Connect with us

Markets

China Factory Prices Give an Unexpected Lift to Global Inflation

Published

on

brexit
  • China Factory Prices Give an Unexpected Lift to Global Inflation

Inflationary pressure emanating from the factory to the world is proving more resilient than economists have anticipated.

China’s producer-price inflation accelerated to 6.3 percent in August from a year earlier, exceeding all but one of 38 estimates in Bloomberg’s survey of economists. That data released Saturday followed 5.5 percent readings in the prior three months and was unexpected for analysts, who have been forecasting more moderation in pricing pressures.

The surprise strength gives support for global inflation spanning from metals to fuel and shows the effects of resilient domestic demand and reduced supplies of some commodities. China’s authorities have been closing mills and smelters to cut excessive industrial capacity and help curb pollution, in turn straining production of metals such as aluminum and steel.

“The key driver has likely come from the supply side,” such as production cuts in response to intensified environmental enforcement in recent months, Robin Xing, chief China economist at Morgan Stanley in Hong Kong, wrote in a note. The bank last week raised its 2017 PPI forecast to 5.5 percent from 4.5 percent, citing stricter anti-pollution measures.

Global metal prices soared last month as China’s demand held up on robust investment and construction amid government reforms that may crimp supplies. That market strength underpins worldwide inflation, and helps ease debt burdens on raw-material producers.

China’s environmental campaign has intensified this year. Inspections that began in Hebei, which surrounds Beijing and is the biggest steel-producing province, have been extended to several more cities and provinces and led to the closures of some businesses and factories.

Aluminum Corp. of China, the nation’s top state-owned smelter of the metal, pledged this month to cut capacity during the winter to curb emissions. Aluminum prices have has surged this year, making it one of the best-performing commodities, on expectations for supply cuts and resilient demand from property and infrastructure. That’s boosting producer inflation.

“While cyclical demand remained resilient, the ‘rationed’ output volume amid stricter environmental inspections may have led to stronger inflationary pressure in August,” Liu Wenqi, an analyst at China International Capital Corp. in Beijing, wrote in a report.

Another underpinning for better-than-expected factory prices comes from infrastructure investment, which is often used to buffer growth amid downward economic pressure. The share of spending used for road, rail and other infrastructure this year has surpassed levels during the global financial crisis, according to a Bloomberg Intelligence analysis.

That boost, however, may prove temporary, as government splurging turns to constraint later this year. Generous government spending to ensure the economy is humming nicely when the 19th Party Congress convenes in October means the fiscal pump is unlikely to kick up a notch as usual at year-end, which is when economists see growth moderating.

“August’s price data show China’s reflation story remains intact,” Tom Orlik, chief Asia economist at Bloomberg Intelligence in Beijing, wrote in a report Saturday. “The caveat is that reflation reflects more stimulus-boosted demand, and positive market sentiment, than it does efforts to close down excess supply – and is therefore subject to reversal.”

Data released Saturday also showed a pickup in the consumer price index, which exceeded estimates with a 1.8 percent increase after rising 1.4 percent in July. Prices rose from the prior month, affected mainly by increases for eggs and vegetables amid hot weather and rain, the National Bureau of Statistics said in a statement.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

Continue Reading
Comments

Crude Oil

Oil Prices Continue to Slide: Drops Over 1% Amid Surging U.S. Stockpiles

Published

on

Crude Oil

Amidst growing concerns over surging U.S. stockpiles and indications of static output policies from major oil-producing nations, oil prices declined for a second consecutive day by 1% on Wednesday.

Brent crude oil, against which the Nigerian oil price is measured, shed 97 cents or 1.12% to $85.28 per barrel.

Similarly, U.S. West Texas Intermediate (WTI) crude slumped by 93 cents or a 1.14% fall to close at $80.69.

The recent downtrend in oil prices comes after they reached their highest level since October last week.

However, ongoing concerns regarding burgeoning U.S. crude inventories and uncertainties surrounding potential inaction by the OPEC+ group in their forthcoming technical meeting have exacerbated the downward momentum.

