2025-05-30 10:51

2025 surplus seen at 20-30 million tons vs 50 million tons before Demand has held up so far this year, cyclones hit supply New supply from Guinea's Simandou remains a long-term price risk SINGAPORE, May 30 (Reuters) - The prospects for iron ore prices are improving thanks to a lower than expected global surplus this year, analysts and traders say, though looming new supply from the giant Simandou project in Guinea remains a long-term downside risk for prices. Analysts and traders have cut their oversupply forecasts for this year to between 20 million and 30 million metric tons, from 50 million tons earlier this year, according to more than a dozen interviews at the flagship Singapore International Ferrous Week conference this week. Sign up here. That is because demand has been surprisingly resilient so far this year thanks to robust steel exports as buyers stocked up amid signs of an escalating global trade war, while cyclones disrupted supply in major producer Australia. In the first four months of 2025, China's iron ore imports slid 5.5% year-on-year while its crude steel output ticked up 0.4%, official data showed. Iron ore prices have held well above $90 per ton, below which high-cost miners struggle to break even, despite trade tensions between the world's top two economies that have fueled concerns about the outlook for steel demand. That has led analysts and traders to revise up their bearish-case pricing scenarios to between $80 and $85 per ton versus $75 or lower at the start of the year. Medium term demand for iron ore should remain firm because China's young fleet of blast furnaces will require iron ore for at least another decade, said analysts. "There won't be any big reduction in the number of blast furnaces in China by 2035 from the perspective of the life cycle of the currently running equipment, meaning that iron ore procurement will hover at a relatively high level," Long Hongming, a professor from Anhui University of Technology, told the conference on Tuesday. SIMANDOU Simandou, one of the world's largest high-grade iron ore mines, will start shipping ore in November, and its entry into the global market is expected to aggravate the supply glut starting 2026. However, the increasingly hostile attitude of Guinea's military government, which recently cancelled 129 minerals exploration permits and is locked in a standoff with Emirates Global Aluminium, raised concerns among traders, miners, analysts and steel mills at the conference in Singapore. Participants questioned whether the government's activist stance could affect how smoothly the project will be able to ramp up to its full production of 120 million tons a year. Simandou is a joint venture between Rio Tinto (RIO.AX) , opens new tab, the world's largest iron ore miner, and Chinese companies including China Baowu, the world's largest steelmaker by output. https://www.reuters.com/world/china/iron-ore-pessimism-subsides-despite-looming-simandou-supply-2025-05-30/

