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Analysts say that India's investment trusts will expand their debt raising as yields fall.
Analysts said that the debt fundraising of India's asset backed investment trusts will continue to increase after surpassing $2 billion in 2025. This is because falling interest rates are continuing to fuel strong investor demands. Prime Database reports that the real estate investment trusts and infrastructure investment trusts raised more than 178 billion rupees (2.07 billion dollars) between January and June, compared to 56 billion rupees during the same period in 2013. Arka Mookerjee is a partner at JSA Advocates and Solicitors which offers legal advice to corporations. She says that bonds offer a lower capital cost compared to bank financing. The predictable income profiles of InvITs and REITs makes them well suited to debt funding, attracting institution investors who are looking for yield-bearing assets-backed instruments. The yields on corporate bonds have fallen over the past few months as the central banks have injected liquidity and cut interest rates by 100 basis point, but the banks have been slow to lower their lending rates. Embassy Office Parks REIT is among those firms who have taken advantage of the bond market. IndiGrid Infrastructure Trust (also known as Cube Highways Trust), Nexus Select Trust and Cube Highways Trust are also in the mix. Last week, it was reported that Embassy REIT plans to issue another bond. Other firms are also in the early stages of discussions. The bond market is less restrictive than the bank loan market, which allows REITs the flexibility to invest in multiple properties. Lata Pilai, India Senior Managing Director and Head of Capital Markets at JLL, an international real estate services company, explained. Trusts that must distribute at least 90% net distributable cash flow to unit holders say they can provide better returns with cheaper funding. These trusts can plan their finances more easily with the help of bond fundraising, and top credit ratings will attract investors like mutual funds and insurance companies. Krishnan Iyer is the chief executive officer of NDR InvIT. He said that AAA-rated structures offer greater credibility, better visibility, and better pricing. They also provide resilience to market volatility. Investors are increasingly attracted to the infrastructure and real estate sector, and REITs and invITs offer a combination of stability of income and growth over time, according to Suresh Darak. He is the founder of Bondbazaar.com, an online trading platform for bonds.
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Chinese exports of critical minerals plummet even as rare Earths recover
China's exports have plummeted in the last three months due to a crackdown against smuggling, transshipment and smuggling that involved China's most powerful spy agency. According to data released by the customs on Sunday, exports of germanium and antimony were respectively down 95% and 88% compared to January. China, like rare earths is the world's largest producer and refiner of both elements. In 2023 and 2024 respectively, both were added to an Export Control List. In December, exports to the U.S. became prohibited as a form of retaliation against chip restrictions. In April, rare earths were included in the same list of controlled substances. This led to a dramatic drop in export volumes which forced certain carmakers in Europe as well as the U.S.A. to stop some production lines. Last month, rare earth exports rose sharply thanks to an agreement between Washington and Beijing. However, germanium and antimony exports fell to their lowest levels ever. The fall in exports coincides with a well-publicised crackdown against critical mineral export controls evasion. China's spy agency reported last week that it had detected attempts by cargoes to bypass controls through transshipment. This is where they move from one country to another before reaching their final destination. The previous week, it was reported that a large amount of antimony appeared to have been transshipped by at least one Chinese firm from Thailand and Mexico to the United States. China's antimony exports to Thailand fell by 90% in the month of April, after reaching a record. Mexico has not received any antimony exports since April. Since China's export restrictions were implemented in July 2023, the spot market prices of high-purity Germanium have nearly doubled. Prices of antimony have almost quadrupled since May last year.
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The chemical industry in Europe is looking for a way to survive.
