturers contracted for the third consecutive month in May, and that suppliers were taking longer than ever to deliver inputs due to tariffs. Wells Fargo economists said that the May ISM data showed that tariff pressure was beginning to affect manufacturers, who are experiencing slower activity, longer lead-times and decreasing inventories. A private sector survey released on Tuesday showed that China's factory activities in May were also down for the first eight-month period. This indicates that U.S. Tariffs are beginning to affect manufacturers. U.S. Futures fell in the Asian session due to the gloomy trade situation, and failed to maintain the gains that were made overnight on Wall Street during the cash session. Nasdaq and S&P futures both fell by more than 0.3%. In Europe, EUROSTOXX futures and FTSE Futures both rose by just 0.1%. The MSCI broadest index for Asia-Pacific stocks outside Japan reversed earlier losses to trade 0.4% higher at the last trading session, while Japan’s Nikkei gained 0.1%. Matt Simpson, City Index's senior analyst and market strategist, said that Trump has the sentiment of the country in his palms once more. He said that he expected to hear Trump and Xi talk about a "really great call" or something to that effect. We'll have to wait until China confirms, as they tend to be slow on this matter. Price action may be unstable until we receive concrete confirmation. We also need to consider the June 4, deadline for "best trade deals" from U.S. Trading Partners. The Trump Administration wants all countries to submit their best offers on trade negotiations before Wednesday. Officials are trying to speed up talks with several partners in order to meet a deadline they set themselves of five weeks. The Shanghai Composite Index rose 0.4%, while the CSI300 blue chip index gained 0.3%. Hong Kong's Hang Seng Index rose more than 1% from its one-month-low on Monday. PAYROLLS ARE AVAILABLE ON DECK The dollar dropped to its lowest level in six weeks against a basket currency early on Tuesday. This was ahead of the U.S. Nonfarm Payrolls data on Friday, which will provide a timely read on the health and performance of the largest economy on earth. The Federal Reserve may be able to ease policy again if unemployment increases. Investors have largely given up hope of a reduction this month or the next. The dollar index ended the session marginally higher, at 98.86. This was a slight improvement from its earlier losses. The euro also reached a six-week high before paring back some of its gains. It was last traded at $1.1421, and sterling fell 0.14% to 1.0025. The Treasury market would benefit from a softer U.S. employment report. 30-year yields are still flirting with the 5% mark as investors continue to demand higher premiums to offset the growing supply of debt. This week, the Senate will begin considering a tax and spending bill that is estimated to add $3.8 trillion dollars to the $36.2 trillion debt of the federal government. The evidence indicates that term premiums are being re-priced significantly higher to account U.S. fiscal risks, geoeconomic risks, trade risks, and credit risks, along with some hedges against the (U.S. Dollar) depreciation, said Vishnu Varathan. He is head of macro-research for Asia ex Japan at Mizuho. The dollar increased by 0.2% against the yen to 142.92. Kazuo Ueda, Governor of the Bank of Japan, said that the central bank would raise interest rates when it was sufficiently convinced of a resurgence in economic growth and prices after a prolonged period of stagnation. Brent crude futures rose 0.34% to $64.85 per barrel while U.S. Crude gained 0.45% to 62.79 per barrel. Spot gold fell from its four-week high to $3,362.10 per ounce.
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Wall Street Journal, June 3,
These are the most popular stories from the Wall Street Journal. These stories have not been verified and we cannot vouch their accuracy. Staff at the U.S. Federal Emergency Management Agency have confirmed that they are abandoning a plan for hurricane response which their newly appointed leader David Richardson had claimed was near completion. The U.S. Federal Government has proposed to remove restrictions on oil and natural gas development in a 23-million-acre reserve of Alaska. EchoStar, a telecom company, has skipped another interest payment while it waits for the Federal Communications Commission to complete its review. Snowflake, a cloud-based data warehouse company, has acquired database startup CrunchyData, in an effort to attract customers who are looking to create their own artificial-intelligence agents. A person familiar with this matter estimates the deal at approximately $250 million. Walt Disney announced Monday that it would be laying off hundreds of people worldwide across a number of divisions. These include marketing for film, television, TV publicity and casting, corporate financial operations and corporate finance. In the proposed budget of U.S. president Donald Trump for fiscal 2026, funding for the Cybersecurity and Infrastructure Security Agency will be cut by $495 millions to $2.38 billion.
