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Copper rallys nears three-week high after Trump's rollback on automobiles
The copper price rose to its highest level in almost three weeks on Thursday after U.S. president Donald Trump granted temporary tariff exemptions to automakers. The price of three-month copper at the London Metal Exchange rose 0.5% to $9,635 per metric tonne by 1100 GMT. This was its highest price since February 14 after a 2.6% jump a day before. Trump granted a one-month exemption to the 25% tariffs on Canada and Mexico for the auto industry, which is heavily reliant on metals. Nitesh Sha, commodity strategist at WisdomTree, said: "It's helped most metals by giving them a bit more time before they can be used in vehicles without having to face immediate tariffs. It also shows some flexibility." The Shanghai Futures Exchange's most active copper contract gained 1.6%, to 78.310 yuan (10,813.31) per ton. This is the highest level in over two weeks. Investors adjusted their expectations about tariffs Trump could impose on the metal. Trump announced that 25% of aluminium and steel imported from March 12 will be subject to tariffs. He also ordered an investigation into the possibility of new tariffs for copper. Comex copper premium over LME copper has decreased to $872 per tonne from $984 per tonne on Wednesday. Investors have capped gains in industrial metals after digesting news from China's National People's Congress. The NPC led to pledges of more fiscal stimulus, and an emphasis on boosting consumers spending. However, the immediate steps announced to boost household demand were not well received by economists. Shah asked, "Now that we are aware of the tariffs in place against China, is it necessary to do more to balance that?" The dollar index fell to its lowest level in four months, making commodities priced in greenbacks cheaper for buyers with other currencies. LME aluminium rose 1.1%, to $2687 per ton. Zinc advanced 1.4%, to $2918.50. Lead was up 0.2%, at $2038.50. Nickel climbed by 1.1%, to $16,075; and tin increased 1.1%, to $32,065. (1 yuan = 7.2420)
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Russia-backed Indian refiner Nayara lines up $217.5 mln share buyback
Nayara Energy is a private Indian refiner that is majority owned by Russian companies, including Rosneft. It will offer a $217.5-million share buyback to assist its minority shareholders in leaving the delisted company. Rosneft, along with its partners, closed the acquisition of Nayara Energy (formerly known as Essar oil) for nearly $13 billion in 2017. Before the closing of the deal, Essar Oil shares were delisted. Nayara announced that it has decided to make an offer of 731 rupees each ($8.39), totaling 18.94 billion rupees, to over 200,000 minority investors who have not participated in previous delisting or exit offers. Nayara said that it hasn't finalised its buyback schedule. Rosneft owns 49.13% of Nayara Energy, and a similar share is held by Kesani Enterprises Co Ltd., a consortium led by Italy's Mareterra Group, and Russian investment group United Capital Partners. Nayara runs a Vadinar refinery that produces 400,000 barrels of fuel per day in Gujarat, a western state. It also operates 6,500 retail petrol stations across the country.
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Harbour Energy announces annual loss and urges UK windfall tax reform before 2030
Linda Cook, Harbour Energy's CEO, warned that if the UK's windfall taxes were not repealed by 2030 it would cause irreversible harm to the oil and gas industry in Britain. This was after the company's 2024 earnings saw a spike due to a tax increase. Harbour, Britain's largest North Sea oil and natural gas producer, has reported a $93 million loss for 2024 compared to a $45 million profit in 2023. Its tax bill is more than doubled, from $571 millions a year earlier, to $1.31 million. LSEG data shows that the pre-tax profit for 2017 was $1.22billion, which is below analysts' estimates of $2.03billion. Harbour's shares fell 14% to 184p by 1021 GMT. North Sea producers claim that the UK Energy Profit Levy, first introduced in 2022 after a spike in energy prices due to Russia's invasion in Ukraine, has hurt profits and created uncertainty for investments. Since the EPL was introduced, we have had an effective tax rate higher than 100% every year. Cook told a press conference that the EPL does not only tax windfall profits but all our profit. Britain announced on Wednesday that it plans to revamp the windfall tax system on oil and gas companies once the current levies expire in 2030. It also pledged to turn the North Sea into an energy hub. In October, the government increased the tax from 35% to 38%, bringing the headline rate for the sector up to 78%, making it one of the highest rates in the world. The government is asking for feedback from industry and other stakeholders until 28 May on possible policy options, including taxing "excess revenues". The consultation did not include any specific price thresholds. Cook stated, "We are eager to engage. Our message will be to work with Treasury to create a fair and stabile fiscal regime. We hope to have this in place by 2030." Harbour has said that despite the difficult environment, it does not plan to move its listing from Britain over to the United States. The group's revenues in 2024 will be around $6.22 Billion, up from $3.75 Billion the previous year. This is primarily due to higher production and post-hedging realized European natural gas prices. (Reporting and editing by Arunima in Bengaluru. Sumana and Emelia Sithole Matarise).
