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The price of iron ore continues to fall due to a rise in supply and a drop in demand during the off-season
The price of iron ore futures fell for the second consecutive session on Wednesday as increased shipments out of Australia and Brazil and a slowing in seasonal demand by China, the top consumer, weighed on sentiment. The September contract for iron ore on China's Dalian Commodity Exchange ended the morning trading 0.85% lower, at 699.5 Yuan ($97.58). As of 0349 GMT, the benchmark July iron ore traded on Singapore Exchange was down 0.46% at $92.55 per ton. According to Chinese consultancy Mysteel, the total volume of iron-ore shipments by top suppliers Australia, Brazil, and South Africa increased from June 16-22 to reach a record high. Rio Tinto, Australia's world-leading iron ore producer has received all the necessary approvals from government for its Hope Downs 2 Project. The joint venture project Hope Downs 2 between Rio Tinto, Hancock Prospecting and others will have a production capacity of 31 millions tons per year. Rio Tinto said it would invest over $13 billion in new mines, plants and equipment. ANZ analysts say that iron ore prices have continued to decline despite signs of a steady supply. ANZ added that, as Chinese imports of ore will likely fall even further over the summer months, construction activity in China is expected to slow. According to the World Steel Association, the global steel production fell by 3.8% between May and a year ago. China's central bank has stated that it will "guide the financial institutions on both the demand and supply side of consumption" as part of its efforts to boost the domestic consumption. Coking coal and coke, which are both steelmaking ingredients, also fell, by 0.69% each. The Shanghai Futures Exchange saw a decline in most steel benchmarks. Hot-rolled coils fell 0.35% and rebar and wire rod by around 0.5%. Stainless steel increased 0.77%. ($1 = 7.1683 Chinese yuan). (Reporting and editing by Michele Pek, Lucas Liew)
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Tesla's European Sales Drop for Fifth Month as EV Rivals Gain
Tesla's European new car sales fell by 27.9% from a year ago in May, even though sales of fully-electric vehicles in the region grew by 27.2%. The revised Model Y has yet to show any signs of reviving Tesla's fortunes. The European Automobile Manufacturers Association's (ACEA) data showed that overall car sales in Europe increased by 1.9%. Plug-in hybrids and alternative fuel cars saw the biggest growth. Why it's important Tesla's European Sales have fallen for the fifth consecutive month as customers opt for cheaper Chinese EVs, and in some cases protest against Elon Musk. Tesla's European Market Share dropped from 1.8% to 1.2% in just one month. The new Model Y will revamp the company's aging model range, as Chinese and traditional automakers launch EVs in a rapid rate amid trade tensions. By the Numbers ACEA data show that new vehicle sales in May in the European Union (EU), Britain, and the European Free Trade Association increased to 1,11 million vehicles. This follows a decline of 0.3% in April. The registrations of SAIC Motor, a Chinese state-owned company, and BMW in Germany rose by 22,5% and 5,6% respectively. Mazda's registrations fell by 23%. Total car sales in the EU have declined by 0.6% this year. This is despite the growing demand for EVs. Registrations of battery-electric cars (BEV), hybrid-electric vehicles (HEV), and plug-in hybrids (PHEV) have increased by 26,1%, 15,8%, and 19,8%, respectively. In May 2024, the EU's sales of BEVs (Battery Electric Vehicles), HEVs (High-Efficiency Vehicles) and PHEVs together accounted for 48.9% of all passenger car registrations. In the EU's largest markets, sales of new cars in Spain and Germany increased by 18.6% and 1,2%, respectively, while they fell in France and Italy by 12.3%, and 0.1%, respectively. Registrations in Britain were up by 1.6%. Reporting by Jesus Calero, Editing by Mark Potter
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New Zealand draft infrastructure plans outlines the need for hospitals and electricity
New Zealand released on Wednesday a draft 30 year national infrastructure plan. The plan highlighted the need for New Zealand to invest more into hospitals and electricity production, and prepare to spend even more to respond to national disasters. The plan is designed to improve infrastructure planning and to introduce a less political approach to infrastructure investments. Critics say that the impact of electoral cycles on infrastructure investment has been costly, with large projects being affected by stop-start effects. Geoff Cooper is the chief executive officer of the New Zealand Infrastructure Commission. He said, "We would like the National Infrastructure Plan (NIP) to provide guidance for the Government on infrastructure decisions, so that they can make informed decisions." The draft plan stated that the country must establish affordable and sustainable financing, make building new infrastructure easier, give priority to maintaining existing infrastructure, and assess project readiness before funding. New Zealand, while in the top 10% in terms of infrastructure spending as a proportion of its gross domestic product in the OECD, was not achieving the returns that it should. According to the plan, to meet the demand, capital investments would need to rise from 12 billion NZ$ today to a little more than 30 billion NZ$ by 2050. New Zealand's government announced plans to increase infrastructure in the nation. Earlier this year, it hosted a summit on infrastructure investment to encourage foreign investment. Chris Bishop, Minister of Infrastructure, said: "The Government is committed to improving New Zealand's Infrastructure System and working with the industry and other parties to reach a consensus on what changes are needed." The plan will be finalised by the end of this year, and the parliament will discuss it in early 2026. Reporting by Lucy Craymer, Editing by Lincoln Feast.
