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Trump accepts two-week truce after iron ore prices fall and shipments increase
Iron ore futures fell on Wednesday as shipments of the key ingredient in steelmaking from major suppliers surged, and U.S. president Donald Trump agreed to an?two-week ceasefire? with Iran. As of 0212 GMT, the most traded?iron ore?contract at China's Dalian Commodity Exchange dropped 1.12% to 791.5 Yuan ($115.87), a metric tonne. The price fell to its lowest level since March 12, at 789.5 Yuan, earlier in the day. As of 0202 GMT, the benchmark May 'iron ore was trading at $105.75 per ton on the Singapore Exchange. As of April 7, iron ore shipments from Australia and Brazil, two major suppliers, jumped by 30.5% on a weekly basis to 24,48 million tons. This was due to weather-related disruptions in Australia. Galaxy Futures analysts said that "high shipments and portside stocks, combined with expectations 'that it is hard to see downstream consumption improving materially,'" pushed ore prices. Rio Tinto announced last month that three of Rio's Pilbara iron-ore port terminals had resumed operations following Tropical Cyclone Narelle. According to Rio, two tropical cyclones between February and March affected the firm's iron ore shipment by 8 million tons. Trump's announcement on social media was also a sudden change from earlier that day. It sent oil prices tumbling and temporarily eased supply jitters as well as inflation fears. Coking coal and coke both increased by 0.32%, while coke decreased by 0.03%. The benchmarks for steel on the Shanghai Futures Exchange were weaker. Rebar fell?0.38%. Hot-rolled coils dropped 0.21%. Wire rod dropped 1.03%. Stainless steel gained 0.35%.
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INSTANT VIEW: Investor reactions to Trump's agreement to a two-week ceasefire.
The U.S. president Donald Trump announced on Tuesday that the two-week ceasefire agreement with Iran was reached less than two hours prior to his deadline of Tehran reopening the Strait of Hormuz, or facing widespread attacks against its civilian infrastructure. Oil fell, bonds rose and stocks surged as the ceasefire seemed to pave the way for lasting peace and the resumption Gulf oil and natural gas exports. Here are some comments from analysts and investors: SAUL KAVONIC HEAD OF ENERGY RESEARCH MST MARQUEE SYDNEY This is a way out of Trump's bombastic ultimatum but it does not mean that the oil market or war will be over. The oil and LNG shut down is unlikely to resume until there's more confidence that a ceasefire will last. A two-week ceasefire could allow some LNG and oil tankers to be released from the Strait of Hormuz, easing some of the market pressure in May. It does not lead to more production but rather a release of water storage. Even if there is a peace agreement, the market would be between 3 million to 5 million barrels per day tighter in the coming years than pre-war expectations due to the damage done to the oil and oil products export infrastructure, which will take months, if not years, to repair. SHINGO IDE, CHIEF EQUALITY STRATEGIST, NLI RESEARCH INSITUTE, TOKYO "This was not a unilateral statement from Trump or the U.S. Pakistan's role as a mediator lends it credibility. "I believe there is a growing hope that if the situation continues in this manner beyond these two weeks, then it could transition to a real truce. "That being said, the United States is still far behind Iran in their thinking... and what Israel is aiming at is on a completely different level. "I think that there is still much to do before these three parties reach an agreement they can all accept." KYLE RODDA, SENIOR MARKET ANALYST, CAPITAL.COM, MELBOURNE: This is the Grande TACO that the markets were looking for. This is a significant development that could be a turning point in the markets. In this world, things can swing violently based on another headline. The re-opening is huge. Oil prices are likely to have reached their peak. This crisis will have ripple effects. We've likely seen the?peak of escalation, and volatility." PRASHANT NEWNAHA SENIOR RATE STRATEGIST TD SECURITIES SINGAPORE "A new escalation is not ruled out. But the markets treat this ceasefire like it's the real thing, and all parties will market the ceasefire to the public as a huge win. As the worst case scenario has been