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LME Aluminium reaches nearly 4-year high amid supply fears
The price of aluminium in 'London has reached its highest level for nearly four years, due to the conflict in the Middle East, which is escalating. This increased concerns about a possible shortage in global supplies. The benchmark?three-month aluminum on the London Metal Exchange reached its highest level since March 31, 2020, earlier in the session, when it hit $3,544 a metric ton. By 0305 GMT, it was up 1.77% to $3,507 per metric ton. The Shanghai Futures Exchange's most traded aluminium contract rose by 3.29%, to?25.310 yuan per ton ($3,658.15), after reaching its highest level since January 30, at 25,860 Yuan. The U.S. and Israel war against Iran has caused shipping to be disrupted through the Strait of Hormuz. This is a vital waterway in the Gulf that accounts for about 9 percent of global aluminum production. Last week, the light-weight metal used in 'construction and packaging' posted its largest weekly gain since January 20, 2023, as concerns about supply grew after Qatari Qatalum started shutting down production, and Aluminium Bahrain declared force majore on shipment. "An extended disruption in the Strait will simultaneously choke off alumina exports from Middle Eastern smelters and alumina imports." This would result in a significant tightening of global supply," EwaManthey, commodities analyst at ING wrote in a report. Manthey said that the escalation in the Middle East could push aluminum prices above $4000 per ton. The stronger dollar has largely tempered the price rise of oil by about 20%. The dollar's strength makes commodities that are denominated in other currencies less affordable to investors. Copper, nickel, lead, and tin all fell in price, while zinc gained 0.49%. Nickel and lead reversed their earlier losses, to gain 0.43%?and 0.244% respectively. This was due to better inflation data in China. Zinc rose 0.52%. Due to the Lunar New Year, China's consumer inflation has accelerated to its highest level in over three years. Reporting by Amy Lv, Lewis Jackson and Eileen Soreng; editing by Eileen Soreng.
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Iron ore continues to rise on the back of surging energy and rising freight costs
Iron ore futures were trading at month-high prices Monday. Dalian iron ore rallied for the sixth consecutive session on the back of rising energy prices and freight prices amidst the Iran war. As of 0247 GMT, the?most-traded?May iron ore contract?on China’s Dalian Commodity Exchange?traded 3% higher to 790 yuan (114.19 USD) per metric ton. The benchmark iron ore for April on the Singapore Exchange rose by 2.13% to $103.75 per ton. The price of oil jumped by about 20% Monday, as the U.S. and Israel war with Iran grew. This led to some Middle Eastern oil producers cutting back on their supplies. The price increase was also influenced by fears of a prolonged disruption to shipping through the Strait of Hormuz. Atilla Widnell, managing director of Navigate Commodities, says that rising energy costs will increase costs for bunker fuel, war risk premium and insurance. He added that in the medium to long term, central banks are more likely to raise interest rates again, in order curb inflation risks, which would dampen the outlook for steel and iron ore. China exports steel to the Gulf via the Strait of Hormuz, which is now its second-largest market. It accounted for 16% of China's exports in 2013, as other countries erected trade barriers. Iran is the tenth largest producer of steel in the world. Iran's production would also be affected if the waterway was blocked, since it imports coal and exports steel products. Steelhome data showed that iron ore inventories at major Chinese ports increased by 0.67% in the week ending March 6. Steelhome data showed that spot prices for seaborne iron ore had risen by 1.51% to $100.6 per ton on March 6. Coking coal and coke?up 7.99% each and 7.19% respectively. The Shanghai Futures Exchange steel benchmarks have mostly been in the ascendant. Rebar rose 1.88%; hot-rolled coils rose 1.99%; and stainless steel increased 1.92%. Meanwhile, wire rod drifted 0.11% lower. Ruth Chai reports. $1 = 6.9182 Yuan
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South Korea will cap fuel prices to protect the economy from an energy shock
South Korean President Lee Jae Myung announced on Monday that the government would cap domestic gasoline prices for the first time in nearly 30 years to contain a price spike after the Middle East conflict sent global crude oil prices sharply higher. At an emergency meeting to discuss the Middle East Crisis, Lee stated that the government would "boldly and swiftly" implement a maximum pricing system on petroleum products which have seen recent price increases. In his opening remarks, Lee stated that the current crisis is "a significant burden" on our economy which is heavily dependent on global trade as well as?energy imported from the Middle East. He also added that South Korea would look at other sources of energy than those shipped through the Strait of Hormuz. Lee called for the expansion of a market stabilisation program worth 100 trillion won (66.94 billion dollars) if necessary, and urged the government and central bank to take additional measures in response to the volatility on the financial and foreign exchange markets. South Korean shares fell 8% on Monday, activating circuit breakers for the second time in this month due to the escalating conflict in the Middle East. The won also dropped by more than 1% and traded near the psychological barrier of $1500 per dollar. The won cut losses after?Lee?s comments to trade at 1,493.5 won/dollar, against a session's low of 1,499.2.