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Investors assess Iran-Israel ceasefire and oil prices rise
The price of oil rose on Wednesday, as investors weighed the stability and potential for a ceasefire agreement between Iran & Israel. However, it remained near its multi-week lows due to the expectation that crude oil flow would not be interrupted. Brent crude futures gained 85 cents or 1.3% to $67.99 per barrel at 0341 GMT. U.S. West Texas Intermediate crude (WTI), however, rose 87 cents or 1.4% to $65.24. Brent settled at its lowest level since June 10, and WTI, since June 5. Both were before Israel launched an attack on Iranian nuclear and military facilities on June 13, After the U.S. attack on Iran's nuclear facility over the weekend, prices had risen to five-month highs. The global energy prices have moderated following the Israel/Iran ceasefire. Our oil strategists' base case is still anchored in fundamentals that indicate a sufficient global supply of oil, according to JP Morgan analysts. According to an initial U.S. Intelligence assessment, U.S. Airstrikes didn't destroy Iran's nuke capability, but only pushed it back a few months. This was as a fragile ceasefire between Iran and Israel, brokered by U.S. president Donald Trump, took hold. Both Iran and Israel announced earlier on Tuesday that the air conflict between the two countries had ended - at least temporarily - after Trump publicly reprimanded them for breaking a ceasefire. Both countries claimed victory as they lifted civil restrictions after 12 days war, which the U.S. also joined by attacking Iran's uranium enrichment facilities. The Israel-Iran ceasefire will likely prove fragile. As long as both sides are unwilling to attack energy export infrastructure or disrupt shipping through the Strait of Hormuz we expect the bearish fundamentals of the oil market to continue. Investors were worried by the direct U.S. involvement. The Strait of Hormuz is a narrow waterway that connects Iran and Oman. It carries between 18 and 19 million barrels of crude oil per day, or bpd, which represents nearly a fifth of the global demand. Investors were awaiting U.S. government statistics on crude oil and fuel stocks due Wednesday. Market sources cited American Petroleum Institute data on Tuesday to show that U.S. crude stocks fell by 4,23 million barrels during the week ending June 20.
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All Inter-Array Cables Installed at 488 MW French Offshore Wind Farm
The final inter-array cable has been installed at Îles d’Yeu and Noirmoutier (EMYN) offshore wind farm in France, being developed by Les Éoliennes en Mer Services.The 61st and final inter-array cable was installed on June 22 at the EMYN offshore wind farm, Louis Dreyfus TravOcean said on social media.The accomplishment paves the way for a transmission capacity of 512 MW.Geoquip Marine’s Geoquip Elena, converted into a Cable Laying Vessel (CLV) with a bespoke project-specific deck layout used in the operation, will be demobilized early July from the Dunkirk offshore base, according to Louis Dreyfus TravOcean.In addition, the termination and testing activities performed by Prysmian from Island Offshore’s service operation vessel (SOV) Island Diligence are on track to conclude in July.With 61 wind turbines, each rated at 8 MW, the EMYN offshore wind farm will have a total installed capacity of 488 MW, generating 1,900 GWh per year, which is equivalent to the electricity consumption of 800,000 people.The wind farm is expected to be fully commissioned by the end of 2025.