After years of losses, and the rapid expansion of global capacities led by China, Europe's petrochemical sector is in disarray. The European industry is struggling due to high production costs, and the ageing of plants. This has made the region more dependent on imported primary chemicals, such as ethylene, propylene and ethylene. These are the building blocks used in plastics, pharmaceuticals, and many industrial products. Jim Ratcliffe said at a recent event that Europe was "sleepingwalking" into an industrial decline, referring to a unit found in petrochemical plant. The billionaire, along with other leaders in the industry, has criticised a perceived lack of political action. This month, the European Commission pledged to support domestic chemical production deemed crucial for its industries. These include ethylene and propylene. The European Commission plans to increase state aid for modernising plants and to require that public tenders prefer goods made in Europe, similar to EU legislation 2023 for metals and mineral. It may be too late for the damage to be reversed. It's like being aboard the Titanic - you can't remain in denial. Giuseppe Ricci is the head of industrial transformation for Italian energy group Eni. Ricci, Eni's vice president of Versalis, said that the company's Versalis business has lost over 3 billion euro ($3.5 billion) during the past five years. This is despite the fact that the firm closed down Italy's two last steam crackers, and invested 2 billion euro in bio-refineries, chemical recycling, and other green technologies. Dow, ExxonMobil TotalEnergies and Shell, as well as other global groups, are closing or reviewing the European chemical assets. The majority of planned closures are aimed at crackers, which convert hydrocarbons to ethylene or propylene. In a document published by eight EU countries in March on petrochemicals, it was stated that up to 50,000 jobs may be threatened by the closure of additional crackers in Europe before 2035. Most EU plants are small or mid-sized, and their average utilization rate is below 80%. This level of utilization is considered uneconomical. According to Wood Mackenzie, up to 40% of EU ethylene capacity, which is 24,5 million metric tonnes, faces a high or medium threat of closure. This includes shutdowns that have been announced as early as late 2024. Robert Gilfillan is the head of Wood Mackenzie's plastics and recycling market. He said that "the proportion of European crackers exposed to risk is higher than other regions." The United States and Middle East, however, use cheaper feedstocks such as ethane - a byproduct of shale gases. NEW DEPENDENCY According to ADI Analytics, North America's ethylene production capacity will increase to 58 millions metric tons from 54 million metric ton by 2030. Huang Yinguo, CEO of the China National Chemical Information Centre, said that China will increase its ethylene production capacity by 6.5% per year between 2025-2030, at which time it will be producing nearly 87 millions metric tons annually. This is more than three times the current EU capacity. Chinese producers also build outposts in Southeast Asia for export to Europe and North America, to bypass Western tariffs and carbon taxes on China-made products. In May, reports from the petrochemical industry organizations of Japan and South Korea stated that, due to their inability to compete, they have maintained low utilization rates since 2023. The European Union faces a difficult choice. Either they intervene decisively, or the chemical foundation of Europe will erode. In their document of March, France, Italy, and Spain demanded a "Critical Chemicals Act" as the latest EU data showed that the region was an annual net importer for ethylene and propylene in the period from 2019-2023. Stephane Sejourne, EU Industry Commissioner, said that Brussels would identify strategic production and supply sites. He told reporters in this month that "first and foremost, it's about sovereignty - keeping our steam crackers." But sovereignty has a price. Citi analyst Sebastian Satz says that most European crackers have been in operation for over 40 years, while only 11 years are required to be considered old. Eni stated in a March presentation that ethylene production costs $800 per metric tonne in Europe when using naphtha, but only $400 in the U.S. with ethane. In the Middle East, the cost is around $200. "SLEEPWALKING INTO DECLINE" Some companies bet big on their survival. INEOS operates in Cologne one of Europe's leading petrochemical plants. It is currently building a 4 billion Euro ethane Cracker in Antwerp, the first cracker built in Europe for over 30 years. The cracker will have a production capacity of 1,45 million metric tonnes of ethylene per year. The plant is due to be online by 2026. It aims at competing with Chinese production while meeting local demand and reducing carbon footprint. Consolidation is creating global giants in the Middle East. Borouge Group will be formed by a $60 billion merger of Abu Dhabi National Oil Company with Austria's OMV. This will make it the fourth largest polyolefins manufacturer in the world. The company intends to export polymers into Europe and compete directly with U.S.-based firms as well as Asian ones. Analysts believe that Europe's petrochemical industry will not disappear completely, but rather become the domain of only a few major players. Enzo Baglieri is a professor of Operations and Technology Management at SDA Bocconi School of Management, Milan. He said that only major European companies will be able to continue producing ethylene. ($1 = 0.8604 euros)
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India's Reliance drops as key segments disappoint
Reliance Industries' shares fell by about 2% Monday, after its energy and retail segments posted first-quarter results that were below analyst expectations. Reliance was the top drag on the benchmark Nifty50 index. It was one of the stocks with the highest weighting, and it weighed heavily, limiting the index's upside. As of 10:15 am IST, the index was up 0.3%. Reliance announced a 78% increase in its first-quarter profits on Friday. This was largely due to the income generated from selling its stake in Asian Paints. Analysts' estimates for the company's key segments of oil-to chemicals (O2C), retail, and other business were below. The company stated that planned shutdowns at Jamnagar Refinery in western Gujarat hurt its refining operation, while seasonal weakness of consumer electronics weighed down on retail growth. Macquarie analysts wrote in a report that "reliance's stock price may moderate near-term after this result print." Reliance shares have risen by about 19% this year compared to a 5.9% increase in the Nifty50 index. After the results, despite the mixed bag of results, 10 analysts have raised their price targets for the stock. The median price target has risen to 1,640 rupees, up from 1,565 rupees one month earlier. Analysts expect that a recovery of gross refinery margins will likely drive O2C growth for this year. They also expect strong growth at Jio's retail and telecom units. Analysts at Emkay said that "Retail and Jio will likely accelerate" and that the new energy eco-system is expected to be fully operationalised in four to six months, with partnerships, and a self funded model in just a few short years. In an interview with analysts, Reliance stated that it was "evaluating" newer sanctions imposed by the European Union on Russia. Reliance is one of the largest buyers of Russian crude oil. Srinivas TUTTAGUNTA, Chief Operating Officer of Refining & Marketing at Reliance Industries, said, "We think we are fairly diversified." (Reporting and editing by Sethuraman NR, Janane Venkatraman).
