Equities, commodities climb after China announces stimulus
After China announced stimulus measures for its economy, a widely-followed global stock index reached a new record high. Copper prices also hit their highest level in 10 week on Tuesday. Mining stocks drove the Dow and S&P 500 to record-breaking closing highs. The Chinese yuan reached a 16-month-high against the U.S. Dollar, and oil prices rose to a 3-week-high on the news that China was the world's largest crude importer. Pan Gongsheng, Governor of the People's Bank of China, announced plans to reduce borrowing costs and inject additional funds into China's economy as well as ease mortgage repayment burdens for households.
Andy Home: Nickel market is no longer worried about Russian supply
The market has shrugged off the suggestion by Russian President Vladimir Putin that Moscow could consider capping nickel exports in retaliation to Western sanctions. The London Metal Exchange's (LME) 3-month price managed to make a slight bounce above the $16,000 per metric ton mark, but momentum is fading. It's a long way from the first Russian invasion of Ukraine in February 2022. The fear that sanctions could be imposed on metal produced by Russian giant Norilsk Nickel sparked a massive rally in 2022, which culminated in a complete meltdown of LME nickel. Two and a half year is a very long time on the nickel market.
Andy Home: Zinc concentrations are squeezed but metal is not in short supply
The global zinc mine production is continuing to decline and raw material shortages are now beginning to affect China, in particular. The 14 Chinese smelters that account for 70% of China's refined Zinc production agreed to postpone new capacity and adjust maintenance plans in order to maintain operating margins. The impact of this on production rates is yet to be determined. These announcements are more likely to be a price signal rather than a concrete action plan. Zinc futures contracts on the Shanghai Futures Exchange (ShFE), the largest contract, rose by 10% in response to the news.
Andy Home: Zinc concentrations are squeezed but metal is not in short supply
The global zinc mine production is continuing to decline and raw materials are now beginning to squeeze, especially in China. In an effort to maintain operating margins, a group of 14 Chinese zinc smelters that accounts for 70% of the country’s refined zinc production agreed to postpone new capacity and adjust maintenance plans earlier this month. The impact of this on production rates is yet to be determined. These announcements are more likely to be a price signal rather than a concrete action plan. Zinc futures contracts on the Shanghai Futures Exchange (ShFE), the largest contract, rose by 10% in response to the news.
BHP strike in Chile enters its third day, boosting global copper price
The strike at BHP's massive Escondida Mine in Chile, which entered its third full day on Thursday boosted global copper prices. A continuing standoff between BHP and the workers is spreading concerns about the supply of red metal. BHP and the union of workers held an initial meeting Wednesday to try to defuse a strike. However, they failed to reach a breakthrough which would have allowed the restart of formal negotiations. The miners are now digging in to demand a greater share of profits. The benchmark three-month copper price on the London Metal Exchange rose by over 2.2% on Thursday to $9,169 a metric ton.
Recession risk roils markets, but it's not alarming yet
The disappointing U.S. employment data has shaken the confidence that there will be a soft landing in the world's biggest economy. Global equity markets have tumbled and bets for interest rate reductions are surging. Investors abandoning popular carry trades in yen have played a major role in the recent selloff. This has complicated the message that asset prices are sending about the economy. Anyone can guess the likelihood of a U.S. recession. Goldman Sachs increased its odds of an American recession to 25%. JPMorgan believes that a recession could start before the end of the year. In July, the U.S.
Glencore, Vedanta Struggle Over Zambia Copper Mines Cuts
Glencore and Vedanta Resources' plans to slash costs at unprofitable copper mines in Zambia are facing strong resistance from the government and trade unions. The Confederation of Trade Unions of Zambia President Joe Kamutumwa said on Wednesday that Mopani Copper Mines, owned by Glencore, should be forced to surrender its mines to the government if the company pursues a plan to lay off workers. The union echoed comments by President Edgar Lungu who warned last week that he would not allow Glencore to lay off workers at Mopani as part of its plan to suspend production for 18 months at the mine.