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Copper prices rise on weaker dollar and tentative Middle East truce
The London Metal Exchange and Shanghai Futures Exchange saw copper prices rise on Wednesday. This was due to a weaker dollar and an improved risk outlook, as a result of a tentative ceasefire agreement between Iran and Israel. As of 0101 GMT the three-month copper contract at the London Metal Exchange rose 0.18% to $9,686 a metric ton. The most traded copper contract at the Shanghai Futures Exchange remained unchanged at 78480 yuan (10,945.45) per ton. Israel has said it will take strong action against Iranian missile attacks that followed after U.S. president Donald Trump announced the end of hostilities. The U.S. Federal Reserve chair Jerome Powell has been neutral with his remarks about the interest rate reduction. A Beijing-based metals expert from a futures firm said this under condition of anonymity. According to an initial U.S. intelligence report, the U.S. airstrikes didn't destroy Iran's nuke capability, but only pushed it back a few weeks. Even after Powell testified before the U.S. Congress, he said that many Fed officials expect inflation to accelerate soon and that the central banks is currently not in a hurry to ease borrowing rates. Dollar-priced materials are more appealing to buyers who use other currencies because of the softer dollar. LME aluminium continued to decline for a second day in a row, falling 0.52%, or $2,565.5 per ton. SHFE aluminium also declined for the fifth consecutive day, slipping 0.34%, or 20,260 yuan. LME zinc rose 0.26%, to $2.688.5. Lead grew by 0.15%, to $2.022, while nickel climbed 0.1%, to $14.935. SHFE lead increased by 0.95%, to 17,090 Yuan. Nickel gained 0.42%, to 117720 Yuan. Tin fell 0.36%, to 262,240 Yuan. Click or to see the latest news in metals, and other related stories. Data/Events (GMT 0500) Japan Leading Indicator Revised Apri 1000 France Unemp SA Class-A May 1400 US Home Sales Units May
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Asia markets stabilize, dollar drops following Middle East truce
The Asian stock market stabilized on Wednesday, as crude oil hovered at multi-week lows. A ceasefire between Israel & Iran boosted sentiment even though hostilities were threatening to flare up. As oil prices fell, the bond market was less exposed to inflation. Israel has said it will take strong action against Iranian missile attacks that followed after U.S. president Donald Trump announced the end of hostilities. According to an initial U.S. Intelligence Assessment, the U.S. airstrikes didn't destroy Iran's nucleonic capability, but only pushed it back a few months. This contradicts Trump's previous comments that Iran’s nuclear program had been “obliterated”. The Nikkei 225 and Australia's benchmark index were both flat, but Taiwan's index rose 1%. Hong Kong's Hang Seng index rose by 0.6%, while mainland Chinese blue-chips fell by 0.1%. The U.S. Stock Futures are little changed. The MSCI global stock index remained stable after reaching a new record high over night. Brent crude rose 81 cents per barrel to $67.95, following a drop of up to $14.58 in the two previous sessions. U.S. West Texas Intermediate Crude added 70 cents per barrel to $65.07 The markets have shrugged off the tenuous cease-fire between Israel and Iran, according to Kyle Rodda senior financial market analyst at Capital.com. He said that "Realistically the markets do not care if there is a continuing conflict between the two nations, which is mainly air strikes." It's really the threat of a wider war with a deeper US involvement and an Iranian blocking of the Strait of Hormuz, that matters. For now, it seems that the risks are low. The yield on the two-year U.S. Treasury fell to its lowest level since May 8, at 3.787%. The U.S. Dollar Index, which measures currency against six major counterparts fell 0.1% to 97.854. The dollar fell 0.1% to 144.70 Japanese yen. The euro rose 0.1% to $1.1625 and is now back at the overnight high level of $1.1641, which has not been seen since October 20,21. Federal Reserve chair Jerome Powell stated on Tuesday that tariffs may begin to raise inflation this summer. This period will be crucial for the U.S. Central Bank when considering interest rate reductions. Powell was speaking at an hearing before the House Financial Services Committee. The data showed that consumer confidence in the United States unexpectedly declined in June, indicating a softening of labour market conditions. According to CME FedWatch, the markets continue to price in an 18% chance of the Fed cutting rates in July.