2025-05-30 10:50

LONDON, May 30 (Reuters) - What matters in U.S. and global markets today By Mike Dolan , opens new tab, Editor-At-Large, Financial Industry and Financial Markets Sign up here. This week's U.S. tariff whiplash has left financial markets dazed, as anxiety about foreign capital taxes and fresh rate cut hopes add to the confusion. June promises to be a tense month in an already turbulent year. It's Friday, so today I'll provide a quick overview of what's happening in global markets and then offer you some weekend reading suggestions away from the headlines. Today's Market Minute * A federal appeals court temporarily reinstated the most sweeping of President Donald Trump's tariffs on Thursday, a day after a U.S. trade court ruled that Trump had exceeded his authority in imposing the duties and ordered an immediate block on them. * The Trump administration's trade war has cost companies more than $34 billion in lost sales and higher costs, according to a Reuters analysis of corporate disclosures. * The safety of Germany's gold reserves held overseas and in New York in particular, until recently mainly a talking point for the country's far-right party and gold bugs, is becoming a matter of public debate with Donald Trump back in the White House. * While we may not see a full-blown debt crisis in the U.S., there's a growing sense that "the fiscal" matters for markets more now than it has for decades. Reuters columnist Jamie McGeever explores the assumptions baked into the current U.S. debt and deficit projections. * Reuters columnist Gavin Maguire explains why developers and exporters of natural gas should be alarmed by the decline in thermal coal exports coming out of Indonesia. Tariffs return along with capital tax fears A federal appeals court temporarily reinstated the most sweeping of Donald Trump's import tariffs late on Thursday. Allowing the stay while the case progresses, the court ordered the plaintiffs in the cases to respond by June 5 and the administration by June 9. Trump has promised to take the matter all the way to the Supreme Court. Thursday's rally in stocks (.SPX) , opens new tab and the dollar (.DXY) , opens new tab faded quickly, with many investors convinced the administration would seek other routes to impose the levies even if it loses its case. The whole episode raises as many questions as answers, not least regarding when tariffs will be imposed and which ones will eventually come to pass. This heightens business uncertainty as much as it offers any marginal relief. Countries in bilateral trade talks may be emboldened to avoid making concessions until there is more clarity around the legal issue, meaning we could see a shortening of the already narrow six-week negotiating period left before July 9's re-imposition of "reciprocal tariffs". Meanwhile, there are also questions over the U.S. fiscal bill now heading through the Senate, including how much delayed or reduced tariffs will impact revenue estimates and deficit calculations. What's more, investors are increasingly concerned about provisions in the bill - namely Section 899 - that allow the administration to impose taxes of up to 20% on foreign asset holdings. Some fear this could cause the tariff war to morph into a capital war, unnerving overseas investors anew. Resorting to non-tariff threats would only up the ante in tough trade talks with Europe, which is already countering with threats against U.S. tech firms. On top of all this, we have next month's annual Treasury review of overseas currency manipulation. In short, we could soon seen more trade weapons drawn into the fray. There's even growing angst overseas that foreign holdings of gold at the U.S. central bank could be at risk. But amid all the speculation, U.S. Treasuries rallied sharply on Thursday. Some of that was down to signs of weakening economic activity, with weekly jobless claims rising, pending homes sales weakening and first quarter GDP revisions cutting consumer spending estimates and showing a drop in corporate profits. That was enough to nudge Federal Reserve easing hopes back up, with futures now pricing in two full rate cuts by yearend. The drop in Treasury yields was helped by a robust auction of 7-year notes, which Morgan Stanley said left primary dealers with just 4.8% of the paper, the lowest primary dealer takedown on record for any Treasury auction. Amid all this, Trump called Fed Chair Jerome Powell to the White House on Thursday for their first face-to-face meeting since he took office in January. He told the central bank chief he was making a "mistake" by not lowering interest rates. Underscoring its independence, the Fed issued a statement after the meeting saying it "will set monetary policy, as required by law, to support maximum employment and stable prices and will make those decisions based solely on careful, objective, and non-political analysis." The April reading for the Fed's favored inflation gauge is due for release on Friday. Ahead of the open, U.S. stock futures were back slightly in the red, 10-year Treasury yields flirted with their lowest in a fortnight and the dollar (.DXY) , opens new tab was firmer after Thursday's sharp