China Should Take Eyes Off Trade War; Property Market Is Biggest Risk

The top economies of the world, the U.S. and China, are so busy with their trade war that they completely ignored the other pressing challenges. China’s real estate market is the biggest threat for the country’s economy than the oil trade war with United State. In fact, experts believe that property is the country’s biggest risk in the next 12 months.

Larry Hu, the head of greater China economics at Macquarie, stated that he has been observing the real estate and smaller cities will see a slump in prices. In China, real estate investment accounts for more than 66 percent of Chinese household assets. Moreover, the property market plays a vital role in local government revenues, corporate investments, and bank loans. Thus, a sharp downturn in the real estate market will have a negative effect on the economic growth of the country.

Till now, the property market has been hot. The mean selling price for brand-new non-governmental housing rose 28.1 percent from the beginning of 2016 to May 2018. Furthermore, the overall domestic property prices have been rising since last three years, according to the National Bureau of Statistics data.

Trade War Effects

Last week, Nanjing announced a ban on corporate purchases of residential properties. Before then there were speculations regarding a similar strategy adopted by Shanghai and other cities. Maybe these are worthy strategies to control the risk of real estate. CNBC reported that Joe Zhou, the regional director of investment management firm JLL, believes that the Chinese government is not likely to relax its policy any time soon and the prices could go down on average.

On the other hand, it is hard to guess whether a downturn in Chines property market would impact of the overall growth in the same scale or not. Meanwhile, the U.S. is pressuring the country with new strategies by imposing tariffs on importing. During these times of trade war, for now, China’s economy is stable, however, the government should look at their real estate market regardless of the increasing pressure from the U.S.

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Turkey Imposed Tarrifs On Rice, Alcohol, Cars From USA To Deal With Financial Crisis

Turkey took the boldest step in the history to cure the financial crisis by making it difficult for the U.S. traders to bet against weak lira. Turkey President Recep Tayyip Erdogan has evolved in a feud with the United State’s President Donald Trump due to the new import taxes. Experts believe that this measure is aimed at recovering the weak lira and not the caused that lead to these situations.

Erdogan, who is in power since this June, is not at all ready to give in to Trump’s threats. Moreover, the tension between the two NATO allies has increased when Trump slapped on the import on Turkish aluminum and steel and these decisions are just the part of the aftermath. Turkey has now decided to impose taxes in the range of 50 to 140 percent on rice, alcohol, and cars from the U.S to overcome this crisis. Moreover, Erdogan urged to boycott all the U.S. electronics such as iPhone, which has become expensive due to the low price of lira.

Aftermath Of U.S. Sanction

The businessmen who earn in lira and have a loan in dollars are suffering the most. The official bad dept of Turkey’s banks is around 3 percent. There are several regulations that soon be applied to recover lira prices. The lira is still down by 20 percent in August and several investors are waiting for the interest hike from the central bank before they fold their cards.

On the other hand, Erdogan is not backing down from the fight with trump. As per reported by Livemint, Turkey’s new tariffs will affect goods that account for almost $1 billion of imports, which is similar to the value of the metal that is subjected to high U.S. taxes. This decision shows that Turkey is giving a proper offensive response to the Trump’s attack on the Turkey economy, the Vise President Fuat oktay tweeted recently.

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Settlemet Talks Begin To End US And China Trade War

On August 16, oil prices slightly recovered after China agreed to negotiate some terms to resolve the ongoing war between the United States and China. However, the oil market is still bearish owing to the U.S. sanctions and the global economic slowdown. Brent crude oil futures LCOc1 were at $71.11 per barrel from their last close and the US West Texas Intermediate (WTI) crude futures CLc1 were up at $65.17 per barrel. Both benchmarks lost more than 2 percent during the trading hours.

Experts stated that the slight recovery in prices was due to the news that the Chinese Vice Minister of Commerce Wang Shouwen will lead the Chinese delegations with the US authorities. The US representatives will be led by David Malpass, the Under Secretary of Treasury for International Affairs. This news has ignited a hope that both countries want this trade war to end without destroying each other economies.

