June 3rd Macroeconomic Index: China Suspends ECFA Tariff Concessions, Eurozone CPI Surprises Upward

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International Crude Price Trend and Exchange Rate of RMB to USD Trend

Domestic News

1. The Customs Tariff Commission of the State Council issued an announcement that from June 15, 134 tariff items such as lubricating oil and base oil originating in Taiwan will be imported

2. Tianqi Lithium: An important shareholding company signed a major contract

3. Minister Wang Wentao inspected Chery Ebro joint venture factory

4. China's first heavy-haul railway hydrogen refueling station was officially put into commercial operation

5. The sales volume of many domestic new energy vehicle companies in May was released

International News

1. The Emir of Qatar held talks with the President of the United Arab Emirates to discuss strengthening cooperation

2. OPEC+ will phase out the 2.2 million b/d voluntary production cuts by September next year

3. Two Israeli Ministers pressured the Prime Minister: If Netanyahu listens to the United States, we will withdraw from the government

4. BMO Capital Markets: The Bank of Canada's interest rate cut plan may be supported by the downward revision of the U.S. economic growth forecast

5.  The preliminary CPI in the euro zone in May accelerated to 2.6% year-on-year from 2.4% in April, exceeding market expectations of 2.5%

Domestic News

1. The Customs Tariff Commission of the State Council issued an announcement that from June 15, 134 tariff items such as lubricating oil and base oil originating in Taiwan will be imported

The Customs Tariff Commission of the State Council issued an announcement that from June 15, the application of the agreed tax rates of the Cross-Strait Economic Cooperation Framework Agreement (ECFA) will be suspended for 134 tariff items imported products such as lubricating oil base oils originating in Taiwan, and will be implemented in accordance with the current relevant regulations. The Ministry of Commerce said that at present, the relevant Departments are studying further measures such as suspending ECFA's tariff concessions for early harvest agriculture and fishery, machinery, auto parts, textiles and other products.

2. Tianqi Lithium: An important shareholding company signed a major contract

Tianqi Lithium announced on the evening of June 2 that on May 31, SQM, a shareholding company, announced that it had signed a "partnership agreement" with Codelco (Chilean National Copper Company). The agreement establishes the rights and obligations of the parties to enter into a partnership (either directly or through a subsidiary or representative office of the Joint Venture) for the exploitation and production of lithium, potassium and other products in the Atacama Salt Lake area currently leased by SQM from Corfo by merging Minera Tarar, a subsidiary of Codelco, into SQM Salar, a subsidiary of SQM (the "Joint Venture"). The Partnership Agreement consists of agreements and documents entered into prior to the completion of the transaction, including the Shareholders' Agreement, the agreement for the sale of SQM's assets in the Salar de Maricunga, certain industrial property licenses to be granted by SQM to the Joint Venture, the Articles of Association and Power of Attorney of the Joint Venture, and the manner in which SQM will inject into its subsidiary, SQM Salar, assets and contracts that are not currently part of SQM Salar's business. According to the Partnership Agreement disclosed by SQM, the formation of a joint venture is subject to a number of conditions precedent, including: (1) approval from antitrust authorities in Chile and abroad; (2) Completion of consultation procedures with indigenous communities, etc.

3. Minister Wang Wentao inspected Chery Ebro joint venture factory

Wang Wentao, Minister of Commerce, inspected Chery Ebro's joint venture factory in Barcelona, Spain. Chinese Ambassador to Spain Yao Jing participated in the investigation. Regarding the impact of the EU's anti-subsidy investigation on China's electric vehicles and the impact of Chinese auto companies on European cooperation, Wang Wentao pointed out that there is not only competition between China and Europe, but also cooperation, and it is the right way to get along with each other to expand cooperation and achieve win-win results in healthy competition. It is hoped that the EU will abandon protectionism and return to the right path of dialogue and cooperation. It is hoped that the enterprises of both sides will overcome difficulties and build the project into an important project of economic and trade cooperation between China and Spain and even China and Europe, and become a model for Chinese auto companies to carry out foreign cooperation and realize the deep integration of the industrial chain. (Ministry of Commerce)

4. China's first heavy-haul railway hydrogen refueling station was officially put into commercial operation

On June 2, China's first heavy-haul railway hydrogen refueling station, the National Energy Group Batuta Hydrogen Refueling Station, was officially put into commercial operation. Located in Ordos City, Inner Mongolia, the Batuta Hydrogen Refueling Station mainly provides hydrogen refueling services for domestic high-power hydrogen energy powered shunting locomotives and "hydrogen fuel cell + lithium battery power battery" zero-emission catenary operation vehicles. The station is equipped with the world's first low-temperature resistant automatic hydrogen filling robot and high-flow hydrogen refueling machine independently developed and manufactured by China, which can achieve all-weather continuous work and large-flow automatic hydrogen refueling under the condition of minus 25 degrees Celsius. The Batuta hydrogen refueling station has a hydrogen refueling capacity of 500kg per day, a hydrogen storage capacity of 800kg, and can fill up a hydrogen-powered locomotive in 30 minutes at the earliest, and the hydrogen fuel filled can provide the locomotive with a continuous operation of 8 hours, with an unladen cruising range of up to 800 kilometers, and is expected to reduce carbon dioxide emissions by about 800 tons per year.