avoided, risk assets and bonds are expected to rally. Looking further ahead, oil prices will not return to their pre-war level. This will make the persistence of inflation a major theme for markets. It is likely that this will put a halt at some point to the current rally in rates. RAY ATTRILL HEAD OF FOREX STRATEGY NATIONAL AUSTRALIA BANK SYDNEY "A lot needs to happen in the next 14-days. The markets still need to proceed with the degree of scepticism Iran fully accepts, leaving them vulnerable to a retracement. I don't believe anyone will be betting on a final resolution to the Middle East issue, and there will be concern about the amount the oil price will drop. We know that it will take months to repair the damage. "$90 is very different from an oil price between $75 and 85." CHARU CHANANA CHIEF INVESTMENT STRATEGIST SAXO SINGAPORE This is a de-escalation sign for the markets, particularly with Hormuz's reopening. It reduces the immediate shock of oil and supports risk sentiment. The key question is whether the talks continue to progress during this two week window. Also, will energy flows and shipping activity return to normal? And, finally, will insurers and tanker owners regain sufficient confidence that Hormuz can function again smoothly? This will determine if this is just a relief rally, or if it looks more like a de-escalation lasting." JAMIE COX MANAGING PARTNER HARRIS FINANCIAL GROUPS, RICHMOND VIRGINIA Markets predicted that Trump would be looking for a way out of Iran. He got one today and he took it. The markets have risen over the past week as a result of a rise in the number of tough talks, which is usually followed by the inevitable twist in order to reach a settlement. BESA DEDA CHIEF ECONOMIST WILLIAM BUCK SYDNEY Markets are likely to show cautious optimism, since this is the first meaningful truce since hostilities started. Investors will be aware that the ceasefire may not last. It is hoped that this will happen, thus limiting the risks of a more profound economic impact. Even if the ceasefire leads to a final resolution, it will take some time to repair and restore infrastructure and refineries. It's better than the prolonged impact. ANDREW LILLEY IS THE CHIEF RATES STRATEGIST, BARRENJOEY SYDNEY. "We have a long way to go to get back where we were before this began. Now, the market is unsure about the extent to the which oil prices will return to $75. "This little precipice, where oil is flowing and no one is in shortage, but it remains at a price equilibrium of $90 is where you eliminate the tail risk, which central banks are cutting. It's a scenario that will result in permanent high yields, because we'll have damaged infrastructure for months and a high oil price that is going to stick around. This means we're going get higher inflation." GEORGE BOUBOURAS, HEAD OF RESEARCH, K2 ?ASSET MANAGEMENT, MELBOURNE: Restocking the energy supply is key in the coming week, as the conflict could re-ignite quickly. It is less likely that a recession will occur, especially if oil, gas and fertiliser are available in the coming week. The markets are never complacent and always pragmatic as they look through the conflict. Valuations remain compelling from a 1-year perspective." MARTIN WHETTON HEAD OF FINANCIAL MARKETS STRATEGY WESTPAC SYDNEY "This happens every day." Does it mean that people will take on new risks? It doesn't. "There would need to be a real lasting peace (to change the situation). The people aren't taking any risks. "This is just algos doing things." BRIAN JACOBSEN CHIEF ECONOMIST ANNEX WEALTH MANAGEMENT MENOMONEE FALLS WISCONSIN "President Trump stated that he had agreed to a ceasefire of two weeks. This is enough to maintain hope that an entire civilization will not be destroyed and oil could start flowing through Strait of Hormuz. Is it simply a matter of moving the goalposts, TACO Tuesday or any other metaphor that we choose, only for tempers to flare up and bombs to drop again? Who knows? "But it's good for now, to elicit positive responses from the markets." Reporting by Tom Westbrook in Singapore, Ankur Banerjee in Tokyo, Gregor Stuart Hunter in Singapore, and Tony Munroe and Ankur Banerjee in Singapore; editing by Sumeet Chaterjee
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Russell: The ceasefire in Iran is a sign of hope, but the physical oil market will remain stressed.