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The price of oil is rising due to supply concerns and a weaker dollar
The oil prices rose on Tuesday due to concerns over supply. Iran is set to reject the U.S. proposal for a nuclear deal that would ease sanctions on the country's largest oil producer. A weaker dollar also helped to support prices. Brent crude futures rose 21 cents or 0.32% to $64.84 per barrel at 0437 GMT. U.S. West Texas Intermediate Crude was up 27 cents or 0.43% to $62.79 per barrel after rising by about 1% in the previous session. In a report, ING analysts said that the oil market gained on Monday due to rising geopolitical risk and a lower-than-expected supply increase from OPEC+. ING stated on Tuesday that "the strength continued in the early morning trading today." Both contracts rose by nearly 3% the previous session, after the Organization of the Petroleum Exporting Countries (OPEC+) agreed to limit the increase in production in July to 411,000 barrels a day. This was lower than many market participants had feared, and the same as the two previous months. Analysts at ANZ said that investors have unwound the bearish positions built up before the weekend meeting. The dollar index, which measures the performance of the US currency against six major currencies, was near its six-week low as the markets assessed the impact that President Donald Trump's proposed tariffs could have on the economy and inflation. Oil, for example, becomes cheaper when the dollar value of commodities is weaker. "Crude Oil Prices Continue to Rise, Supported by the Weakening Dollar," said Priyanka Sackdeva, Senior Market Analyst at Phillip Nova. Prices were also supported by geopolitical tensions. Iran is set to reject the U.S. proposal for settling a decades-old dispute over nuclear energy, a diplomat from Iran said on Monday. He claimed that it did not address Tehran's concerns or soften Washington’s stance towards uranium enrichment. If the nuclear talks between Iran and the U.S. fail, this could lead to continued sanctions against Iran. This would limit Iranian oil supply and support oil prices. A wildfire in Alberta, Canada, has caused a temporary shut-down of oil and gas production. This could lead to a reduction in supply. Wildfires have affected the production of crude oil in Canada by more than 344,000 barrels per day (bpd). This is about 7%. (Reporting and editing by Sonali Freed and Jamie Freed; Anjana Anil and Michele Pek)
United States oil need grew to highest seasonal level given that 2019 in July, EIA data shows
U.S. oil demand increased in July to the highest seasonal level because 2019 while output decreased for the second time in three months, information from the U.S. Energy Information Administration revealed on Monday. U.S. oil need has actually been more durable this year compared to other significant customers, such as China, which have actually lagged under financial pressures.
Overall oil usage rose 1.2% from June to 20.48 million barrels each day (bpd) in July, the highest for that month because 2019. Demand for both gas and ultra-low sulfur diesel was at the highest seasonal levels given that 2019, whereas jet fuel demand of 1.83 million bpd was the highest for any month since August 2019.
On the other hand, oil output in the country slowed marginally for the 2nd time in 3 months. Total U.S. oil production fell by 25,000 bpd from June to 13.205 million bpd in July, EIA information revealed.
Some oil experts and financiers have actually been watching for signs of a downturn in U.S. production as record supplies from the nation, paired with weak financial activity in China, have weighed heavily on oil prices this year. The U.S. pumped a. regular monthly record of 13.3 million bpd last December, according to. EIA information.
Oil output in Texas fell by 34,000 bpd from June to 5.71. million bpd in July, EIA data revealed. That was the very first regular monthly. decline in the top oil producing area of the nation since. January.
Output likewise declined in North Dakota, the third-largest oil. producing state in the nation. North Dakota field production. fell by 20,000 bpd from June to 1.16 million bpd in July, the. most affordable because January, according to the EIA information.
Number 2 oil manufacturer New Mexico bucked the pattern, with. output up by 25,000 bpd to a record of 2.04 million bpd, EIA. information revealed.
(source: Reuters)