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The yen is satisfied with the morning bid for Europe.
Wayne Cole gives us a look at what the future holds for European and global markets. Investors have sold on rumours and bought (a little bit) on facts in Japan's upper-house election. The Japanese markets were closed on Marine Day, so there was no liquidity. However, the yen has gained a little against the dollar and the euro. Nikkei Futures in Chicago have been trading in line with the Friday cash close. Wall Street futures have risen a little bit, while European futures are down a little. Shigeru Shiba, the Prime Minister, seems to be in a safe position for the time being, even though the ruling coalition has lost control of upper house by just three seats. He will still need to get support from minor parties if he wants to pass any legislation. The government may also choose to continue the difficult tariff negotiations with U.S. officials. Talks seem to be stuck, partly due to agricultural imports, which are culturally and politically sensitive for Japan. President Donald Trump’s August 1 deadline is fast approaching. The European Union finds itself in a similar situation. The U.S. Commerce secretary Howard Lutnick is confident that a deal will be reached, but the EU is preparing a list for retaliation duties on U.S. goods. On Thursday, the EU also tried to leverage China by having Ursula von der Leyen, President of the Commission and Antonio Costa as Council president meet with President Xi Jinping. Reports suggest that Trump could meet Xi in October or in November. The U.S. has already allowed the export to China of chips in exchange for a resumption in rare earth shipments. Analysts suspect that the U.S. effective tariff rate may be slightly higher than the 1930s levies which contributed to the Great Depression. This optimism is largely based on the earnings of Alphabet, Tesla and other megacaps. Lockheed Martin's and General Dynamics' results should confirm that the increase in global defence expenditure is bringing in a windfall. There's nothing in the diary for Monday, but you can always watch Trump. Market developments on Monday that may have a significant impact No speakers from the central bank or major data sources
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Steel exports and China's stimulus plans are driving iron ore prices higher.
The iron ore futures price rose on Monday as a result of the hopes that China will continue to stimulate growth after a mixed bag second-quarter data and increased steel export demand. As of 0250 GMT, the most traded September iron ore contract at China's Dalian Commodity Exchange was 2.15 % higher. It stood at 809.5 Yuan ($112.78) per metric ton. The benchmark iron ore for August on the Singapore Exchange rose by 2.81% to $103.6 per ton. China's benchmark lending rate remained unchanged in line with expectations following slightly better than expected second quarter economic data. Analysts and traders said that the market is now focused on the Politburo Meeting this month, which will likely shape economic policy in the remainder of the year. Mysteel Global reported that the prices of steel products rose due to increased expectations about macroeconomic policy stimuli. Mysteel, in a separate report, said that improved margins on sales of steel also encouraged steel mills increase their blast-furnace operations. The average rate of blast-furnace capacity utilization increased by 0.99 percentage point week-on-week between July 11-17. Analysts say that hot metal production, an indicator for iron ore consumption, is still high. Everbright Futures, a broker, said in a recent note that steel exports were still high. Hexun Futures, a broker, reported that iron ore exports from Australia and Brazil, two of the top producers, have slightly increased. Coking coal and coke, which are used to make steel, also grew by 4.18% and 2.95 percent, respectively. The benchmark steel prices on the Shanghai Futures Exchange have gained ground. Hot-rolled coil and stainless steel gained 1.45% and 1.45% respectively. Rebar and wire were up around 2%. ($1 = 7.1774 Chinese yuan) (Reporting by Lucas Liew; Editing by Subhranshu Sahu)
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Gold prices steady as investors wait for US trade updates and central bank meetings
Gold prices were not much changed on Monday, as investors watched developments in U.S. Trade Talks and awaited possible market-moving factors, such as the U.S. Federal Reserve policy meeting scheduled next week. As of 0250 GMT, spot gold remained steady at $3,352.19 an ounce. U.S. Gold Futures remained unchanged at $3,358.70. Tim Waterer, KCM Trade's Chief Market Analyst, said that the dollar has had a quiet start to the week. This has opened the door for gold to make gains in the early going. Tariff deadlines are looming. The closer we get to the August 1 deadline, without any new trade agreements emerging, the more likely it is that gold will start to fancy another run towards the $3.400 level, and perhaps even beyond. Investors are watching developments in the trade negotiations as U.S. president Donald Trump approaches his August 1 deadline. U.S. commerce secretary Howard Lutnick is optimistic that a deal can be reached with the European Union. Reports said that Trump could visit China between October 30th and November 1st before attending the Asia-Pacific Economic Cooperation Summit. He might also meet Chinese leader Xi Jinping at the APEC summit in South Korea. The European Central Bank will likely hold its interest rates at 2.0% after a series of rate cuts. Last week, Federal Reserve governor Christopher Waller reiterated his belief that the U.S. Central Bank should reduce rates during its next policy meeting. In an environment of low interest rates, gold, which is often considered to be a safe haven during times of economic uncertainty, does well. The ruling coalition in Japan lost control of Japan's upper house during an election held on Sunday. This further weakened Prime Minister Shigeru Shiba's hold on power, as the U.S. deadline for tariffs looms. Other metals, such as spot silver, rose 0.1% to $38.22 an ounce. Platinum gained 0.3%, to $1.425.11, and palladium increased 0.2%, to $1.243.47.