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Germany investigates Argus Media and S&P Global regarding fuel pricing concerns
After an initial investigation that raised concerns about pricing and competition, Germany's antitrust regulator said it was investigating whether the price information services provided on the wholesale fuel market by Argus and S&P Global had any impact. Prices are often linked to wholesale contracts, and this can have an indirect impact on retail prices. These are provided by agencies that report prices, such as S&P Global Commodity Insights and Argus media. They are based on transactions reported. Neither Argus Media nor S&P Global Commodity Insights, (Platts), were immediately available to comment. The cartel office urged for stronger regulations last month after a review of oil market prices revealed that they were based on limited information and susceptible to manipulation. In a Thursday statement, Andreas Mundt said, "We are seeing indications that there is a structural disruption in the wholesale fuel trade." The office will use the new powers it obtained in 2023 in order to investigate if there is a significant and continuing disruption of competition in individual markets or across all markets. If confirmed, it will address its causes. (Reporting from Riham Alkousaa, Ahmad Ghaddar and Miranda Murray in London)
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The bond market continues to sell off after a seismic shift in German spending
The world financial markets were still in a phase of radical readjustment on Thursday, after U.S. president Donald Trump's shaking up of the transatlantic relations prompted a half-a trillion-euro seismic shift in German infrastructure and defense spending. The European Central Bank is preparing to lower its interest rates later. Normaly, that would be enough to grab the attention of traders. This was the most important thing to remember, even though the global bond market is still in full swing. The 10-year German Bund yield has seen its largest increase since the 1990s. Bund yields are now up by 10 basis points to 2.88% after reaching as high as 2.929 on Wednesday. The euro rested at a four-month high, while European stocks took a break after a 10% rise this year. Jim Reid of Deutsche Bank said that the Bund yield spike on Wednesday was the largest move since German unification. This is a seismic change of epic proportions, and only nimble and fast-money investors have responded thus far. Overnight, the global implications became apparent. The yield on Japan's 10-year bond, a key factor in the cost of borrowing worldwide, has reached a 16-year high. In addition, the yield on U.S. Treasury notes 10-years also rose for a 3rd day despite increasing bets that Federal Reserve rates will continue to fall. The focus remained on the global economic war, after Tuesday's 25% tariffs on Mexican and Canadian imports were imposed along with new duties on Chinese products. On Wednesday, however, the White House announced that President Trump will exempt Mexican and Canadian automakers from their respective countries' tariffs for a month so long as they comply with existing free-trade rules. This had boosted U.S. stock prices and bolstered Asian markets. MSCI's broadest Asia-Pacific share index outside Japan rose 1.25% while Tokyo's Nikkei closed 0.8% higher. China's blue chip index grew by 1.4%, while Hong Kong's Hang Seng Index soared over 3% and reached its highest level in three years. The Hang Seng has risen by 20% this year and is the best-performing major stock market worldwide. RESPONSE OF THE ECB After the massive rearmament campaign in Germany and Europe, the ECB was expected to cut interest rates. The euro remained steady at $1.08, just below the four-month high it reached in early Asian trading. The euro is expected to rise by more than 4% in the coming week, which would be its best performance since March 2009. Julien Lafargue is the chief market strategist of Barclays Private Bank. He said that this (ECB meeting) could be very exciting given the current circumstances. Lafargue stated that the bank is close to reaching the "neutral" interest rate level after recent reductions. "Christine Lagarde, will be asked how the ECB plans to respond," Lafargue added, to the European increase in defense spending. Gold prices in commodities were unchanged at $2,921.39 an ounce, as traders awaited the U.S. Non-Farm Payrolls Report on Friday to get hints on the Federal Reserve’s policy direction. The oil prices have been trying to recover after stumbling this week. This was due to a bigger than expected increase in U.S. crude stock, OPEC+'s plans to boost output, and U.S. Tariffs on important oil supplies. Brent futures hovered near a three-year low reached on Wednesday.