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Aluminium prices rise on supply fears; dollar firm puts pressure on other base metals
The escalating conflict?in the Middle East increased concerns about tighter supplies globally, which offset pressure from a stronger dollar. As of 0202 GMT the most traded aluminium contract on?the Shanghai Futures Exchange increased 3.41%, to 25,340 Yuan ($3,659.63), per metric ton. It had earlier reached its highest level since January 30, at 25,860 Yuan. The benchmark three-month aluminum contract on the London Metal Exchange gained 1.12%, to $3484.5 per tonne. The contract reached its highest level since March 31, '2022, when it was $3,544 per ton. The U.S. and Israel war against Iran has caused shipping to be disrupted through the Strait?of Hormuz. This is a vital waterway in the Gulf that accounts for 9% of the global aluminium?production. Last week, the light-weight material, which is used for construction and packaging purposes, recorded its biggest weekly gain since January 2023. This was due to supply concerns that were exacerbated when Qatari smelter Qatalum started shutting down production, and Aluminium Bahrain declared a force majeure on shipments. "An extended disruption in the Strait will simultaneously choke off alumina exports from Middle Eastern smelters and alumina imports." This would 'tighten the global supply significantly,' wrote EwaManthey, commodities analyst at ING. Manthey said that the Middle East escalated could push aluminium prices above $4000 per ton. The rise in oil prices by about 20% weighed on other base metals. The stronger the dollar, the less affordable commodities are for investors who use other currencies. SHFE copper fell by 1.78%. Nickel also declined by 1.72%. Lead was down 0.18%. Tin dropped 5.45%. Copper, nickel, and lead all fell in price. Tin also dropped 5.96%. The zinc contracts in Shanghai were similar to those in London. Reporting by Amy Lv, Lewis Jackson and Eileen Soreng; editing by Eileen Soreng.
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Oil surges by 20% as supply fears are fueled by the Iran war
Early Monday morning, oil prices jumped by 20%, reaching their highest level since July 2022. This was due to the expanding U.S./Israeli conflict with Iran, which led major Middle East producers to cut back on supplies, and concerns about a prolonged disruption of shipping through Strait of Hormuz. COMMENTARY: DANIEL HYNES, SENIOR COMMODITY STRATEGIST ANZ SYDNEY I?think the prices have risen this morning due to?reports? that?Middle East manufacturers are now reducing their output because storage facilities are filling up quickly. "I think that the threat of Middle Eastern producers cutting back on production will keep prices high. Next, it will be a question of whether they reach a point at which they must shut down oil wells. This would not only have a negative impact on production but also delay a reaction once the conflict ends. This 'would potentially sustain these prices for a much longer time." VISHNU VARATHAN HEAD OF MACRO RESEARCH ASIA EXJAPAN MIZUHO SINGAPORE A sudden supply shock has reverberations that go beyond who is the net energy importer or exporter. Supply chain effects are more than just how price affects margins. Even in a country like Indonesia, it's not uncommon to see protests on the streets if fuel prices increase. The dollar is the one that has outperformed, given Japan and Korea's exposure to this market and the?sharp pain that can be expected?from Brent at $107". Given Japan and Korea's exposure to this region and the "sharp pain" that can be anticipated from Brent at $107, the dollar is the clear winner. SAUL KAVONIC HEAD OF ENERGY RESEARCH MST MARQUEE The market was complacent until last Friday about the extent and duration of war and the associated supply disruptions. It's the oil market that has cried wolf. The market has become complacent after three years in which geopolitical risks have increased but failed to lead to disruptions of supply. "But this existential Iran War is the energy crises scenario that has been 'wargamed' for 50 years and finally comes to fore." BMI, A FITCH SOLUTIONS UNIT "Our baseline is that the conflict in Iran is large, but will not last long. However, there is still a risk of a "prolonged war". The Gulf Cooperation Council will feel the most impact among emerging markets. This is due to the shock's negative impact on "trade, logistics and tourism." First, Pakistan and India are the most vulnerable because they are energy importers who have a relatively high exposure to Strait of Hormuz. Egypt and Turkiye, on the other hand, are most vulnerable to a physical disruption of trade. It is because of their high energy bill, "fragile" external positions, large subsidies, and unanchored inflation. Third, commodity-producing economies in Sub-Saharan Africa, Latin America, and Nigeria are the least at risk. MICHAEL MCCARTHY - CHIEF OPERATING OFFICER MOOMOO SYDNEY The threats to attack refineries are extremely concerning. It threatens to bring about the worst of all possible economic situations. The cutting off of 15%-20% the oil supply to the world not only slows every economy down, but also introduces inflation. "Stagflation is an economic disaster. It's a combination of inflation and slowing growth." (Reporting and editing by Rae Wee; Tom Westbrook; Emily Chow; Katya Glubkova. Tony Munroe Rashmi aich Sumana Nandy.