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McGeever: Bowman's turn and oil plunge challenges Fed's hawkish stance
In recent years, the financial markets have consistently underestimated the Federal Reserve’s willingness to reduce interest rates. The latest Fed talk, softer economic data and the dramatic drop in oil prices could indicate that they are right this time. Last week, the central bank appeared to snuff out traders' hopes of a dovish steering. The Fed's summary economic projections maintained its median "dot plot" projection of two rate cuts of 25 basis points this year. It was a close call and the Fed lowered its 2026 forecast from two rate cuts to just one. In the days following, it was widely believed that the hawkish stance of policymakers reflected their desire to anchor inflation expectations. The traders' expectations for rate reductions this year dropped to less than 50 basis points. This reading may be premature. First, the fear of rising energy costs due to conflict in Middle East has disappeared. Oil prices have fallen back to their previous levels, despite the fact that they rose by as much as 17 percent in the days following the Israel-Iran conflict on June 13. The price of oil is falling and, late Monday night, U.S. president Donald Trump announced the two countries had reached a ceasefire. The Fed has made a number of dovish remarks in the past few days, and they are not only from the usual suspects. This suggests that the U.S. Central Bank may be closer than previously thought to lowering rates. NEGATIVE SURPRISE It is not impossible to justify a more dovish approach. Fundamentally, the U.S. economy is deteriorating. Citi's U.S. Economic Surprises Index has been declining since the end May, and is now negative. This means that economic data are underperforming expectations. It fell to its lowest level since September of last year. It is important to be cautious when analyzing the economic surprise indexes following significant movements, because initial expectations could have been overly pessimistic. The current shift is a valid red flag. We look at the surprise factor and how it compares to consensus expectations. Citi's Stuart Kaiser points out that both have fallen into negative territory. The 'hard activity data' index is also now negative. What is 180 DEGREE Turn? Michelle Bowman, Fed Vice Chair of Supervision, surprised investors by saying that she would vote for a rate reduction as early as July if the inflation pressures "remain constrained". Bowman's remarks are important. She hasn't spoken about the economy for over two months. In March, she said that the labor market would be a more significant factor in policymaking. Since her appointment as Fed governor in 2018, she has been consistently one of the most hawkish members on the Federal Open Market Committee. The move came after Governor Christopher Waller said on Friday that a rate reduction next month was on the table. Waller is one of the FOMC’s most dovish members. This is not surprising. Traders and investors should take note if a FOMC hawk such as Bowman now sings from the same hymnal. Cynics might question the timing of Bowman’s apparent 180-degree turnaround, which comes just as Trump intensifies his attacks against Fed Chair Jerome Powell over not cutting interest rates. There's no evidence that political pressure was at work. The recent drop in oil prices will also help her case. It fell 7% on Monday, the largest drop in three years. It was more impressive when you consider that it opened the day at 6% and reached a five-month peak in response to Saturday's U.S. nuclear bombings of Iranian facilities. The price of crude oil did not increase on an annual basis following Israel's initial strike against Iran on June 13. Oil prices have been falling since January and are down by 20% on a year-over-year basis. It's not energy prices that are causing inflation to be sticky. Waller - and Bowman - will love this. It is possible that traders are not overestimating the Fed’s willingness to reduce rates this time. They could be on the right track with their bets that 125 bps will be eased by the end next year. You like this column? Open Interest (ROI) is your new essential source of global financial commentary. ROI provides data-driven, thought-provoking analysis. The markets are changing faster than ever. ROI can help you keep up. Follow ROI on LinkedIn, X.
Iran's ruling class caught between Trump's repression and an economy in trouble
Iran's clerical leadership may find that engaging the "Great Satan" in order to negotiate a nuclear agreement and ease crippling economic sanctions is the lesser evil.
Four Iranian officials have said that despite its deep mistrust for the United States and in particular President Donald Trump, Tehran is growing increasingly worried about public anger at economic hardships escalating into massive protests.
People said that despite the defiant and unyielding rhetoric of Iran's clerical leadership in public, there was a pragmatic desire within Tehran's power corridors to strike a bargain with Washington.
Tehran's fears were exacerbated when Trump revived his "maximum-pressure" campaign from his first term, which aimed to reduce Iran's oil sales to zero by imposing more sanctions. This would bring Iran's fragile economy to its knees.
Masoud Pezeshkian, the president of the Islamic Republic of Iran, has repeatedly emphasized the severity of its economic situation, saying that it was more difficult than the Iran-Iraq War in the 1980s. He also pointed this month at the latest round U.S. sanction targeting oil tankers transporting Iranian oil.
According to one of the Iranian officials, leaders are concerned that cutting off diplomatic avenues could further fuel discontent in Iran against Ayatollah Ali Khamenei. This is because he is the final decision maker for the Islamic Republic.
Alex Vatanka is the director of the Middle East Institute's Iran Program in Washington. He said that there was no doubt whatsoever that the man, who has been the supreme leader since 1989, and his foreign policies preferences are the most responsible for the current state of affairs.
Iran's poor economy prompted Khamenei, who was then president of Iran, to back the nuclear deal struck in 2015 with major powers. This led to the lifting of Western sanctions as well as an improvement in economic circumstances. Then-President Trump’s renewed attack on Iran after he withdrew from the nuclear agreement in 2018 squeezed life standards again.
The situation is getting worse every day. I cannot afford to pay rent, bills or clothes for my kids," Alireza Yousefi said, 42, an Isfahan teacher. "Now, even more sanctions make it impossible to survive."
The Iranian Foreign Ministry did not reply to a comment request.
"ON EQUAL TERMS"
Trump, while increasing the pressure on Iran through new sanctions and military threats, also opened the doors to negotiations when he sent a letter to Khamenei suggesting nuclear talks.