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Palmettos end higher but caution over US tariffs cap gains
Malaysian palm futures rose Thursday, following the movement of rival oils in Dalian and Chicago, but caution about U.S. Tariffs limited gains. The benchmark contract for palm oil delivery in May on the Bursa Derivatives Market gained 63 ringgit (1.43%) to close at $4,480 ringgit (1,012.43) per metric ton. Anilkumar bagani, research head at Mumbai-based Sunvin Group, says that the market remains cautious due to confusion regarding U.S. Tariffs on Mexico and Canada. The direction of the soy oil, rapeseed, and canola futures are also unclear from the North American, European, and Asian markets. Chinese futures, however, were trading slightly higher this morning." Dalian's soyoil contract with the highest volume gained 0.92%. Palm oil prices in Dalian rose by 1.93% while soyoil prices at the Chicago Board of Trade increased by 0.37%. As palm oil competes to gain a share in the global vegetable oil market, it tracks price changes of competing edible oils. GAPKI (the Indonesia Palm Oil Association) released data on Thursday showing that Indonesia exported 29.54 millions metric tons of palm products in the last year. This represents an 8.3% decline on the previous year. A survey found that Malaysia's palm oil stocks in February were at their lowest level for nearly three years due to production disruptions from floods. A minister revealed that palm oil plantations have been infested in two states of Malaysia, the second largest producer in the world. The country is recovering from flooding which has disrupted its production. The price of oil rose after heavy selling drove the market down to its lowest level in many years. However, tariff uncertainty and an increasing supply outlook limited gains. Palm oil is a better option as a biodiesel feedstock because crude oil futures are more stable. The palm ringgit's trade currency, the U.S. Dollar, has slightly strengthened, making the commodity more expensive for buyers who hold foreign currencies.
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Infestations in two states of Malaysia have affected palm oil production
A minister revealed that palm oil plantations have been infested in two states of Malaysia, the second largest producer in the world. The country is recovering from flooding which has disrupted its production. Plantation and Commodities minister Johari Abdul-Ghani stated in a Wednesday parliamentary response, which was then published on Thursday, that leaf-eating pests have been reported to be attacking in Peninsular Malaysia. Johor, Perak and Perak account for 1.01 million of the 5.61 million acres of oil palm plantations. In recent months, floods have affected the country's output. The result is that it has hit a six-month low. Perak is experiencing an increase in oil palm crop threats. He said that to address the situation, a budget of 5 million Ringgit ($1.13million) was requested in order to intensify control efforts against this increasingly widespread outbreak. He added that the Malaysian Palm Oil Board is taking steps to control the infestation, including spraying biopesticides and planting beneficial plants. Reporting by Ashley Tang, Editing by Sonia Cheema. $1 = 4.4220 ringgit
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Trump tariffs on Mexican fuel oil will send it to Asia and Europe in March
Analysts and trade sources said that Mexican fuel oil cargoes will be heading to Asia and Europe in this month due to higher prices. Traders also plan on diversifying after U.S. president Donald Trump imposed import tariffs this week. Pemex, the state energy company in Mexico, usually sells its heavy crude oil and high-sulfur fuel oil to U.S. Gulf Coast refining plants for processing. However, a 25 percent tariff imposed by Washington on Mexican products on Tuesday has caused cargoes to be diverted. Data from shipping analysts Kpler and Vortexa and trade sources show that Mexico's HSFO exports to Asia and Europe will increase in March. This is the first time in at least five months. Kpler data from this week showed that two Mexican fuel oil cargoes, totaling 145,000 metric tonnes, or 920.750 barrels, will land in Singapore by late March. Meanwhile, Europe is expected to receive four shipments totaling 188,000 tons this month. The sources in the trade said that strong HSFO prices have drawn Mexican supplies. The spot prices of Singapore 380cst HSFO, the benchmark for the region, have risen in recent sessions. Meanwhile, refiners' profit margins on producing this fuel reached a rare premium last month. "Europe is the more natural outlet for Mexican oil." A fuel oil trader in Asia said that with the current strength of Singapore, perhaps more (oil can) flow here. HSFO is blended with marine fuel in bunker hubs like Singapore and Rotterdam. Pemex and its trading arm did not immediately respond to a comment request. "We could see fuel oil cargoes diverted to the U.S. East Coast and possibly increase European arrivals this month from Mexico," said Vortexa Analyst Xavier Tang. He added that the tariffs would likely displace a significant portion of U.S. HSFO imported from Mexico. Kpler data shows that the next Mexican fuel oil cargo to be shipped into the U.S. will be transported by Constellation, a tanker of Panamax size, and is expected to discharge in Houston on Friday. Traders said that the volume of goods diverted from Asia to Europe will depend on Washington's tariff adjustments or suspensions, and on emission tax in Europe. Another Asia-based fuel oil dealer said that if the U.S. tariff on imports remains at 25%, cargoes will likely head east. An European trader stated that traders would also take into account the EU emissions trading systems (ETS) tax in calculating arbitrage to Rotterdam. The trader said that "ETS prices are low, but if they rise, it will become more important in arbitrage calculations." A source at PMI Comercio Internacional (Pemex's international trading arm) said that it would be easier to sell HSFO in Asia than Europe. They declined to name the sources as they were not authorized to speak with media.