Tit-For-Tat Will End

There are several things the U.S. President Donald Trump initiated since his election. However, the global trade war is an excellent example of what he is capable of. When the United States imposed heavy tariffs on China and several other countries, to return the favor, China also implemented tit-for-tat tariffs and threatened with heavy duties on billions of dollar worth goods. This had a damaging effect on the oil industry and led to an increase in oil prices beyond anyone’s expectations. When China and the U.S. were busy playing “tariffs game”, several other Asian countries and their markets were witnessing a slowdown in the market and currency weakness, which in turn dragged down the oil industry. In addition, Japan and Tehran showed a slowdown in oil demand as well as a decline in crude oil import. As reported by Reuters, several Asian buyers such as South Korea, Japan, and India scaled back orders from Iran’s oil exports due to the threat of U.S. sanctions. Thus, the news of negotiations to end the this war once and for all has given hope to the market players to invest again, which recovered the crude oil market.

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Ballooned Crude Oil Prices Takes Toll On The Asian Market Demand

The biggest crude oil buyers in the Asian market are India and China. The reducing demand for the oil has threatened the Asian as well as the global oil market. India and China are regarded as the two pillars of the petroleum and oil market, but eroding demand has increased the trade tension globally. Moreover, this has exposed the weakness of the Asian crude oil market. The two countries together buy more than 12 percent of the world’s oil and their growth has uplifted the global oil market since 2006. However, since July their shipped imports were nearly 50,000 barrels per day (bpd), whereas their January–June average was about 12.4 million bpd. This reducing oil demand has inflated the crude oil prices. Moreover, the sanctions with the U.S. and China-US trade war have supplemented the growth of the crude oil prices.

The Demand Will Continue To Slow Down

The factors such as the U.S. sanctions on Iran and the increased imports from Japan and South Korea resulted in rising oil prices. The shipping data clearly state that the annual growth from the top five buyers of Asian market including India, China, Japan, South Korea, and Taiwan has fallen from 3.5 percent in 2016 to nearly 2 percent in this year. Traders expect the downfall of the demand in future also owing to the trade conflict between China and the U.S. Moreover, the renewed trade sanctions against Iran, the world’s major oil exporter, will target the petroleum sector, disrupting the crude oil market further.

As per reported by Reuters, Sushant Gupta, the research director at energy consultancy Wood Mackenzie, stated that any further escalation in a trade war between the two major economies is a vital downside risk, and will lead to a slowdown in the Asian crude oil demand growth in the next year. This may lead to downward pressure on oil prices.

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China May End Up Inadvertent Winner From Trump’s Aluminium Tariffs

Whether the President of the United States Donald Trump wants it or not, there are high chances that China may get benefits from the aluminium tariffs. This probably was not the intentions behind starting the trade war, but Trump may have to witness China winning the war. Some of the major winners from the 10 percent import tax will be China’s producers.

When Trump started the war, he imposed heavy duties on the Chinese aluminium companies. However, he may have overlooked that some of the companies may get other benefits that the U.S. companies will never get. The Trump tariffs, the strict measures against Rusal, a major Russian producer of aluminium as well as a strike at Alcoa’s alumina and bauxite operations in Western Australia are set to disrupting the aluminium market.

Trade War In Favor Of China?

Recently, Trump decided to throw double tariffs on aluminium from Turkey. In the aftermath, the companies that were in fear for the aluminium deficit are now concerned regarding the risk of supply disruption.

Rusal, the company is responsible for the production of 1.87 million tonnes of aluminium and is a major supplier for not only the U.S. but also other countries in the world. This company is now concerned that it may have to stop the productions and pay tariffs, if the agreement with the U.S. sanctions is not reached. Trump has given Rusal’s customers in the U.S. the deadline of October 23 to end their relations. If the deal is not reached or get extended, the aluminium market will face severe disruptions. On the other hand, China’s aluminium producers have some spare capacity and they are able to produce aluminium to use in beverage cans and motor cars. Reuters reported that China’s aluminium output ramped up in June to 2.83 million, increased by 1.6 percent compared to production in May. Thus, the China-U.S. trade war is hurting the United States aluminium market than China.

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Pink Bollworm Attack: Maharashtra Farmers Stare At Missing 12 Lakh Bales

Maharashtra cotton farmers are likely to face loss; thanks to the attack of Pink Bollworm attack and lack of rain. Last year, they managed a crop size of 82 lakh bales, but this year, it will be a miracle if they reach 70 lakh bales. The harmful diseases such as Pink Bollworm has the ability to weaken the crop and restrict the plant growth up to 3-4 feet.

