Author: Fiona Craig

Global crude steel production edged lower in July as declining output in China outweighed continued expansion across several other major steel-producing economies, according to Morgan Stanley.

Worldwide production decreased 0.3% year-over-year during July, leaving cumulative output 0.6% below the previous year’s level.

China was responsible for the overall contraction, with production falling 3.6% from July last year and 3.1% year-to-date. Excluding China, the picture was considerably stronger, with global output increasing 3.4% year-over-year and 2.4% since the beginning of the year.

US, India and Turkey Lead Growth Outside China

Production trends remained positive across a number of important steel markets.

India increased crude steel output by 1.9% year-over-year in July, taking year-to-date growth to 6.1%. US production climbed 4.4% from a year earlier and was 6.0% higher for the year so far.

Turkey delivered one of the strongest performances, with output rising 7.0% year-over-year and 7.9% year-to-date. South Korea also recorded solid growth of 6.4% and 2.7%, respectively.

Russia’s production recovered 3.3% compared with July last year, although output remained down 6.1% year-to-date. Japan recorded a modest 0.4% annual increase, while Brazil’s production was virtually unchanged with growth of just 0.1%.

Further Chinese Production Decline Indicated in August

China’s steel industry appears to have remained under pressure into August.

The China Iron and Steel Association’s month-to-date survey points to a 4.9% year-over-year reduction in output from Chinese mills, extending the weakness seen during July.

Despite lower domestic production, Chinese exports remain substantial. As of July, steel shipments from the country were running at an annualised pace of approximately 116 million tonnes.

The combination of weaker Chinese production and elevated export volumes remains an important factor for international steel markets and pricing.

European Steelmakers Report Improving Output

European production strengthened in July, with crude steel output across the EU27 increasing 3.8% year-over-year and moving 0.4% higher on a year-to-date basis.

Including the UK, European production advanced 3.5% from July last year, although cumulative output was unchanged.

Germany recorded growth of 3.0% year-over-year and a stronger 8.1% increase year-to-date. Italy’s production rose 4.2% annually and 3.6% for the year so far.

Elsewhere, Finland increased output by 13.0% from a year earlier, Sweden by 10.1% and Austria by 3.3%. France delivered a 12.5% year-over-year rebound, although its cumulative production remained 1.3% lower.

Several markets continued to struggle. Year-to-date steel output was down 13.8% in Spain, 5.3% in the Netherlands, 6.1% in Poland and 18.0% in the UK.

EU Hot-Rolled Coil Spreads Move Well Above Historical Average

Improving conditions in parts of the European steel industry have been accompanied by stronger hot-rolled coil spreads.

EU HRC spreads have climbed to $464 per tonne, significantly above their long-term average of approximately $320 per tonne.

The increase provides a more supportive margin backdrop for European steelmakers, even as the global production picture remains divided between falling Chinese output and stronger activity across many markets outside China.

Gold extended its rally on Monday, climbing beyond $4,650 an ounce as concerns surrounding U.S. government finances and Treasury efforts to influence longer-term borrowing costs continued to encourage demand for bullion.

At 02:42 ET (06:42 GMT), XAU/USD gained 1% to $4,650.63 an ounce, while Gold Futures advanced 0.6% to $4,706.89. XAG/USD edged 0.2% higher to $69.15 an ounce and XPT/USD rose 0.6% to $1,892.51. The US Dollar Index was also up 0.2% at 98.88.

Treasury Measures Strengthen the “debasement trade”

Gold entered the week with considerable momentum after gaining more than 5% last week, marking its third consecutive weekly advance. Monday’s move followed a 1.9% increase on Friday and kept bullion close to its strongest level in three months.

The latest phase of the rally has been linked closely to the U.S. Treasury’s unexpected decision to increase purchases of longer-maturity government securities. The intervention initially pushed bond yields and the dollar lower, strengthening demand for tangible assets as investors reassessed the longer-term purchasing power of traditional currencies.

Treasury Secretary Scott Bessent has indicated that the government could expand its buyback programme further. He also said the administration intends to introduce a fiscal initiative aimed at tackling elevated government borrowing costs.

For markets, the issue extends beyond the immediate impact on yields. Greater Treasury intervention has prompted questions over whether policymakers could increasingly seek to influence borrowing costs rather than allowing bond-market forces to determine them independently.