Khamenei rejected the offer Wednesday, repeatedly saying that Washington had made excessive demands and that Tehran wouldn't be pushed into negotiations.
In an interview published Thursday, Abbas Araqchi, Iran's top diplomatic official said: "If we negotiate while the other party is exerting maximum pressure on us, we will be in a weaker position and achieve nothing."
He said that "the other side must be convinced of the ineffectiveness of the pressure policy - then we can sit down at the table and negotiate on equal terms."
A senior Iranian official stated that there was no other option but to reach a deal, and it was possible. However, the road ahead was bumpy, given Iran's mistrust of Trump following his abandonment of the 2015 agreement.
Iran's economic collapse has been largely prevented by China, its main oil buyer and one of the few countries still trading with Tehran in spite of sanctions.
According to estimates by the U.S. Energy Information Administration, oil exports dropped after Trump abandoned the nuclear deal, but recovered in recent years. They are expected to generate more than $50 billion of revenue between 2022 and 2023, as Iran finds ways to avoid sanctions.
But uncertainty still looms about the future of exports, as Trump's policy of maximum pressure aims to choke off Iran's crude oil sales by imposing multiple rounds of sanctions against tankers and other entities involved in trade.
PUBLIC ANGER SIMMERS
Iran's rulers also face a series of crises: energy and water shortages; a collapsing dollar; military setbacks for regional allies, and growing fear of an Israeli attack on its nuclear facilities. All of these are exacerbated by Trump's hard stance.
Lack of infrastructure investment, excessive consumption driven by subsidies and declining natural gas production, as well as inefficient irrigation are all contributing to the energy and water sector's problems. This leads to blackouts, and water shortages.
According to foreign exchange websites and officials, the Iranian rial's value has dropped by more than 90 percent against the dollar ever since sanctions were reinstated in 2018.
State media reported that Iranians, worried about Trump's harsh approach, have bought dollars, other hard currency, gold, or cryptocurrency, indicating further weakness in the rial.
State media reported that the price of rice had risen 200% in the past year. Media reports indicate that housing and utility costs in Tehran and other major cities have risen sharply in recent months. They climbed roughly 60%, mainly due to the steep decline of the rial and the rising cost of raw materials.
Some Iranian experts claim that the official inflation rate is over 50%, but it hovers at around 40%. The Statistical Center of Iran has reported a dramatic rise in food costs. In January, the prices of a third of the most essential commodities increased by 40%. They were now more than twice as high as they had been in the previous month.
According to the Tasnim News Agency, Ebrahim Sadeghifar, head of Iran's Institute of Labor and Social Welfare (IILSW), 22%-27% of Iranians are now living below the poverty level.
Last week, Iran's Jomhuri-ye Eslami daily reported that the poverty rate was around 50%.
I can't pay the rent on my carpet shop, or my employees' wages. No one can afford to buy carpets. "If this situation continues, I'll have to layoff my staff," Morteza (39), said over the phone, from Tehran's Grand Bazaar. He gave only his first name.
How can they hope to resolve the economic crisis without talking to Trump? Talk to him, and you will reach an agreement. "You cannot afford to be proud on an empty stomach."
NUCLEAR RED LINE
According to Iranian state media, at least 216 protests took place in Iran during February. These included retirees and workers, as well as students, health professionals, merchants, and healthcare professionals. According to reports, the protests were mainly focused on economic hardships such as low wages and unpaid salaries for months.
Officials fear that a decline in living standards, despite the small scale of most protests, could explode.
One of the four officials who was close to the government said, "The country is a powder-keg and any further economic strains could ignite it."
The officials stated that Iran's ruling class is aware of the possibility of a return of unrest, similar to protests from 2022-2023 over the death of Mahsa Amin in custody or nationwide protests of 2019 over the rise in fuel prices.
Senior Iranian officials said that there were several high-level discussions to discuss the potential of new mass demonstrations and possible measures to prevent them.
Iranian officials, however, said that despite concerns about possible unrest, Tehran would only go so far with any discussions with Trump. They stressed that "excessive requests" such as the dismantling of Iran's nuclear program or conventional missile capability were not on the table.
The senior official stated that "yes, there is concern about increased economic pressure and there are concerns regarding the nation's anger growing, but we cannot give up our right to produce nuclear energy just because Trump wants it."
Ali Vaez is the Iran project director for International Crisis Group. He said that Iran's leaders believed that negotiations with Trump would be a sign of weakness and could lead to more pressure rather than less.
He said: "Ayatollah Khmenei appears to believe that surrendering is the only thing more dangerous than sanctions." (Reporting, Writing and Editing by Parisa Hafezi)
(source: Reuters)