The physical oil markets are still in a world of pain, despite a planned two-week truce between the United States (US) and Iran. Brent crude oil contracts plunged by as much as 16 % to $91.70 per barrel during early Asian trading on Wednesday, after ending at $109.27 a barrel on Tuesday. The rapid selloff is a sign of relief that President Donald Trump has delayed his alarming threats to wipe out the Iranian civilisation. This also reflects the optimism that crude, refined products and liquefied gas (LNG), may be able to resume and continue through the Strait of Hormuz if negotiations are successful. There is a rule that says that if the word "if", appears in a phrase, then it's the most important part of that sentence. It's very unlikely that the peace talks in this case will result in a lasting resolution, as both sides are far apart on many key issues. The negotiations are scheduled to start in Pakistan this Friday, and will last two weeks. An extension is possible if needed. Iran's 10-point proposal aims at securing effective control of the Strait of Hormuz. This is where up to 20 percent of crude oil, refined petroleum products, and LNG were transported prior to the U.S.-Israeli attack on Iran?on 28 February. The control of the strait, as well as unresolved questions surrounding Iran's nucleo-programme will be difficult issues to resolve at the talks. Market optimism about the ceasefire could be tested in the coming weeks if an accord is not reached. There will be little difference in the immediate world of crude oil and refined products supply and demand if there is a ceasefire. Supply chains are being affected by the disruptions caused by the closure. Physical markets in Asia will continue to be under pressure for several months, even if the strait reopens fully. SAUDI PRICES Saudi Aramco has increased its official selling price (OSP) for cargoes loaded in May to record levels. The state-controlled oil company of the kingdom raised its OSP for its benchmark Arab Light for Asian refiners by $19.50 per barrel above the average for Oman/Dubai. The price was $17 higher per barrel than the $2.50 increase for cargoes loaded in April. This reflects the growing desperation of some Asian refiners who are desperate to get their hands on any crude that is available. Oman crude finished at $119.31 per barrel on Tuesday, and cash Dubai at $123.20. If these prices continue through May, a barrel of Arab Light Crude for an Asian refiner would cost close to $150. Prices for grades like Oman and Dubai are likely to fall sharply if the ceasefire agreement results in a sustained reopening of Strait of Hormuz. Refiners would still be battling the issue of getting enough crude oil while supply chains are severely disrupted. The Saudi price increase may help to rebalance flows, by shifting barrels away from China, which is the largest crude importer in the world, and towards other buyers, such as Japan South Korea, and Singapore. Kpler, a commodity analyst firm, estimates that Saudi Arabia exported 1.37 million barrels a day in April. This is up from the 1.04 million barrels bpd of March. China receives about 29% of the total imports. The high price of Saudi crude oil for May's cargoes could encourage Chinese refiners, however, to reduce imports in favor of cheaper supplies from Russia. Africa, and South America. It is possible that this will allow countries like Japan and South Korea to import more cargoes from Saudi Arabia, whose imports have been falling since April. South Korea's Saudi Arabia imports are expected to fall to 520,000 bpd by April. This is the lowest since Kpler?data dating back to 2013. It also represents a drop from a high of 1,14 million bpd reached in January. Japan's imports of Saudi Arabia were estimated at 373.600 bpd, a Kpler low in April. This is also down from December's recent peak of 1,41 million?bpd. The crude oil market is likely to use prices to determine the direction of supply. Wealthy countries are likely to be able secure enough?crude to get them through this current disruption. Fuel shortages will cause economic damage to developing countries in Asia and Africa. 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 a columnist who writes for.