U.S. Fiscal Position Adds to Gold’s Appeal

ANZ analysts said Treasury intervention has intensified investor concerns about the sustainability of the U.S. fiscal position.

They noted that gold’s advance beyond $4,500 has been supported by expectations that the government will continue trying to contain longer-term yields. At the same time, pressure on the dollar has encouraged investors to increase allocations to bullion.

The fiscal backdrop has attracted greater attention after U.S. government debt exceeded $40 trillion for the first time, while the dollar recently fell to its weakest level in more than three months.

These developments have reinforced the appeal of assets perceived as alternatives to conventional currencies and government securities.

ETF Inflows Signal Broader Investor Demand

Institutional and investment demand for gold has strengthened alongside the price rally.

According to ANZ analysts, gold-backed ETFs recorded their largest single-day inflow since September 2025 and have now attracted net inflows for five consecutive weeks.

The technical backdrop has also improved. Gold has moved above its 200-day moving average around $4,513, an indicator commonly followed by traders when assessing longer-term market direction.

If the upward momentum persists, the $4,700-an-ounce region represents the next significant technical level.

Central Banks and Geopolitical Risks Add Support

Gold’s recovery is also benefiting from persistent geopolitical uncertainty, which continues to encourage demand for assets regarded as stores of value.

Bullion has moved comfortably above the $4,000 level that provided an important support zone during the previous correction. Continued central-bank purchases and renewed ETF demand have helped reinforce the move higher.

ANZ said investor positioning increasingly points towards diversification as confidence in U.S. assets is challenged by elevated government debt, fiscal uncertainty and questions surrounding the future direction of economic policy.

The World Gold Council has similarly highlighted central-bank purchases as an important pillar of gold demand while inflationary and geopolitical risks remain elevated.

Oil prices fell on Monday as evidence of improving tanker movements through the Strait of Hormuz provided some relief from fears of prolonged supply disruption, with Iran reportedly allowing a number of Iraqi oil vessels to pass through the critical shipping route.

The New York Post separately reported that shipping activity through the strait had increased substantially over the past fortnight. Nevertheless, traffic continues to operate at only a fraction of the levels seen before the conflict.

The pullback follows strong gains for crude during the previous week. Although improved tanker movements have temporarily eased supply concerns, the prospect of Washington imposing even tougher economic sanctions on Tehran means the risk of further disruption remains elevated.

At 04:32 ET (08:32 GMT), Brent Oil Futures dropped 1.3% to $93.16 a barrel, while WTI/USD declined 1.9% to $85.42. Both benchmarks nevertheless remained more than 5% higher over the previous two weeks.

U.S. Sanctions Threaten to Reignite Oil Market Volatility

The United States is preparing to unveil what officials have described as the toughest sanctions imposed on Iran to date.

U.S. Treasury Secretary Scott Bessent said in an opinion piece for the Financial Times that an “economic D-Day” was approaching for Iran, adding to a series of warnings from Washington about increasing economic pressure on Tehran.

Bessent is expected to provide details of the measures during a press conference at 14:00 ET (18:00 GMT) on Monday.

The planned sanctions come as the confrontation surrounding the Strait of Hormuz remains unresolved, leaving energy markets vulnerable to further geopolitical escalation.

Tehran Warns It Could Stop Persian Gulf Oil Exports

Iran has responded to Washington’s planned measures with renewed threats against regional energy flows.

Mohsen Rezaee, Secretary of Iran’s National Security Council, warned that “not a single drop of oil will be exported” through Hormuz or “anywhere in the Persian Gulf” if the economic conflict continues.

Iranian officials have also warned neighbouring Gulf states against cooperating with the United States.

Such threats keep the possibility of another sharp increase in crude prices firmly in focus, despite Monday’s decline.

Iraqi Tankers Receive Permission to Navigate Hormuz

Iranian media reported over the weekend that Tehran had approved passage through Hormuz for some Iraqi oil tankers following repeated requests from Baghdad.

Details surrounding the number of vessels and the amount of crude involved were not immediately available. Even so, the decision indicates that limited commercial traffic is taking place after the strait had effectively been closed following the start of U.S. hostilities in February.