Commodity Surge Boosts World Equities; Dollar Falls
Major world stock markets were poised for their biggest weekly advance since 2011 on Friday, as greater investor appetite for riskier assets propelled gains in equities and a surge in commodities and crude oil prices. Declines in the dollar, a bullish oil forecast and giant miner Glencore's pledge Friday to slash world zinc output by 4 percent have lifted beaten-down commodities, with Brent crude oil headed for its biggest weekly rise since March 2009. The U.S. dollar hit a three-week low against the euro as minutes from the Federal Reserve's September policy meeting showed the Fed in no rush to raise interest rates.
Oil Leads Market Rout as Asian Shares Tumble
Commodities pulled down by tumbling Asian equities; Oil, coal, copper at 2009 financial crisis levels. Commodity markets lurched lower on Monday after Chinese equities resumed their slide, fuelling worries of a hard landing in the world's biggest consumer of raw materials. Crude oil tumbled to its weakest levels in 6-1/2 years while industrial metals prices also hit multi-year lows amid a broad sell-off of risky assets. Investors took flight after the Chinese stock market posted its biggest one-day loss since the height of the global financial crisis in 2007, plunging more than 8 percent.
Baltic Exchange Eyes Move into Commodities
Baltex reaches breakeven level since start of 2015; Baltic previously faced broker opposition over platform. London's Baltic Exchange is studying a potential foray into commodities and is open to proposals on tie-ups as other exchanges attempt to boost volumes, its chief executive said. Baltex, the Baltic's digital shipping platform, was launched in 2011 as the first central electronic marketplace for freight forward agreements (FFAs), which allow investors to take positions on freight rates at a point in the future. Since the beginning of this year…
Marex Spectron Reportedly for Sale
Marex Spectron Group Ltd is up for sale, four years after the global energy and metals broker was formed from two different entities, four sources close to the company said. The firm, which is majority-owned by private equity investment firm JRJ Group, emerged in 2011 from the merger of metals dealer Marex Financial and energy broker Spectron Group. Sources said JRJ Group has considered selling Marex Spectron for some time. It has appointed an investment bank to follow the process, a source with direct knowledge of the matter said, but declined to name the bank.
Teck Ships 1st Zinc From Washington Mine After Restart
Canadian miner Teck Resources Ltd. said on Wednesday it has shipped its first zinc concentrate from the Pend Oreille mine in Washington state following the restart of the mine which was idled during the global economic crisis in 2009. The material will be delivered to British Colombia in Canada, a major hub for zinc production in North America. The mine is expected to produce 44,000 tonnes of zinc in concentrate annually. The mine was put on care and maintenance five years ago when prices were around $1,100 per tonne, below…
Glencore Seeks to Exit Aluminum Price-Fixing Case
Glencore Plc has asked a U.S. judge to dismiss it as a defendant from nationwide antitrust litigation over the alleged manipulation of aluminum prices. In a Monday night filing with the U.S. District Court in Manhattan, Glencore said it lacks minimal contacts with New York, Michigan and California, where the alleged violations took place, and does not even conduct any business in those states. Glencore said it is solely a Jersey holding company with offices in Baar, Switzerland, and as a result has never bought or sold physical aluminum, London Metal Exchange warrants or LME aluminum futures, and never owned or operated warehouses.
Aluminum Premiums; How High Can They Go?
Another quarter and another record premium level for Japanese aluminum buyers. The premium over the London Metal Exchange cash price for third-quarter shipments to Asia's largest importer seems to be settling around the $400 per tonne level, up from $365-370 in the current quarter. A year ago the premium was just $250 and until the third quarter of 2012, it had never been higher than $130. Japanese buyers, however, have little choice but to take the premium pain. Although still viewed as a benchmark for the whole of Asia, the Japanese quarterly premium no longer has anything to do with regional supply-demand nuances.
Ukraine Crisis Pushes up Gold, Oil, Grains
Gold, crude oil and grains surged on Monday while industrial metals slid as investors reacted to escalating tensions between Moscow and Kiev after the Russian military tightened its grip on Ukraine's Crimea region. Concern about supplies pushed up crude oil prices by more than $2 a barrel and wheat and corn by 4-6 percent. Safe-haven buying sent gold prices to four-month highs. Base metals such as copper fell along with shares as investors ditched higher-risk assets and due to worries that a conflict could damage global growth.