According to a survey conducted by Manish Daga, the director of Cotton Association of India (CAI), if farmers wait until third and fourth pickings, they could suffer a complete loss. Moreover, the survey suggested that the pink bollworm attack was witnessed in the last 15 days and it can cause damage to this year’s yield. The association has identified three major diseases that harm cotton crops: Pink Bollworm, White Burshi, and Thrisp. It has been observed that the plant height gets reduced to three to four feet with merely 15 flowers per plant due to these diseases.

Inadequate Rainfall Hampers Plant Growth

This year, rains have not been kind to Indian cotton farmers. The cotton plants need rainfall during their growth and the time is now, but the insufficient rain has already hampered this year’s cotton production. To add more troubles the attack of Pink Bollworm is reducing the yield further. Moreover, lack of irrigation systems made the condition worse for the Indian cotton farmers. As reported by Finance Express, Atul Ganatra, the President of CAI, stated that the Khandesh region in Maharashtra–the major cotton producing region–has detected all three major diseases including Pink Bollworm, White Burshi, and Thrisp. Moreover, due to non-irrigated areas sowing in June end, the cotton plants have become weak in absence of rain. Thus, it is possible that the overall revenue generation from the cotton industry will be less than the last year.

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Modi Stated India Can Save 12,000 Crore By Using Ethanol As Auto Fuel

The Modi Sarkar has reduced GST on ethanol and biodiesel from 18 percent to 15 and 12 percent respectively. The reduction on tax is the result of the statement of the Prime Minister, Narendra Modi regarding the use of ethanol as auto fuel.

This Friday, Modi stated that India will be able to save 12,000 crores if people opt for ethanol blending program over the next four years. He spoke during the World Bio-fuel Day event held in New Delhi that India is targeting about 10 percent blending of fuel with ethanol by the end of 2022. This is likely to reduce India’s import bill, which is estimated to increase 24 percent from $88 billion to $109 billion, considering the global oil prices $65 per barrel.

Ethanol To Reduce Crude Oil Consumption

It is expected that the country will have 12 bio-fuel refineries and those will be owned by state-run companies including HPCL, IOCL, MRPL, Numaligarh refinery, and BPCL. In addition, the Indian government has planned to blend 5 percent biofuel by the end of 2030. As a result, the government has reduced the GST on ethanol and biodiesel to 15 and 12 percent respectively.

As per reported by Financial Express, Modi stated that India is currently saving Rs. 4,000 crores in foreign exchange owing to the ethanol blending program, which was started during the Vajpayee government. However, the previous government negated it for too long. In March 2015, the Indian Prime Minister set the target of lowering dependence on oil by 10 percent by the end of 2022. Moreover, the Indian biofuel business is expected to reach Rs. 50,000 crores by 2022, according to the ministry of petroleum estimates. In fact, during today’s global trade war, increasing prices of crude oil, and instability in the global market, even a slight dependence from oil import will be beneficial for India.

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India’s Silver Jewellery Losing Its Charm As Key Buyers Show No Interest

India’s silver is losing its price as the foreign buyers from the Middle East and the U.S. are not eager to invest. Analysts stated that the prices of silver have affected the overall demand in the global market. Moreover, there are fat chances that the price will not increase, but in the long run, the prices will be appreciated as the metal is strong.    

The silver exporters are looking for the emerging markets as the Commonwealth of Independent States (CIS) countries to market silver jewelry. Exports of silver jewelry for the month April-June 2018 are pegged at about $120 million, decreasing by 39 percent from $1,722 million in the corresponding time of last fiscal. Moreover, the silver prices are slipped from Rs. 38,925 to Rs. 37,780 per kg in the last six months. It is said that the metal is undervalued but it may not fall below Rs. 37,000 mark.    

