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MORNING BID EUROPE - Trump touts a 'forever ceasefire' and oil slides
Stella Qiu gives us a look at what the future holds for European and global markets. Donald Trump, the U.S. president, surprised the markets on Monday night by announcing that Israel and Iran agreed to an immediate ceasefire. This could end a 12-day conflict. According to his words, the ceasefire will last "forever". Investors will surely hope that it is real and holds. Only a few days ago, the U.S. began a military strike against Iran that could have drawn it into a costly war. The oil prices fell by almost 3% Tuesday after a drop of almost 9% overnight, as the immediate danger to the Strait of Hormuz shipping route appeared to be lessening. The U.S. Crude Futures have returned to $66.80 a barrel, the lowest price since about June 11, before Israel began its attacks against Iran. This is good news for the global inflation rate, and will help central banks to control inflation. The situation is fluid. Iran was still launching missiles towards Israel. Israeli media reported that a building was struck and three people died in the missile attack on Beersheba. A senior Iranian official confirmed earlier that Tehran had agreed on a ceasefire. However, the country's Foreign Minister said there would not be a cessation in hostilities until Israel stopped its attacks. S&P futures and Nasdaq Futures both rose by 0.7%. The EUROSTOXX futures are pointing to a strong recovery in European stock markets. The MSCI index for Asia-Pacific stocks outside Japan rose 2.1%, while Japan's Nikkei gained 1.1%. South Korean stocks hit their highest level since September 2021. Dollar, which was under pressure after the Middle East conflict and had been able to find some safe haven bids, fell again by 0.5%, falling from a six-week high of 148.45 yen. Investors are now focused on the upcoming appearance of Federal Reserve Chair Jerome Powell before Congress. Due to the inflationary effect of Trump's trade tariffs, the Fed hasn't moved on interest rates yet this year. Some Fed officials have broken ranks with Powell whose hawkish stance on rates has enraged Trump. Michelle Bowman, a Fed official, said that she is open to lowering rates in July. Governor Christopher Waller also said that he will consider doing the same next month. There will be more Fed officials speaking tonight. New York Fed president John Williams is scheduled to give a keynote speech in New York, and Cleveland Fed president Beth Hammack is due to speak about monetary policy at London. Central bankers in Europe are also busy. Bank of England Governor Andrew Bailey is scheduled to make public appearances at London's City Hall and a number of ECB officials are also set to give speeches. The following are the key developments that may influence Tuesday's markets: Fed Chair Jerome Powell makes a public appearance before Congress along with other Fed officials, including New York Fed president John Williams, Cleveland Fed president Beth Hammack, and Boston Fed pres. Susan Collins. The NATO summit is underway in Hague Andrew Bailey, Governor of the Bank of England and Huw Pill, Chief Economist of the Bank of England appear at a Conference on Britain's Return to Gold Standard in 1925. Germany IFO Business Survey Confidence in U.S. consumer spending, according to the Conference Board Canadian CPI for the month of May
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Fugro Secures Offshore Wind Site Survey in German North Sea
Fugro has secured contracts to conduct both geophysical and geotechnical site investigations for the development of two large-scale offshore wind farms in the German North Sea.The project, known as Windbostel Ost and Windbostel West, is a joint venture between RWE and TotalEnergies, with a combined generating capacity of 4 GW.Fugro’s comprehensive site characterization work will provide essential geo-data on the seabed and subsurface conditions northwest of the island of Borkum.The geophysical surveys will provide initial detailed mapping of the seabed and shallow subsurface layers, identifying potential hazards and informing early design considerations.The geotechnical investigation will provide data on the seabed’s soil composition and characteristics through in situ testing and sampling.The combined geophysical and geotechnical data will be crucial for foundation design, structural analysis, cable routing, and risk assessment during the construction and operational phases of the project.“This project aligns with our goal of supporting the development of sustainable energy solutions and using our expertise in complex offshore investigations. We are committed to providing the critical Geo-data needed for the safe and efficient development of these important wind farms, contributing to the growth of renewable energy in the North Sea,” said John ten Hoope, Fugro’s Regional Business Line Director for Marine Site Characterisation in Europe and Africa.This contract follows Fugro’s previous geotechnical investigations for the 1.6 GW Nordseecluster project in Germany and builds upon preliminary geotechnical data acquired by Fugro for the German Federal Maritime and Hydrographic Agency (BSH).