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Russell: Compounding errors, narrow self-interest and narrow ROI threaten global fuel shortage
The United States, China and other major countries are making miscalculations, and retreating to their narrow interests, which threaten to turn the conflict in Iran into an international crisis for the supply of refined oil products. The media focuses a lot on the price for crude oil. Brent crude futures, which are the benchmark, jumped up to 20% in the early Asian trading on Monday, reaching $111.04 per barrel. This is the highest level since July 2022. The price of refined fuels, such as gasoline, jet fuel and diesel, has risen even more than crude oil. These are the fuels that consumers buy. Jet fuel prices led the explosive rise in refined products prices last week, followed by Singapore spot prices The price of oil reached a record high of $225.44 per barrel on 4 March, before falling to $155.82 at the end. This price is still 66.7% above the $93.45 per barrel which was the case on February 27th, the day before the United States and Israel began an aerial campaign against Iran. Singapore gasoil (the building block of diesel and jet fuel) reached $123.39 per barrel on 4 March, its highest price since September 2023, and a 33.5% increase from the closing price on 27 February. The product markets of Asia have begun to reflect a shortage in the supply of fuels essential for keeping economies running. According to commodity analysts Kpler, the effective closure of Strait of Hormuz will result in a reduction of 18 million barrels of crude oil and products per day. This is roughly divided into 14 million bpd of raw crude and 3,000,000 bpd of finished products. The market is still not convinced that Iran will not attack any vessel attempting to pass through the Strait. The Trump administration and Israel made a strategic mistake by attacking Iran without closing the Strait of Hormuz. As with most analysts and probably Gulf governments, I assumed that this conflict would be similar to previous flare-ups. It was assumed that everyone would act rationally, and not attack oil production or transportation infrastructure. After all, it's in no one's best interest to stop the flow of crude and its products. It turns out that if you say to a religious dictatorship that you want a regime change, that government will not feel compelled to follow the previous rules. The decision by Iran to attack its Gulf neighbours, which host U.S. bases, has rewritten all previous calculations regarding the conflict. Gulf countries Saudi Arabia and the United Arab Emirates are highly dependent on oil, fuel, and liquefied gas exports. Their revenue has been severely cut. Dubai, as one of the Emirates is increasingly dependent on being the financial and tourism centre for the region, both sectors are now suffering a major?hit due to the ongoing conflict. MULTIPLY MISCALCULATIONS Now, the compounding mistakes of Trump's administration are becoming more evident. Their stop-gap solutions have not been well received by the market. One thing is to provide insurance and maybe even naval escorts. It's another to guarantee safe passage for hundreds of ships each week. If Iran were to hit a fully loaded crude tanker using a ballistic rocket, the situation would be far worse than it currently is. It's like giving cookies to an elephant. It is nice, but not very effective. Asia's refiners have already begun to scramble for crude oil from suppliers outside of the Strait of Hormuz. What will be the probable outcome of this? The price of crude oil will increase, and as the Strait closes, the more the region will be short of refined products and crude. In response to the looming shortage, countries with refinery capacity will concentrate on their own domestic needs and reduce exports of fuels. This will exacerbate the shortage of refined product. Reports indicate that China's major state-owned refining companies have been ordered to stop exports. Refineries in South Korea and India are reducing refinery production. Beijing's authorities must ask themselves:?how much longer before the Chinese economy is affected by the decision to stop supplying refined fuels to nations that import them? This is yet another miscalculation