Market analysts attribute the decline to expectations of minimal adjustments to oil output policies by the Organization of the Petroleum Exporting Countries (OPEC) and its allies, known collectively as OPEC+, until a full ministerial meeting scheduled for June.

In addition to concerns about excess supply, the market’s attention is also focused on the impending release of official government data on U.S. crude inventories, scheduled for Wednesday at 10:30 a.m. EDT (1430 GMT).

Analysts are keenly observing OPEC members for any signals of deviation from their production quotas, suggesting further volatility may lie ahead in the oil market.

Continue Reading

Energy

Nigeria Targets $5bn Investments in Oil and Gas Sector, Says Government

Published

on

Crude Oil - Investors King

Nigeria is setting its sights on attracting $5 billion worth of investments in its oil and gas sector, according to statements made by government officials during an oil and gas sector retreat in Abuja.

During the retreat organized by the Federal Ministry of Petroleum Resources, Minister of State for Petroleum Resources (Oil), Heineken Lokpobiri, explained the importance of ramping up crude oil production and creating an environment conducive to attracting investments.

He highlighted the need to work closely with agencies like the Nigerian National Petroleum Company Limited (NNPCL) to achieve these goals.

Lokpobiri acknowledged the challenges posed by issues such as insecurity and pipeline vandalism but expressed confidence in the government’s ability to tackle them effectively.

He stressed the necessity of a globally competitive regulatory framework to encourage investment in the sector.

The minister’s remarks were echoed by Mele Kyari, the Group Chief Executive Officer of NNPCL, who spoke at the 2024 Strategic Women in Energy, Oil, and Gas Leadership Summit.

Kyari stressed the critical role of energy in driving economic growth and development and explained that Nigeria still faces challenges in providing stable electricity to its citizens.

Kyari outlined NNPCL’s vision for the future, which includes increasing crude oil production, expanding refining capacity, and growing the company’s retail network.

He highlighted the importance of leveraging Nigeria’s vast gas resources and optimizing dividend payouts to shareholders.

Overall, the government’s commitment to attracting $5 billion in investments reflects its determination to revitalize the oil and gas sector and drive economic growth in Nigeria.

Continue Reading

Commodities

Palm Oil Rebounds on Upbeat Malaysian Exports Amid Indonesian Supply Concerns

Published

on

Palm Oil - Investors King

Palm oil prices rebounded from a two-day decline on reports that Malaysian exports will be robust this month despite concerns over potential supply disruptions from Indonesia, the world’s largest palm oil exporter.

The market saw a significant surge as Malaysian export figures for the current month painted a promising picture.

Senior trader David Ng from IcebergX Sdn. in Kuala Lumpur attributed the morning’s gains to Malaysia’s strong export performance, with shipments climbing by a notable 14% during March 1-25 compared to the previous month.

Increased demand from key regions like Africa, India, and the Middle East contributed to this impressive growth, as reported by Intertek Testing Services.

However, amidst this positivity, investors are closely monitoring developments in Indonesia. The Indonesian government’s contemplation of revising its domestic market obligation policy, potentially linking it to production rather than exports, has stirred market concerns.

Edy Priyono, a deputy at the presidential staff office in Jakarta, indicated that this proposed shift aims to mitigate vulnerability to fluctuations in export demand.

Yet, it could potentially constrain supply availability from Indonesia in the future to stabilize domestic prices.

This uncertainty surrounding Indonesian policies has added a layer of complexity to palm oil market dynamics, prompting investors to react cautiously despite Malaysia’s promising export performance.

The prospect of Indonesian supply disruptions underscores the delicacy of global palm oil supply chains and their susceptibility to geopolitical and regulatory factors.

As the market navigates these developments, stakeholders remain attentive to both export data from Malaysia and policy shifts in Indonesia, recognizing their significant impact on palm oil prices and market stability.

Continue Reading
Advertisement




Advertisement
Advertisement
Advertisement

Trending