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Prio Aims to Double Oil Output in 2026
Brazilian oil company Prio expects to double its daily output next year when compared with 2024 levels, driven by the development of some key offshore fields, CEO Roberto Monteiro said on Monday.Prio forecasts production to exceed 200,000 barrels per day (bpd) next year, Monteiro told an event marking the company's 10th anniversary, up from the 100,000 bpd reported last year.Independent oil producer Prio has expanded in recent years through some high-profile asset purchases, including those of the Wahoo field from TotalEnergies and BP, and the Peregrino field from Equinor and Sinochem.The production target reflects the development of those assets, Monteiro said, with the company currently awaiting approval from Brazil's environmental agency Ibama to connect wells and begin output at Wahoo.The outlook comes amid heightened geopolitical tensions in the Middle East, which have pushed global oil prices higher in recent weeks due to concerns over potential supply disruptions.Global benchmark Brent prices oscillated on Monday, touching a five-month high before falling more than 1% as oil and gas transit continued on tankers from the Middle East after U.S. air strikes against Iran over the weekend."It's horrible to say that a war is a positive thing, but that's a reality," Monteiro told reporters, referring to the recent surge in oil prices. "Brazil, in general, is a geopolitically stable country and a significant oil producer."The CEO emphasized that while Prio monitors global geopolitical developments, its strategic decisions would remain based on operational efficiency and productivity. "Our portfolio was designed with efficiency in mind," he said.Sao Paulo-traded shares of Prio were up around 1% on Monday, outperforming the broader Bovespa stock index, which slid 0.6%.(Reuters)
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China's demand for iron ore is countering Australia's supply outlook.
The price of iron ore futures fluctuated within a narrow range on Tuesday as traders assessed the balance between the strong demand for near-term supply in China and the possibility of an improved supply coming from Australia, a major producer. As of 0310 GMT, the most traded September iron ore contract at China's Dalian Commodity Exchange remained unchanged at 706.5 Yuan ($98.45). The benchmark July Iron Ore at the Singapore Exchange fell 0.18% to $93.7 per ton. According to Chinese consultancy Mysteel, hot metal production, which is a measure of iron ore consumption, increased 0.24% week-on-week to 2.422 millions tons as of 20th June. Analysts at ANZ said that "volumes have remained around 2.4 millions tons since April. This suggests resilience on the largest steel market in the world." Hexun Futures stated in a report that the market still prices in seasonal demand weakness. Mysteel said in a separate report that "Chinese iron ore prices continued to fall during the period of June 16-20 as the seasonal decline in steel consumption during the summer undermined the demand for this steelmaking material." Rio Tinto, world's biggest iron ore producer and Hancock Prospecting enter a joint venture to develop the Hope Downs 2 Project in Western Australia. Rio announced in a press release that the two pits of iron ore will have an annual combined production capacity totaling 31 million metric tonnes. Coking coal and coke, the other steelmaking ingredients traded in a sideways manner. Jiang Mengtian is the chief analyst of Horizon Insights. He said that the Middle East conflict intensification has had little direct impact on ferrous prices, but the coking coal price did benefit from the energy concerns. The benchmarks for steel on the Shanghai Futures Exchange have lost ground. Rebar fell 0.13%, while hot-rolled coils dropped 0.16%. Wire rod slipped 0.75% and stainless steel was down around 1%.