which will be more expensive than increasing fuel exports in order to help meet demand. China exports about 600,000 barrels of refined products per day. It is the only major oil producer with a significant amount of spare capacity, and an estimated crude oil stockpile of over 1 billion barrels. The level of stocks means that China could refine oil at the current rate for three years even if imports were to drop to zero. China could, in effect, use its massive stockpiles to boost refinery runs, increase exports, and ease the looming crisis of supply. It would be highly profitable and also gain favor with nations that import fuels, which may otherwise face a shortage. Kpler reports that Australia is Asia’s largest fuel importer. It takes?about 900,00 bpd. Imagine a country that could not meet the demand. This would lead to shortages. The government must prioritise the production of food and its delivery as well as keeping as much as possible of the economy running. A brave Australian government might tell China that it would not be able to ship any more iron ore due to diesel shortages, unless Beijing supplied refined fuels. China imports about two thirds of its iron from Australia. Without these flows, its steel industry will be severely curtailed and this in turn will have a devastating effect on manufacturing and construction. This point is only possible if the Strait of Hormuz is largely closed, and if countries are guided by their own narrow, short-term interests. It is unfortunate that the political leaders are not able to understand the strain they put on the energy system. Their actions show that they only see their country's problems, without understanding that this is a global problem that requires global solutions. You like this column? Open Interest (ROI) is your new essential source of global financial commentary. ROI provides data-driven, thought-provoking analysis on everything from soybeans to swap rates. The markets are changing faster than ever. ROI can help you keep up. Follow ROI on LinkedIn, X. These are the views of the columnist, an author for.
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US Energy chief defends waiver of Russian oil sanctions and blames higher gas prices on fear
On Sunday, Trump administration officials defended the 'decision' to temporarily lift sanctions on Russian oil and predicted that gasoline prices would spike sharply in response to the Iran War. Chris Wright, the Energy Secretary of the United States and U.S. The Ambassador to the United Nations Mike Waltz stated that a waiver granted last week allowing Indians to purchase Russian oil will ease pressure on the global markets. Waltz told NBC's 'Meet 'the Press' that the 30-day pause would allow millions of barrels of crude oil, sitting on ships, to be sent to Indian refineries. Wright said on CNN's "State of the Union," that the waiver could help "tame this fear of a shortage of oil, to tame the price spikes and the worries?we see?in the marketplace." The war is now in its second and final week, with no end in sight. Americans are facing higher gas prices, a new complicating factor in the U.S. economic system, which lost 92,000 unexpected jobs in February. According to AAA, as of Friday the average national price for regular gasoline was $3.32 per gallon. This is up 11% since the previous week, and the highest level since September 2024. Diesel is $4.33, a 15% increase from the previous week, and has risen to its highest level since November 20,23. Donald Trump said in a Truth Social post on Sunday night that "short-term oil prices, which are expected to drop quickly when the Iran nuclear threat has been destroyed, is a small price to be paid for the U.S.A., and World, Safety and Peace." "ONLY FOOLS THINK DIFFERENTLY!" Wright had earlier on Sunday said that there was no shortage of natural gas or oil and blamed the price hikes on "fear" and perceptions that the Iran operation would be a long-term affair. Wright, speaking on Fox News Sunday, said that it would not be the case. He echoed Trump's claim that the war would last only a few weeks and not months. U.S. Crude?futures surged by more than 20% on Monday morning, reaching their highest level since July 2022. The expanding war fueled fears of a tightening supply and prolonged disruptions to shipments through Strait of Hormuz. Senator John Kennedy of Louisiana, a Republican, has criticized energy speculation. Kennedy said on "Fox News Sunday" that oil prices have risen because oil traders are out there with their Gucci loafers and caramel Frappuccino, bidding up the cost. Analysts say that a continued?rise in gas prices could harm Republicans during the November'midterm elections, when control of Congress is at stake. A recent /Ipsos survey found that the majority of respondents disagreed with Trump's claim that the economy is "booming."