Demand For Silver Is Not Picking Up   

The major reason behind the downfall of silver prices is the decrease in demand in international as well as domestic market. The Economic Times reported that usually, the country imports around 7,500 tonnes of silver. Every quarter, the import of silver is around 1,800 tonnes. However, in the last few months, the international demand has decreased significantly, resulting in the downfall of the metal prices. In April-June the demand for silver is decreased by 35 to 40 percent. Silver, as well as gold, are suffering the downfall owing to the market uncertainty. However, there is a slight hope for silver. If the Indian monsoon performs well this year, the rural demand for silver may increase and the market will witness growth in demand and thus prices. If the silver demand increases During Diwali and Dussehra festivals, the prices may recover after all.   

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China-America Trade War May Bring India Cheaper Oil

The trade war between China and the United States is not on its way to slowing down. The worlds two most powerful economies are busy slapping tariffs on each other. However, the trade war may get India a cheaper supplier of crude oil.   

China is the biggest buyer of gas and crude oil in Asia, but its biggest trading house has seized to buy crude from the U.S. and Bejing wants to impose tariffs on the U.S. crude and liquified natural gas. This war has resulted into buying Iranian oil, keeping Tehran still in play in the global market. Moreover, it has a significant impact on Iran’s sanctions on India’s oil sourcing. According to vessel-tracking and port data compiled by Thomson Reuters Oil Research and Forecasts, India has booked almost 10 billion barrels, 319,000 barrels per day (bpd) of crude oil from the U.S.   

India Enjoys The Bargaining   

The demand for 319,000 bpd is just a glance at the amount of India’s import from the U.S. In fact, this demand is almost triple the 119,000 bpd India’s import. This will be fulfilled over the course of seven months. The industry player estimate that India may enjoy this bargain. The country can use this to argue with the U.S. to waiver sanctions as India will be the biggest buyer-after South Korea-of the American’s oil.    

As reported by Times of India, India is the world’s third-largest crude oil importer. If India cuts the deals with Iran, the U.S. will be the major beneficiary as it will put America and Saudi Arabia in a position of power against Tehran. Thus, the increasing tension is nothing but helpful for India to get best oil deal from the U.S. Besides the benefits of being side by side with America, India may get cheaper oil supplies from either Iran or the U.S.   

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China Tariffs Will Affect Next Natural Gas Shipments Of US

The global trade war took another turn when China decided to incur the U.S. with tariffs, creating an uncertainty for multibillion-dollar facilities that deal with natural gas shipment.     

By the end of 2019, about six facilities in the U.S. are expected to be exporting liquified natural gas. During the same period, several companies have to decide whether they want to continue the wave of American LNG export. In addition, several of these projects deal with Chinese buyers, which is expected to surpass Japan, the largest consumer of natural gas in the world. However, if China imposes a 25 percent tariff on the U.S. LNG, it will complicate financing for some of these projects. Even though these tariffs have to remain in place for several months, the threat comes at the worst timing as there is not enough capital to finance multiple projects.     

China’s Targeting Trump’s Agenda    

Several industry watchers are sure that several terminals are already at the risk of shelved owing to lack of money to finance them. Moreover, there are some the U.S. projects that are seeking capital and most of which are built on the U.S. Gulf Coast.      

As reported by CNBC, the energy analysts at Raymond James, Pavel Molchanov, stated that even though the politics in China is ignored, there are innumerous early-stage projects, and sadly, most of them will never be built regardless what China decides. The prime reason behind this issue is the scale of demand is excessive, too many early-stage players want to develop an LNG plant.     

China has not disclosed the details of these tariffs and not yet made clear how these tariffs affect contracts. On the other hand, although China cannot win the game of tariffs with the U.S., they can target the U.S President, Donald Trump’s agenda to bring back the U.S. at the negotiating table

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Surging Dollar Prices, Trade Dispute Damaging Zinc Prices https://ift.tt/2NWyyAE

The global trade war has another metal victim: zinc. It has dropped to a multi-month low and the sole reason is the increasing trade tension across the world. The war between the world’s top two economies, fear of strong glut, and increasing value of the dollar have resulted in the drop in the zinc prices. In addition, on the London Metal Exchange (LME), zinc is the worst performing non-ferrous metal. Indian prices are also registered new low. Thus, investors are in fear that the increasing global tension will catastrophically damage the global economic growth and as a result the global demand for the metal.