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Gold nears 2-week low following Trump's announcement of Israel-Iran ceasefire
Gold prices dropped to their lowest level in nearly two weeks on Tuesday, as risk appetite increased after U.S. president Donald Trump announced that Iran and Israel agreed to a truce. This lowered demand for safe haven assets. As of 0257 GMT spot gold fell 0.5% to $3351.47 per ounce after reaching its lowest level since the 11th of June earlier in session. U.S. Gold Futures fell 0.9% to $3365.30. Ilya Spirak, the head of global macro for Tastylive, said: "It appears that there is a lot of geopolitical risks leaving the market in the near-term after we've seen signs of deescalation between Iran and the U.S." Trump announced that Israel and Iran would cease all hostilities. This could end the 12-day conflict which saw millions of Iranians flee Tehran, and raised fears about further escalation. Israel did not immediately comment. Israel has not yet responded. An Iranian official confirmed earlier that Tehran had agreed on a ceasefire. However, the country’s foreign minister stated there would be no cessation unless Israel stopped their attacks. Oil prices fell to their lowest level in a week after Trump announced a ceasefire between Israel and Iran. Michelle Bowman, Vice-Chairperson for Supervision at the U.S. Federal Reserve, said that it is time to lower interest rates due to possible risks on the job market. Investors are awaiting the testimony of Fed Chairman Jerome Powell to be given before the House Financial Services Committee on Tuesday. Powell has been careful to signal near-term ease. Spivak stated that "the bias is in favor of gold prices, but there could be a short-term correction and an increase in the dollar in the near term if Powell can convince markets they won't cut more than two times this year." In an environment with low interest rates, gold tends to flourish. Silver spot fell by 0.1% at $36.10 an ounce. Platinum dropped 0.2% to 1,292.39 and palladium was down 0.4% to $1,000.05. (Reporting and editing by Rashmia Aich, Mrigank Dhaniwala and Anmol Chaubey from Bengaluru)
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Metals are on the defensive after Iran-Israel truce announcement
On Tuesday, the London Metals Exchange (LME) and Shanghai Futures Exchange (SFE) were largely rangebound as caution reigned following the announcement by U.S. president Donald Trump of the Iran-Israel ceasefire. As of 0103GMT, LME's three-month copper rose 0.04% to $9671.5 per ton. SHFE's most-traded Copper gained 0.09%, to 78400 yuan. Trump stated in a post to his Truth Social website that a "complete" and "total" ceasefire would be implemented between Israel and Iran with the aim of ending the 12-day conflict. The commodity market has been unpredictable this year, and traders and investors are likely to wait and see how things turn out. As news of a ceasefire eased fears of supply disruptions, the U.S. Dollar fell and oil dropped to its lowest level in over a week. The greenback price of commodities is cheaper for buyers who hold other currencies. LME Aluminium fell by 0.77%, to $2.568.5 per ton. On Monday, it had reached a three-month peak on fears that the conflict could push up energy costs and disrupt supply. SHFE aluminium fell 0.37% to 20 345 yuan. LME zinc fell 0.37%, to $2677 per ton. Tin dropped 0.13%, to $32,650, and lead declined 0.05%, to $2,000. Nickel rose 0.21% to $14.835. SHFE nickel fell 0.58% to reach 117,280 Yuan. Zinc rose 0.68% to 22080 yuan, while lead increased 0.3% to 16920 yuan. Click or to see the latest news in metals, and other related stories. Data/Events (GMT) 0500 Japan Chain Store sales YY May 200800 Germany Ifo Business climate, current conditions, expectations New Jun 1400 US consumer confidence Jun ($1 = 7,1790 Chinese Yuan) (Reporting and editing by Hongmei LI; Sumana Niandy).