Shipping activity had slowed dramatically again last week as the U.S.-Iran confrontation continued without any meaningful breakthrough.

Before the conflict, approximately one-fifth of global oil supplies passed through the Strait of Hormuz, making developments surrounding the waterway particularly important for crude prices and the wider global economy.

Red Sea Risks Add Another Layer of Supply Uncertainty

Concerns are no longer confined to the Persian Gulf.

Yemen’s Iran-backed Houthi Group has announced a naval blockade targeting Saudi Arabia, raising the possibility that disruption could spread towards the Red Sea.

Any simultaneous deterioration in shipping conditions across Hormuz and the Red Sea could create substantial additional risks for global energy flows.

While Monday’s resumption of some tanker movements has offered temporary relief, the combination of tougher U.S. sanctions, Iranian export threats and widening regional tensions means the outlook for oil remains highly sensitive to geopolitical developments.

Bitcoin (COIN:BTCUSD) remained firmly above $77,000 on Monday as optimism surrounding possible U.S. cryptocurrency regulation and expectations for more supportive financial conditions continued to underpin digital assets.

Bitcoin advanced 1.3% to $77,091.1 by 01:47 ET (05:47 GMT), having recently traded above $79,000 during a sharp recovery.

Other major cryptocurrencies also gained, although prices generally remained below their weekend peaks. At the same time, uncertainty surrounding Iran added an element of caution ahead of Washington’s expected announcement of its toughest sanctions against Tehran so far.

Regulatory Optimism Helps Bitcoin Approach $80,000

Renewed enthusiasm for Bitcoin followed comments from U.S. President Donald Trump last week calling on lawmakers to approve a fair version of the Clarity Act.

The legislation has been held up in Congress for more than a year and is intended to provide a broader regulatory structure for the U.S. cryptocurrency industry.

However, lawmakers remain divided over key provisions, including whether certain crypto assets should be treated as securities or commodities and how yields paid on stablecoins should be regulated.

Another source of disagreement involves proposals to restrict cryptocurrency trading by lawmakers and government officials, particularly following controversy surrounding Trump’s substantial profits from the industry during his presidency.

Despite the president’s intervention, the timetable for turning the Clarity Act into law remains uncertain.

Treasury Buybacks Add to Risk Appetite

Expectations of increased market liquidity have provided another source of support for cryptocurrencies.

The U.S. Treasury indicated last week that it plans to double buybacks of longer-dated securities as part of efforts to bring bond yields lower.

Greater liquidity and declining yields can increase investor appetite for higher-risk assets, helping explain the renewed interest in cryptocurrencies. Gold has also benefited from similar expectations.

The theme is commonly referred to as the “debasement trade,” reflecting concerns that larger U.S. fiscal deficits could weaken the dollar and encourage investors to seek alternative stores of value.

Bitcoin is frequently included in that category, although its substantially higher volatility means many investors continue to regard gold as the more defensive alternative.

Major Cryptocurrencies Join Bitcoin’s Advance

Positive sentiment spread across the broader digital asset market on Monday.

Ether climbed 2.7% to $2,457.34, while XRP advanced 2.4% to $1.4784.

Solana, Cardano and BNB each gained more than 2%, extending the recovery across major altcoins.

Memecoins also moved higher, with Dogecoin rising 2.4% and $TRUMP gaining 0.5%.

Bitcoin’s next moves are likely to remain sensitive to developments surrounding U.S. cryptocurrency legislation, financial-market liquidity and geopolitical tensions as traders assess whether the latest recovery can develop into another challenge of the $80,000 level.

European natural gas prices edged lower on Monday as traders took profits following a 7% weekly advance that had pushed the market to its highest levels since March. A modest retreat in crude oil prices also helped ease some of the immediate pressure across energy markets.

Benchmark Dutch front-month futures and comparable British wholesale gas contracts both declined by 0.8%, retreating slightly after a strong multi-week rally had lifted European gas markets to five-month highs.

Supply Risks Continue to Support Gas Prices

Despite Monday’s modest decline, the fundamental backdrop for European natural gas remains tight. Traders continue to monitor disruptions to Middle Eastern shipping alongside significant shortfalls in underground gas storage levels across Europe.