Russell: China's modest stimulus does not have a big impact on commodities.
Beijing has largely promised to continue the mild stimulus policy seen last year.
The news that the United States and Canada have agreed to a 5% economic growth goal and promised to increase consumption as well as deal with any negative effects of the trade war, were positive.
The parliament meeting of this week was also far short of any sort of announcements of stimuli that could have given commodity markets confidence that China, as the largest buyer of natural resources in the world, will see a meaningful increase in imports by 2025.
What's likely to happen is that the same trends as in 2024 will continue, with some commodities performing better than others, but overall, the story remains one of modest growth.
Data from the first half of this year suggests that China's imports are continuing on their recent path.
LSEG Oil Research estimates that China's crude oil imports in February were 10.75 million barrels a day (bpd), up from the January figure of 10.1 million bpd but down from customs figures of 11.04 millions bpd.
The government has encouraged consumers to switch to new energy vehicles, which can be either hybrids or full-electric vehicles.
The subsidy program for switching to NEVs as well as more efficient appliances in the home was expanded this year. This means that NEVs will continue to grow rapidly, and now account for more than half of all new car sales.
The news isn't good for those who hoped that the increased focus on consumer spending would lead to a stronger demand for steel.
In a draft report by the state planner, China revealed for the first time in the last five years a plan to reduce crude steel production in 2025.
The report did not specify the steel production target, but it is likely to be less than 1 billion tons. This is the level at which China's output has fluctuated around since 2019.
China's imports will be affected if steel production drops from the 1,005 billion tons in 2024. These are the two main raw materials.
COAL, IRON ORE
China imports a small percentage of the global seaborne ore. However, they are expected to grow in 2025.
Kpler estimates that February arrivals will be 83.92 millions tons, the lowest total since April 2019. This is down from 104.34 in January.
Imports may have been affected by the Lunar New Year holidays in February, but adding them to Kpler's estimate for January gives an average daily of 3,19 million tons over the first two month of the year. This is down from the 3.39 million tons of 2024.
Kpler estimates that China's seaborne coal imports have fallen to 29.82 millions tons in 2025. This is the lowest level since February 2024, and is down from 35.9 millions tons in January.
It is likely that the decline in coal imports reflects lower domestic fuel prices which have led to a rise in inventories, and a reduction of demand for imported fuel.
The announcements made by China this week were positive for commodities, especially those that are associated with energy transition.
In a Wednesday statement, the National Development and Reform Commission announced that China would develop new offshore wind farm and accelerate construction of "new energy bases" in the western desert areas of the country.
China's continued focus on renewable energy is good for its demand for metals like copper, aluminum and silver which are used in the manufacturing of solar panels.
The Shanghai exchange's copper contracts rose as early as Thursday morning, rising as much as 1.1%, to 77990 yuan (10,757) per ton. They are now up by 5.2% from the end of the last year. Aluminium futures also gained 0.5%.
The ongoing commitment to build renewable energy capacity in China and increase the share of NEVs is a reason for some optimism. However, the residential real estate sector continues to be a source of concern.
The potential impact of trade wars launched by Donald Trump's administration, which could slow down global growth and increase inflation, is a greater concern.
These are the views of the columnist, who is also an author. (Editing by Stephen Coates).
(source: Reuters)