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BHP exits $2.5 billion Tanzania nickel project, partner Lifezone says
BHP Group chose to sell to Lifezone Metals its stake in the $2.5 billion Kabanga Nickel Project in Tanzania for up to $83 million. Lifezone, a company listed on the NYSE, said that it would acquire BHP’s 17% equity stake in Kabanga Nickel Limited. KNL is the majority owner in the Kabanga Nickel Project located in the northwestern part of Tanzania. In a report released by the company on Friday, development costs were estimated at $2.49billion. The project is expected to produce around 50 000 metric tons per year once it has been fully ramped-up, which will take about six years. The project will be finalized by the end of next year. BHP agreed to invest up to $100 million by 2022 in the nickel mines and processing facilities, if certain conditions are met. BHP still views Kabanga as one of the best undeveloped nickel-sulphide projects in the world, according to a source familiar with the matter. However, the uncertain outlook for the nickel market and the miner’s capital allocation structure have made investing in greenfield nickel project challenging. BHP's spokesperson declined to make any comment. BHP's view of nickel has changed due to the boom in production from Indonesia over the past few years. BHP put its Australian Nickel West operation on care and maintain last year because of a poor outlook on nickel prices. A decision about the future is due in early 2027. Lifezone owns now 100% of KNL. KNL holds 84% of Tembo Nickel Corporation Limited, the Tanzanian operating firm for the Kabanga Nickel Project. Tanzanian government owns the remaining 16%. Lifezone said that all existing agreements with BHP had been terminated, and it also took full control of 100% offtake of the Kabanga Nickel Project. (Reporting by Melanie Burton; Editing by Jamie Freed)
Investors continue to monitor the impact of new sanctions against Russia on oil prices.
The oil price barely moved on Monday, as traders watched the impact of European sanctions on Russian supply and rising production from Middle East producers. They also worried about fuel prices as tariffs weigh on global economic growth.
Brent crude futures were up 5 cents at $69.33 per barrel by 0040 GMT, after closing 0.35% higher Friday. U.S. West Texas Intermediate Crude was up 2 cents to $67.36 per barrel after a 0.30% increase in the previous session.
The European Union approved Friday the 18th set of sanctions against Russia for the conflict in Ukraine. These included India's Nayara Energy as an exporter who refines oil from Russian crude.
Dmitry Peskov, the Kremlin's spokesperson, said that Russia has developed a certain immunity against Western sanctions.
Rosneft - Russia's largest oil producer and owner of Nayara - criticised Sunday the sanctions, calling them unjustified, illegal, and a direct threat to India's energy independence.
A spokesperson for the Iranian Foreign Ministry said that Iran, another oil producer sanctioned, will hold nuclear talks with Britain, France, and Germany in Istanbul on Friday. The three European countries had warned that international sanctions would be reimposed if the negotiations were not resumed. Baker Hughes reported on Friday that the number of oil rigs operating in the U.S. fell by two last week to 422 - the lowest level since September 2021.
Separately U.S. Tariffs on Imports from the European Union will kick in on 1 August, although U.S. Secretary of Commerce Howard Lutnick stated on Sunday that he is confident the United States can secure a deal with the bloc. (Reporting and editing by Jamie Freed; Florence Tan, Reporting)
(source: Reuters)