5. The sales volume of many domestic new energy vehicle companies in May was released

Li Auto delivered 35,020 new cars in May, a year-on-year increase of 23.8%; NIO delivered 20,544 new vehicles, a year-on-year increase of 233.8% and a record high. ZEEKR delivered 18,616 new vehicles, an increase of 115% year-on-year and 16% month-on-month, reaching a new high; Leapmotor delivered 18,165 new vehicles; Xpeng delivered 10,146 new vehicles, up 35% year-on-year and 8% month-on-month; Nezha Automobile delivered 10,113 new vehicles. In terms of traditional automakers, SAIC Motor sold 81,000 new energy vehicles in May, and GAC Aion sold 40,073 vehicles, up 42.5% month-on-month. Navy delivered 14,371 vehicles.

International News

1. The Emir of Qatar held talks with the President of the United Arab Emirates to discuss strengthening cooperation

On June 2, local time, the Emir of Qatar (head of state) Tamim visited the United Arab Emirates and held talks with UAE President Mohammed bin Salman in Abu Dhabi, the capital of the United Arab Emirates. The two sides discussed issues such as enhancing bilateral relations and trade between the two countries and strengthening cooperation among Gulf countries. At the same time, the two sides also exchanged views on the Palestinian-Israeli conflict and other regional and international situations. The two leaders expressed their support for efforts to achieve a ceasefire in the Gaza Strip and a comprehensive and lasting peace based on the two-state solution, which will contribute to the security and stability of the region.

2. OPEC+ will phase out the 2.2 million b/d voluntary production cuts by September next year

On June 2, although OPEC+ has officially agreed to extend the "voluntary production cuts" until the end of 2024 at Sunday's conference, two OPEC sources said that OPEC+ will phase out the voluntary production cuts of 2.2 million barrels per day between October 2024 and September 2025. There are two "voluntary production cut agreements" within OPEC: one is a compensatory production cut (the top level of the chart: 2.2 million b/d mentioned above), which affects members who have not made voluntary cuts; The second category is the so-called compensatory cuts, which affect the few countries that have failed to implement the official cuts (Tier 2 is illustrated: this part of the capacity is about 1.66 million b/d), and the second cut agreement will remain in effect throughout 2025, the sources said.

3. Two Israeli Ministers pressured the Prime Minister: If Netanyahu listens to the United States, we will withdraw from the government

Two Israeli ministers threaten Netanyahu. Two far-right Israeli ministers threatened on June 1 that they would exit the Netanyahu government if Prime Minister Benjamin Netanyahu implemented the hostage release agreement outlined by US President Joe Biden, AFP reported on June 1. According to reports, Biden said on May 31 that Israel has proposed a new roadmap aimed at achieving a comprehensive ceasefire, including the release of hostages held in the Gaza Strip by Hamas militants. But Netanyahu's far-right coalition partners, Israeli National Security Minister Itamar Ben-Gvir and Finance Minister Bezalel Smotrih, said they would exit Netanyahu's government if the deal was implemented. Without Ben-Gvir and Smotrich's party, Netanyahu's coalition could lose its majority in the Knesset, the report said.

4. BMO Capital Markets: The Bank of Canada's interest rate cut plan may be supported by the downward revision of the U.S. economic growth forecast

BMO Capital Markets lowered its forecast for U.S. economic growth this year to 2.2% from 2.4%, adding that it provided another reason to push the Bank of Canada to cut interest rates on June 5. Chief economist Doug Porter noted that this is the first time in some time that the company has lowered its forecast for U.S. economic growth. Porter said the upside surprise in the U.S. "seems to be nearing the end," which could mean the Fed will cut interest rates in the second half of 2024. Porter said the weakness in the U.S. economy should ease the BoC's concerns about policy divergence with the Fed and potential weakness in the Canadian dollar.

5. The preliminary CPI in the euro zone in May accelerated to 2.6% year-on-year from 2.4% in April, exceeding market expectations of 2.5%

Eurozone preliminary CPI accelerated to 2.6% year-on-year in May from 2.4% in April, exceeding market expectations of 2.5%, the first rebound this year, which may prompt the ECB to cautiously consider the pace of future rate cuts, pause rate cuts in July, and slow the pace of rate cuts in the coming months. Core CPI rebounded to 2.9% in May from 2.7%, also exceeding market expectations.

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