reversal. Elsewhere, European stocks (.STOXXE) , opens new tab were higher, but Japan's Nikkei (.N225) , opens new tab relapsed more than 1%. Tokyo core inflation readings for May came in higher than forecast at 3.6%, the most in two years, upping speculation that there will be more Bank of Japan interest rate hikes ahead. European inflation updates for this month were much softer, buoying hopes of further European Central Bank easing as the ECB gets set to meet again next week. Weekend reading suggestions Here are some articles away from the day-to-day headlines that you may find interesting. * GENDER Z: In democracies worldwide, a political gender divide is intensifying among Gen Z voters, with young men voting for right-wing parties and young women leaning left, a break from pre-pandemic years when both tended to vote for progressives. Reuters' Heejung Jung, Mark Bendeich and Thomas Escritt examine this trend. * RESERVE SWITCH: Just over half of 88 central bank reserve managers said they expected the pace of reserve diversification to accelerate over the next 12 months, according to the annual HSBC Reserve Management Trends survey. Almost 80% of respondents thought de-dollarisation was increasing, though on a gradual basis. , opens new tab * DEFENSE HELP WANTED: While the European Union's 800 billion euro defense spending push is expected to create hundreds of thousands of jobs over the next decade, specially trained AI engineers, data scientists, welders and mechanics are in short supply. Reuters' Michael Kahn, Christoph Steitz, Dominique Patton spoke to more than a dozen companies, recruiters and workers who said that along with hiking wages and benefits, arms makers are poaching from other sectors. * MGGA: Making Germany Grow Again is the theme of an IMF podcast with Ulrike Malmendier, a professor at University of California, Berkeley and member of the German Council of Economic Advisors. Malmendier explains how ageing Germany needs to attract more skilled migrants, rethink its capital markets and pensions system and address energy supply problems in order to resume its role as Europe's powerhouse economy. , opens new tab * FUZZY FEDSPEAK: Households and professional forecasters often hear Federal Reserve speeches on inflation and monetary policy in different ways, according to a paper on Fed communications published on CEPR's VoxEU site. , opens new tab * EV EVERGRANDE?: An intensifying auto industry price war in China has stoked fears of a long-anticipated shake-out in the world's largest car market. Reuters' Norihiko Shirouzu reveals how steep price cuts may signal a potential tipping point, where weaker players can no longer sustain deepening losses. * 'SACRIFICE RATIOS' AND PRICE LEVEL: Central bank research show how 'sacrifice ratios' - or output losses per inflation reduction - were historically low during post-pandemic monetary tightening. But it ignores politically toxic price level increases, something that should be included in the list of 'tradeoffs' assessed when conducting policy, according to an NBER paper by economists Kristin Forbes, Jongrim Ha and Ayhan Kose. , opens new tab * DOLLAR SACRIFICE?: Donald Trump's erratic U.S. trade threats against Europe and de-funding of universities are the sorts of policies that come at a price, not least damaging the dollar's cyclical and structural outlook. Writing on Project Syndicate, former Goldman Sachs global economist and UK Treasury minister Jim O'Neill explains why he thinks the implications for the future of American power are profound. , opens new tab * DRONE WARS: Indian and Pakistani militaries have deployed high-end fighter jets, conventional missiles and artillery during decades of clashes, but the four days of fighting in May marked the first time New Delhi and Islamabad utilized unmanned aerial vehicles at scale against each other. Read the fascinating report by Reuters' Devjyot Ghoshal, Ariba Shahid and Shivam Patel. * INDUSTRIAL POLICY REDUX: Government subsidies, investment incentives, and other industrial-policy actions have almost quadrupled since 2017 - mostly in critical industries such as defense, chips and high-end equipment, according to research from the consulting firm McKinsey. , opens new tab Chart of the day Companies are struggling to give guidance on the rest of the year's earnings given the high level of uncertainty related to U.S. tariff policy. Today's events to watch * U.S. April personal consumption and spending and personal consumption expenditures inflation gauge (8:30 AM EDT), April international goods trade (8:30 AM EDT), April wholesale/retail inventories (8:30 AM EDT), May Chicago business survey (9:45 AM EDT) University of Michigan final May household sentiment survey (10:00 AM EDT); Canada Q1 GDP revision (8:30 AM EDT) * San Francisco Federal Reserve President Mary Daly, Dallas Fed President Lorie Logan, Atlanta Fed chief Raphael Bostic and Chicago Fed boss Austan Goolsbee all speak. * U.S. corporate earnings: Marvell Technology Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles , opens new tab, is committed to integrity, independence, and freedom from bias. https://www.reuters.com/business/finance/global-markets-view-usa-2025-05-30/

