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- According to a report by global consultancy Oliver Wyman, UK households could be £1,000 worse off as a result of Brexit-imposed trade barriers. The report found that supply chain disruptions could wipe out supermarkets’ and restaurants’ business profits with rises in costs being passed on to consumers.
- China has announced that its retaliatory tariffs on US imports will include tariffs on US soybeans, the US’s most valuable agricultural Chinese export. Soybean futures consequently have fallen 2.3% to their lowest in a year. $12bn of soybeans are sent to China annually and farmers are anticipating significant disruptions from June 6th when the tariffs come into effect.
- South Korea has suspended selling of Canadian wheat and flour following the announcement that an unapproved genetically modified trait of wheat was found in produce from the Canadian province of Alberta. Last week Japan’s farm ministry also suspended its tenders and sales of Canadian wheat.
- Copper prices have dipped to a near 2-week low as trade tensions between China and the US increase. The LME benchmark contract for 3-month delivery is currently trading at $7,015/tonne. There is likely to be further pressure on metals prices if tariffs are imposed on cars and automobile parts.
- A stronger USD is holding gold at near 5-1/2 month lows, offsetting the impact on prices which the increasing trade tensions between the US and China is having. Spot gold is currently trading at around $1,281.12/oz.
Energy - UK
- UK gas prices have eased at the start of this week due to lower-than-normal demand at a time of excess supplies due to a planned pipeline closure which has slowed exports.
- The EU has issued an overall positive opinion on plans for a British nuclear power plant project. The EU has said that the plant, which would be built by Hitachi’s Horizon, would not have health or environmental impacts on other member states.
Energy - International
- Investors will be keeping a close eye on OPEC and Russia ahead of Friday’s meeting in Vienna. It is expected that Saudi Arabia-led OPEC and non-OPEC Russia will agree to take steps to increase production following a successful year of supply cuts which have tightened the market.
- Focus is also on China’s retaliatory duties on US commodities, including oil, in response to the US tariffs on $50bn of Chinese imports which come into effect on 6th July. The imposition of tariffs on imports of US oil by China would likely be good news for other producers, including potentially Iran.
- European spot power prices have risen as a result of a sharp day-on-day increase in consumption. The rise in consumption, driven by increasing temperatures and therefore increase in air conditioning demand, comes at a time of modest German renewable supply but gains in prices have been capped by two German nuclear reactors re-joining the grid last week.
- Europe’s diesel market is under pressure as a result of a wave of Eastern shipments entering the market just as refiners enter peak season. It is expected that around 2.2m tonnes of diesel will arrive this month from the Middle East and Asia, with at least 2m expected next month.
- ExxonMobil have announced that they are considering importing LNG into Australia to help ease the threat of a gas shortage from 2021. If plans go ahead, it would put ExxonMobil in direct competition with AGL Energy, Australia’s second biggest energy retailer, and a consortium involving Japanese JERA. AGL Energy plans to start importing LNG from 2021, and JERA from 2020.