2nd August 2022: Yesterday closed orders given +8.684%; China on the brink of war; Production cut in China; Europe’s gas storage facilities are 69% full
Symbol: GOOGL; Type: BUY; Open Price: 105.99; Close Price: 116.07; Profit: +8.684%.
China on the brink of war
The planned trip to Taiwan by the Speaker of the House of Representatives of the United States, Nancy Pelosi, has prompted China to prepare for a robust response. About Taiwan, which China considers to be its territory, Chinese President Xi Jinping said last week to the leader of the United States, Joe Biden, that “anyone who plays with fire would be scorched.” According to the statement made by China’s foreign ministry on Monday, the People’s Liberation Army ‘won’t sit quietly by’ if Pelosi visits Taiwan. To break the impasse over Taiwan, China would have to send an unusually large number of flights or an unusually large number of aircraft all at once. The publication affiliated with China’s Communist Party, the Global Times, has proposed that China should carry out a military flight straight over Taiwan.
A deep or protracted sortie over the median line of the Taiwan Strait would strain Taiwan’s military since it would require its planes to remain in the air for a longer period. China is Taiwan’s most important trading partner, which China may leverage to its advantage. Sanctions, including prohibitions on going to China’s mainland, have already been imposed by Beijing on several Taiwanese politicians. Additionally, China can potentially obstruct shipping in the Taiwan Strait, a significant global commerce route. That would imply recalling China’s Ambassador to the United States, Qin Gang, who just started his job a year ago.
Other military options are available to Beijing besides staging a potentially disastrous assault across the Taiwan Strait. It is possible for them to take control of one of the smaller outlying islands that are now held by the government in Taipei. In the early stages of the Cold War, the United States provided significant military backing for the People’s Liberation Army of China’s bombing of Taiwan’s Kinmen Islands. The United States would consider any such seizure of Taiwanese land to be a significant escalation in the conflict.
Production cut in China
China’s steel sector is entering a new period of uncertainty as a deepening property crisis threatens demand, and Beijing’s construction-led development model seems increasingly unworkable. This new era comes at a time when China’s property crisis is also becoming worse. In a pressure that is certain to endure for five years, Li Ganpo, founder and chairman of Hebei Jingye Steel Group, warned that one-third of China’s steel mills might go bankrupt.
According to Goldman Sachs Group Inc., demand is expected to be 5% lower this year. According to a report published by Liberum Capital on Tuesday, China’s steel sector is experiencing “severe contraction on all fronts.” Iron ore, a crucial component in steel production, has experienced a decline in demand.
According to executives, local governments are applying pressure on mills to maintain activity levels. It’s possible that steel manufacturers won’t have much wiggle room when it comes to cutting production.
Europe’s gas storage facilities are 69% full
The capacity of gas storage facilities in Europe has reached around 69 percent. This summer, Russia’s European exports hit their lowest levels in almost a decade, with the country providing less than a third of the typical amount. As a result of the restrictions, prices have risen to their highest point since the beginning of March, which was during the first few weeks of Russia’s conflict in Ukraine. The skyrocketing energy cost has fueled inflation and contributed to the risk that certain regions of Europe will enter a recession. Gas storage facilities in Europe are around 69 percent full, and the rate at which they are being refilled is average.
The volumes of Russian supplies in the next weeks will determine whether or not there will be enough time to stockpile sufficient gasoline for the upcoming cold season. Moscow has asserted that international sanctions are to blame for problems with equipment at the Nord Stream pipeline’s entry point in Russia and delays in the pipeline’s maintenance.
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