2025-05-30 10:32

MUMBAI, May 30 (Reuters) - The Indian rupee declined by about 1% in May, reversing course after gaining in the previous two months, influenced by factors such as continued uncertainty over U.S. trade policies, gains in its Asian peers and a conflict between India and Pakistan. The rupee closed at 85.5775 on Friday, capping a day of choppy trading with a mild decline. Sign up here. The currency had rallied to a six-month high earlier in May but shed its gains through the month. Initially, a military conflict between India and Pakistan hurt the currency but it rebounded once a ceasefire was reached. Over the rest of the month, dollar demand from corporates and foreign banks weighed on the rupee, traders said. Dollar-buying intervention by Reserve Bank of India also put a lid on the sharp appreciation above the 84.60-84.80 zone, according to one of the traders. Meanwhile, the dollar was set to end the month little changed against major peers as mild relief on the softening of U.S. trade policies, typified by the pact with China, gave way to a legal back-and-forth on the legal validity of reciprocal tariffs. Asian currencies were mostly stronger on the month, led by the Korean won while the offshore Chinese yuan, a closely tracked peer of the rupee, rose nearly 1%. Barclays expects the rupee to underperform its peers going forward as the RBI focuses on replenishing FX reserves and is "unlikely to want to see a renewed richening of the INR," analysts at the firm said in a note earlier this week. India's foreign exchange reserves (INFXR=ECI) , opens new tab stood at $685.7 billion as of May 16, about $19 billion below their all-time high hit in September 2024. Traders now await the release of India's economic growth data for the January-March quarter and U.S. PCE inflation data due later in the day. Economists polled by Reuters expect India's GDP to have grown 6.7% year-on-year, up from 6.2% in the previous three months. https://www.reuters.com/world/india/rupee-flips-back-monthly-decline-lags-asian-peers-2025-05-30/

2025-05-30 10:16

MUMBAI, May 30 (Reuters) - The Indian rupee gained on Friday, as uncertainty around U.S. tariffs following a temporary reinstatement pulled the dollar index back below the 100-handle. The dollar index had risen to a peak of 100.48 on Thursday after a trade court blocked most of U.S. President Donald Trump's tariffs, but quickly reversed course to fall 0.6% after an appeals court temporarily reinstated the levies as it considered the government's appeal. Sign up here. The rupee , aided by broad weakness in the dollar, rose 0.2% to 85.35 as of 10:40 a.m. IST, nearly the same level it was at before the initial block on the tariffs. The weakness in the dollar also reflected weaker-than-expected labour market data and U.S. consumption data, MUFG Bank said in a note. In the near-term, focus is likely to stay on developments on U.S. trade policies, especially as the end of the 90-day pause on country-specific reciprocal tariffs, starting April 9, draws near. "Our expectation for a trade deal to be struck between India and U.S. beyond the day-to-day uncertainty is a factor underpinning our view for USD/INR to grind lower to 83.50 by 1Q2026, coupled with lower inflation and more supportive domestic policies including rate cuts by RBI," MUFG said. Traders also pointed to dollar selling interest from at least two foreign banks, likely on behalf of custodial clients, which helped lift the rupee. Other Asian currencies were trading flat-to-slightly lower, while India's benchmark equity index, the Nifty 50 (.NSEI) , opens new tab, fell about 0.3%, tracking a fall in most regional equities. https://www.reuters.com/world/india/rupee-gains-dollar-index-reverses-course-us-tariff-twist-2025-05-30/

2025-05-30 09:51

Bank customers may not be fully aware of crypto-asset risks Stablecoins not good payment means without proper regulation Rules alone are not the solution, we need the digital euro ROME, May 30 (Reuters) - European Central Bank policymaker and Bank of Italy Governor Fabio Panetta called on Friday for close monitoring of the reputational risks banks face in providing crypto-asset services, warning that losses could harm the trust of customers. Presenting the Bank of Italy's annual report, Panetta warned about the growing links between the world of crypto-assets and the traditional financial system, pointing to the rising number of accords between banks and digital asset providers. Sign up here. "Crypto-asset holders might not fully understand their nature and conflate them with traditional banking products, with potentially negative repercussions for confidence in the credit system should losses occur," Panetta said. Italy's biggest bank Intesa Sanpaolo (ISP.MI) , opens new tab in January carried out what CEO Carlo Messina described as "a test", by buying 1 million euros in bitcoins, the world's largest digital currency. Intesa set up a proprietary trading desk for digital assets in 2023, and last year started handling spot trades with crypto-assets. Spain's Santander (SAN.MC) , opens new tab is weighing a digital asset expansion, including early-stage plans to offer a stablecoin as well as access to cryptocurrencies for retail customers of its digital bank, Bloomberg reported on Thursday. Panetta said stablecoins, which are designed to maintain a stable value against underlying currencies or assets, posed a threat to traditional means of payments if large foreign-based technology platforms decided to promote their use. "In the absence of adequate regulation, their suitability as a means of payment is doubtful, to say the least," he said. The central banker warned, however, that it would be foolish to think that the spread of crypto-assets, including stablecoins, can be curbed simply by imposing restrictions. "What is needed is a response that matches the ongoing technological transformation," he said, adding that "the digital euro project stems precisely from this need." The European Central Bank is working to develop a digital currency to compete with private alternatives that risk undermining the role of central bank money. https://www.reuters.com/business/finance/ecbs-panetta-warns-crypto-losses-can-harm-confidence-banks-2025-05-30/