Strong Dollar And Trade War Bringing Down The Zinc Prices

U.S. and China are slapping tariffs on each other’s imports which has roiled the global economy and commodity market. This situation is likely to get worse unless China takes some changes in its subsidies plans for high-end industries and intellectual properties practices. China is a major producer and consumer of zinc. The slow economic growth in China, prevailing trade tensions have reduced the market value of the metal. Last year, China produced about 5 million Megatonne of zinc, and it consumed about half of the global consumption. In addition, Money Control reported that the zinc inventories in Shanghai and LME warehouses are also reducing, falling more than 45 percent since 2017.

The reducing zinc prices are also because of a strong dollar. The surge in dollar prices has made dollar-dominated metals more expensive for buyers. Since, the U.S. President, Donald Trump started the trade war by imposing tariffs on import, the U.S. greenback has risen more than 7 percent. Moreover, the recent decisions taken by the U.S. government are further boosting the dollar value, making zinc prices lesser than ever. Looking ahead, if the trade war continues between the two leading counties of the world, the impact on zinc prices will be dangerous, reducing its global demand.

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US Ports Will Take First Blow Owing To Trump’s Trade War https://ift.tt/2v3ocrM

U.S. ports that are used to handle billions and billions of dollars trading business over the year are now on the verge of becoming the first victims of the global trade war started by the country’s President Donald Trump. It all started when the U.S. ditched the nuclear deal with Iran and decided to reimpose sanctions on various countries. Now, that decision has come back to bite the economy of the U.S. as the port managers are bracing themselves for the multiple canceled shipments and lost jobs. The White House has threatened to impose higher duties on $200 billion Chinese good and this will negatively affect the economy of the country as well as on the jobs of port workers.

The Busiest Gateway Will Feel The Pain First

The port of Los Angeles and Long Beach are the busiest trading ports of the U.S. and thus will be the first ones to feel the pain of global trade war. In 2017, Southern California port handled $173 billion in Chinese import, which is about a third of the total goods shipped from China to the United States. Furthermore, more than 300 official port will face problems if the widening of the tariff is continued any further as more than $500 billion worth of goods arrived from China last year. In addition, more than $130 billions of goods flow through these ports to China every year, producing trade deficit of more than $300 billion.

CNBC reported that several economists are considering that Trump underestimated and misread the impact of global trade imbalance and he thought it will not hurt the U.S. economy. However, the trade deficit with China has turned into an eye-opener for Trump and his supporters. In addition, Trump declared that he is willing to slap tariffs on Chinese-made product shipped to the U.S. This may bring layoffs and would be detrimental to jobs at the port and to the state and national economy.

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Iran Or US, India Must Be Ready To Pick Its Partner https://ift.tt/2LK34QT

India must not waste any time and be ready with Iran plan, or else it may find itself in a tough spot as the sanctions reimposed by the U.S. will kick in in November. The U.S. president Donald Trump intends to implement sanctions on Tehran, Iran, who is the biggest supplier of crude oil for India. The deal is of the highest importance for India as in one hand it will get cheap crude oil from Iran and patterning with the U.S., the biggest economy in the world has its own benefits. In addition, Iran is the third largest supplier of oil to India. In 2017-18, India imported about 22 million tonnes of oil from Iran, thus, the advantages of dealing with Iran cannot be overlooked. Dealing with Iran’s supply is suitable for Indian refineries, especially, Petrochemicals Ltd. And Mangalore Refinery. The sudden closing of the tap will be catastrophic for them. Clearly, India needs a plan.

Will The U.S. Be A Sane Choice Than Iran?

Recently, the U.S. sent a team to explain in detail the conditions of the sanction plan. The India government was told that it will impose a sanction in two stages, the first will kick in August and second in November. It’s the second stage that has piqued global attention as it contains deals with petroleum trade. However, no one knows about the specifics of the sanction. However, the U.S. clearly stated that India must slow down its import from Tehran. It’s not the first time that Iran is under threat regarding its importers. However, India must not wait any longer and come to a decision as the U.S. is under the government of Trump, who is well known for his eccentric decisions and unpredictable, aggressive behavior. Recently, The Economic Times reported that The Indian financial sector has already begun to efforts to shut out its exposure to Iran and safeguard transactions. So, it’s clear that India has to make quick political plans to deal with the sanctions as it can no longer partner up with China and Russia.

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