These supply concerns have helped underpin the recent rally and could keep the market sensitive to further geopolitical developments, particularly those affecting energy flows from the Persian Gulf.

Monday’s decline therefore represents only a limited reversal following the recent surge rather than a significant improvement in the underlying supply outlook.

Oil Pullback Provides Temporary Relief

A decline in global crude benchmarks helped create room for some profit-taking in natural gas markets.

Brent crude futures fell around 1.5% on Monday to trade near $91.80 a barrel, partially reversing the 5% increase recorded during the previous week.

The retreat provided temporary relief across energy markets, although traders remain alert to the possibility of renewed volatility as tensions between Washington and Tehran intensify.

Washington Threatens Iran With “the greatest financial offensive ever marshalled”

The United States has increased economic and diplomatic pressure on Iran, threatening Tehran with what it described as “the greatest financial offensive ever marshalled.”

Washington is expected to announce a broad package of economic sanctions on Monday designed to penalise foreign trading partners that continue doing business with Iran.

The prospect of tougher restrictions has increased uncertainty over energy supplies at a time when European gas markets are already dealing with constrained inventories and disruption to important shipping routes.

Iran Threatens to Halt Persian Gulf Energy Exports

Iranian officials responded to the planned sanctions by warning that the country could completely stop energy exports originating from the Persian Gulf if U.S. economic pressure continues.

Such an escalation could have significant implications for global oil and gas markets, potentially disrupting additional supplies and reversing Monday’s modest decline in energy prices.

Investors and energy traders are now awaiting a press conference from U.S. Treasury Secretary Scott Bessent scheduled for 2:00 p.m. ET, when further details on the scope and implementation of the new sanctions are expected.

Six European Union countries are calling for talks in September on creating an EU-wide mechanism to tax windfall profits earned by oil companies following the surge in energy prices caused by Iran’s blockade of the Strait of Hormuz.

Finance ministers from Germany, Spain, Portugal, Italy, Poland and Austria have written to Ireland, which currently holds the EU’s rotating presidency, requesting that the proposal be placed on the agenda for the next meeting of EU finance ministers in Dublin on September 18 and 19.

Ministers Point to Major Energy Supply Shock

The six governments argue that sharply higher energy prices are intensifying cost-of-living pressures across Europe and require a coordinated response at EU level.

“We are experiencing one of the biggest supply shocks in decades, and all over the world there is growing discontent about the rise in the cost of living,” the finance ministers wrote in the letter seen by Reuters.

They argued that measures introduced by individual governments have so far failed to provide a lasting solution to higher energy costs.

“Government measures taken so far have not been sufficient to reduce or stabilise prices for businesses and citizens on a permanent basis. This is why we need a common approach, one that ensures that those who are profiting from the crisis do their part to ease the burden on the general public,” they said.

Oil and Refined Fuel Prices Surge

Oil prices have risen approximately 25% from their levels when the U.S.-Israeli war with Iran began on February 28.

The impact has been even more pronounced across some refined petroleum products. European diesel prices have climbed by more than 70% since the conflict started, while gasoline prices have increased by around 20%.

The disruption to energy supplies through the Strait of Hormuz has intensified concerns over the financial burden on households and businesses while potentially generating substantially higher profits for parts of the oil industry.

Countries Seek EU-Wide Windfall Tax Framework

The six finance ministers want the EU to examine a common framework for taxing extraordinary profits, drawing on the experience of measures introduced during the 2022 energy crisis.

“To this end, we need to address the matter of high energy prices by discussing an EU-wide framework to tax windfall profits, taking into account lessons learned in 2022, this time with a more specific analysis of how the foreign profits of multinational oil companies can be included in a more targeted way,” the letter said.

The proposal would therefore go beyond examining profits generated domestically, with ministers seeking a more targeted approach to determining how overseas earnings from multinational oil groups could be incorporated.

Refinery Margins Also Under Scrutiny

The six countries are also seeking the rapid publication of findings from a European investigation into refining margins.

The ministers want greater clarity on whether refiners have benefited disproportionately from the recent surge in energy prices and whether current margins reflect underlying market conditions.

The issue is now expected to form part of the wider European debate over how governments should respond to the economic consequences of the energy supply shock while determining how much of the burden should be carried by companies benefiting from higher prices.