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US oil prices rise on fears of supply amid an expanding U.S./Israeli conflict with Iran
U.S. Crude Futures increased more than 20% during early trading on Monday. They reached their highest level since July 2022, due to the escalating U.S. - Israeli 'war with iran. As of 2220 GMT, U.S. West Texas Intermediate crude futures were up as much as $20.34 per barrel and were $14.83 or 16.31% higher at $105.73. The price of WTI crude futures rose by as much as $22.4%, to $111.24 in the early part of the session. The benchmark contract rose 12% on the Friday, and it has gained 36% in the last week. Iran named Mojtaba Khamenei, the son of Ali Khamenei, as its Supreme Leader on Monday. This shows that Iran's hardliners are still in control in Tehran after a week-long conflict with Israel and the United States. Israel's military claimed that it had struck Iranian commanders early on Sunday in Beirut, after days of strikes which have killed nearly 400 people. Even if the conflict ends soon, fuel prices could rise for weeks or even months. This is because suppliers are dealing with damaged facilities, disrupted logistical systems and increased shipping risks.
Oil prices surge, while shares in Asia plummet as the Middle East conflict rages
The U.S. Dollar was in high demand on Monday due to the investor's desire for liquidity.
Brent crude soared 15% to $106.94 per barrel after already rising 28% in the previous week. U.S. crude climbed 17% to $106.75, threatening to send petrol prices rapidly skyrocketing.
Iran has named Mojtaba Khamenei the successor to his father Ali Khamenei, signaling that hardliners are still in control in Tehran after a week of conflict with Israel and the United States.
Donald Trump, the U.S. president, had called the act "inacceptable".
Investors were bracing themselves for a long stretch of rising energy prices. With no signs of an end in sight to the hostilities that have raged across the Middle East, and with tankers still refusing to cross the Strait of Hormuz. Bruce Kasman, JPMorgan's chief economist, said that the global economy is still dependent on the flow of oil and gas from the Middle East through the Strait of Hormuz.
He added that the near-term scenario would be a spike to $120 bbl, followed by a moderation when the conflict subsides. "But in the absence of a clear, decisive and unified political solution, Brent crude oil prices will likely settle at a high $80 per barrel by mid-year."
Kasman stated that such a result could reduce global economic growth by?0.6% annually for the first six months of this year and increase consumer prices by 1% annually.
He warned that a wider and more sustained conflict could push oil prices above $120 per barrel and cause a global economic recession.
S&P futures fell 1.6% while Nasdaq Futures dropped 1.7%.
Japan's Nikkei Futures plunged to 52,400. This is a drastic drop from the cash close on Friday of 55,620.
CENTRAL BANS HAMSTRUNG
The risk of inflation rising outweighed the safety-haven concerns on bond markets. 10-year Treasury notes futures fell 13 ticks while three-year Futures dropped?22.
Investors also sold interest rate futures, fearing that higher inflation could make it more difficult for the Federal Reserve's policy to be eased. This is despite the fact that the Federal Reserve was arguing for stimulus based on the disappointing job numbers.
The data on U.S. consumer prices due on Wednesday will likely show that the annual rate of growth held steady at 2.4%.
The Fed's preferred measure for 'core inflation' was released on Friday. It is expected to remain at 3.0%. This is well above the central banks 2% target. Analysts see an increased risk.
Markets have bet that the European Central Bank will raise rates in June, possibly even earlier.
Markets have also moved to price in only a 40% chance of another easing by the Bank of England compared to two or more cuts before the Middle East conflict began.
Investors who are nervous sought out the dollar as a safe haven, while avoiding currencies of countries such as Japan and Europe that are net importers of energy.
The dollar rose 0.3% to 158.35 Japanese yen while the euro fell 0.7% to 1.1534. The Australian dollar (often sold as a hedge in times of market volatility) fell 0.7% to $0.6977.
Dealers speculated that investors might have to book gains on gold to offset losses elsewhere. (Reporting and editing by Edmund Klamann; Reporting by Wayne Cole)
(source: Reuters)