2025-05-30 08:03

Yield at auction beats expectations, signaling investor caution Argentina's reserves target with IMF seen as challenging NEW YORK/BUENOS AIRES, May 30 (Reuters) - Argentina's first major bond sale in seven years, a $1 billion offering with payments in pesos, is a clear sign that global investors are regaining their faith in a country recently mired in triple-digit inflation. But the nearly 30% yield, higher than many expected, showed a high level of apprehension remains. Sign up here. President Javier Milei needs to prove to Argentines voting in October, the International Monetary Fund and foreign investors that the economic recovery will continue. Annual inflation has fallen to near 50% from over 270% a year ago. He has convinced the IMF to lend Argentina $20 billion and slashed government spending without losing much popularity, even though nearly 40% of Argentines live below the poverty line. Argentina owes around $300 billion, about $60 billion of which is in dollar-denominated international bonds. A return to dollar-denominated financing in global capital markets is embedded in the IMF program and is sorely needed to cement the recent recovery. This week's offering is "an important milestone on the path to refinancing future dollar commitments," said economist Gustavo Ber, head of Buenos Aires-based Estudio Ber. BTG Pactual called it a "savvy move" with the same outcome as the central bank buying dollars with pesos, without distorting the foreign currency market. The government said late on Wednesday that demand for the 5-year notes was about 1.7 times the $1 billion cap. The 29.5% yield exceeded initial expectations for about 25% and investors have the option to sell back the bonds after two years. Markets on Thursday signaled partial support, when prices for Argentina's dollar bonds issued under foreign or local laws rose marginally. Auctions like this could be replicated but other steps are crucial, said Armando Armenta, senior economist at AllianceBernstein. "It would be better to see more foreign direct inflows and, more importantly, the central bank purchasing reserves to meet the net international reserve accumulation targets," Armenta said. "This would open the door for Argentina to access the dollar sovereign debt market early next year." PESO DEBT On Thursday, peso-denominated debt prices fell and the 10-year local note yield rose, roughly to 27% from 26%. "These rates in pesos are very high, considering their expectations of inflation falling towards 10% in the next two years," said Clyde Wardle, senior emerging markets FX strategist at HSBC, of the yield paid this week. If the current 47% inflation keeps falling sharply, those rates will turn out to be very high and raise the risk of pushing the government to print pesos to pay bondholders, he said. The new offering's yield was well above the expectations of local brokerage Puente, which noted that it "does not indicate strong conviction regarding the future evolution and sustainability of the (currency exchange)." The peso has fallen about 9% to the dollar since capital controls were loosened in mid-April. Argentina has promised the IMF to add $4.4 billion to its net reserves by mid-June. Those reserves were in the red in December and analysts doubt the June objective will be met. The new bond shows investor limits for now, HSBC's Wardle said. "It is unlikely Argentina could find an affordable dollar-denominated issuance rate that attracts foreign investor interest. There is still too much uncertainty about growth." https://www.reuters.com/world/americas/argentina-takes-baby-step-toward-financial-order-with-pricey-1-billion-debt-2025-05-30/