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Australia starts formal sale process of Gupta’s Whyalla Steelworks
The Australian government officially opened on Tuesday the sale process of commodity tycoon Sanjeev Gupta’s Whyalla Steelworks. It said that global steelmakers interested in expanding into low-emission manufacture have shown strong interest. In February, the steel plant in South Australia, whose operating company owed creditors tens and tens millions of dollars, was placed into administration. This forced the federal and state governments to provide a bailout package of A$1.9 billion ($1.23billion). Federal Industry Minister Tim Ayres announced that "selected prospective buyers" now have access to a secured data room. This allows for initial due diligence, and parties can prepare non-binding indication offers. A number of potential buyers have expressed an interest in purchasing and transforming integrated operations. Ayres stated that the independent sale process would be led by administrator KordaMentha, and sales advisors 333 Capital. Gupta’s family conglomerate GFG Alliance did not respond immediately to a comment request. GFG reported in March that it was the largest creditor of Whyalla Steelworks with A$536m ($347m). Since March 2021, when its main backer, the supply chain finance company Greensill, declared insolvency, the privately-held conglomerate has refinanced its global business in steel, aluminum and energy. Liberty Steel East Europe was placed into administration at the end of last year. ($1 = 1.5444 Australian dollars)
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AVZ Minerals will resume legal proceedings against DRC in dispute over disputed Lithium deposit
AVZ Minerals, an Australian company, announced on Tuesday that it would resume legal proceedings against the Democratic Republic of Congo over mining rights for the Manono Lithium deposit. The parties had been unable to settle a dispute regarding the deposit. Unresolved issues could pose a problem for the plans of California-based metals company KoBold Metals to purchase AVZ Minerals stake in one world's biggest hard rock lithium deposits. AVZ originally held the permit for the Manono Project, but the DRC mines ministry revoked it in 2023 on the grounds that the project hadn't advanced fast enough. The rights were granted later to a unit of Zijin Mining, which prompted AVZ, to seek relief from both the International Court of Arbitration of International Chamber of Commerce and the International Centre for Settlement of Investment Disputes. In late May, the AVZ temporarily suspended the ICSID proceedings after the U.S. Government encouraged the parties to resolve the dispute. AVZ's shares were suspended by DRC in May 2022, and then delisted from the stock exchange two years later, due to a dispute. DRC said that it did not interact with AVZ at all during the suspension, and therefore the suspension is now void. The company announced that the ICSID proceedings will resume. KoBold Metals didn't immediately respond to our request for comment. (Reporting and editing by Sherry Phillips and Alan Barona in Bengaluru, and John Biju in Bengaluru)
Exxon reports mixed Q4 results, with higher oil production but weaker refining profits
Exxon Mobil posted mixed results for the fourth quarter, which showed weakness in its chemicals and refining businesses. However, it exceeded Wall Street's profit estimates with higher oil production.
The shares of the U.S. oil producer No. 1 fell 1.5% to $107.91 in morning trading before recovering some of their losses. The shares of the No.
Over the past year, oil companies have been under pressure from lower prices and margins for refining as global demand has fallen short of expectations. Other oil giants such as Chevron, and
Chevron also suffered from the weaker market.
Loss in its refining businesses
First time since 2020
LSEG data revealed that Exxon’s adjusted profit for fourth quarter was $7.39billion or $1.67 per common share. This beat analyst expectations of $1.56. The earnings from oil and natural gas production increased from $4.15 to $6.28 billion. The production, which includes the Permian Basin and lucrative projects in Guyana has increased from 4,58 million barrels per day in the third quarter to 4.6 million.
Darren Woods, Exxon's CEO, said that the company would be more efficient in its spending and only invest if they were confident of generating high returns. This includes the low-carbon solutions business.
Exxon laid a
Five-year plan
In December, the government will increase spending on projects to boost oil and natural gas production by 18% between 2030.
Woods stated that they would not proceed with the project until they were convinced of their value.
The total adjusted earnings for the year 2024 was $33,46 billion, a decrease from $38.57 milliards in 2023.
Chemical and Refining Sludge
In a research note, Paul Cheng, analyst at Scotiabank said that favorable adjustments for tax and year-end helped Exxon achieve its results. Biraj Borkhataria, an analyst at RBC Capital Markets, stated that the company's profits were also higher than expected due to lower corporate costs.
The earnings from gasoline and diesel production fell by a significant amount from $3.2 billion, which was the figure a year ago. Other companies' opening of oil refineries in Asia and Africa resulted in a higher global fuel supply even though demand for gasoline and Diesel lagged expectations.
Kathryn Mikells, chief financial officer of the company, said that the refining industry is still under pressure due to the increased supply.
She said, "That's what we really watch as we look forward to 2025." The company reported that the adjusted profit from producing chemicals fell 76% to $215 millions from the third quarter due to lower margins and seasonal higher expenses. Borkhataria stated that the figure was the lowest since 2019.
Mikells stated that the company is still expecting a decision in September on its arbitration challenge against Chevron's purchase of oil producer Hess. Chevron would be able to gain a foothold on Guyana's oil project if it proceeds. Exxon, CNOOC and Hess have said that they are entitled to purchase Hess’ stake, even though the deal was approved by U.S. regulatory authorities.
In 2024, the company will return $36 billion to shareholders via dividends and buybacks. This is up from $32 Billion in 2013. The company intends to buy back $20 billion worth of shares each year until 2026.
(source: Reuters)