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Gold gains continue as Trump suspends Iran attack for two weeks
Markets reassessed the near-term risks after U.S. president Donald Trump said he agreed to'suspend' bombing and attacks against Iran for two-weeks, easing concerns of energy-driven inflation. After a 1.2% rise on Tuesday, spot gold rose 2.3% by 2344 GMT to $4.811.66 an ounce, while U.S. Gold futures for delivery in June gained 3.3% at $4.840.20. Trump claimed that Washington had agreed to the two-week suspension of attacks, and that Iran had sent a 10-point plan which he called a basis for negotiation. His comments followed previous warnings by the U.S. that Tehran must reopen Strait of Hormuz, or risk retaliation. "This is just a relief rally, and it's still unclear if Iran will comply. The 200-day-moving average at $4,930, and then $5,000, will be the key obstacles for gold. Tai Wong, an independent metals trader, said that $80-$81 was a key level for silver. Pakistan, who?has been mediating between Washington and Tehran had requested the two week extension to allow diplomacy to proceed. The Supreme Security Council of Iran announced that negotiations with the United States will begin Friday, April 10 in Islamabad after it sent its proposal through Pakistan. However, it also added that these talks do not signify an end to the 'war. The central bank's decision to cut rates could be complicated by rising energy prices. Gold is seen as a safe haven in uncertain times and an inflation hedge. However, when interest rates are high its appeal can be weakened. Federal Reserve Bank of Dallas research suggests that a disruption in global oil trade could cause U.S. inflation to rise above 4% before the end of the year, and even higher increases are possible over the short-term. Since the Iran War began on February 28, gold has dropped more than 8%. The markets are now waiting for the minutes of the Fed's meeting in March, which is due on Wednesday. (Reporting by Anmol Choubey in Bengaluru; Editing by Leroy Leo and Sumana Nandy) (Reporting from Anmol Choubey, Bengaluru. Editing by Leroy Leo & SumanaNandy).
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US crude falls below $100 after Trump announces a two-week ceasefire
U.S. West Texas Intermediate Crude fell by nearly $20 per barrel after U.S. president Donald Trump announced that he had agreed to an?a two-week ceasefire, subject to the safe and immediate reopening of Strait of Hormuz. WTI crude oil for May delivery dropped $18.10 or 16.02 percent to $94.85 a barrel at 2320 GMT after hitting $91.05, its lowest level since March 26. The announcement was made shortly before the deadline for Iran to either open the Strait of Hormuz where 20% of?the world's oil transits or face widespread attacks against its civilian infrastructure. He made the announcement on social media, where on Tuesday he said "a whole civilisation?will?die tonight" if his demands weren't met. Iran has said that it will stop its attacks as soon as the attacks against it cease. It also stated that a safe transit of the Strait of Hormuz is possible in coordination with Iranian forces for two weeks. In March, the U.S. and Israel war against Iran led to the steepest'monthly oil prices increase in history of more than 50%. Trump said that the U.S. received a 10-point Iran proposal which he described as a?workable basis to negotiate. He also stated that the parties are?very close to reaching a long-term agreement. Tony Sycamore, IG analyst, wrote that it was a "good start" and could pave the way to a permanent reopening. But there are still many ifs to be worked out. Helen Clark reported; Chris Reese, Jamie Freed and Chris Reese edited.
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Oil prices plunge, stocks soar after Trump announces a two-week ceasefire
After a two week ceasefire, investors cheered the possible return of oil and gas flowing through the Strait of Hormuz. U.S. president Donald Trump announced that he had agreed to suspend the bombings and attacks against Iran for two week and that an agreement on a long-term peaceful solution was being worked out. The global markets are shook since U.S. and Israel launched an attack on Iran at the end of February. This led Tehran to close the Strait o'Hormuz - a waterway that is used to transport one fifth of the world’s oil and natural gas. U.S. crude futures dropped 16.5%, to $94 per barrel. S&P futures jumped over 2%, and the dollar fell broadly. It had been the safe haven for investors in the turmoil. Jamie Cox is the managing partner of Harris Financial Group. "Markets had predicted that Trump was searching for an exit in Iran," she said. "Today he got it and took." The 10-year U.S. Treasury futures showed a broad gain for Asia's stocks, which had been battered by war and high energy prices. Treasury futures rose about 15 ticks. The euro rose 0.76% to $1.1683, while the risk-sensitive Australian Dollar gained 1.3%. Cryptocurrencies rose as well. Trump set a deadline of late Tuesday for the?agreement? with Iran. He threatened to destroy all bridges and power plants in the country, if Iran did not reopen Strait of Hormuz. Iran reportedly said it would retaliate by attacking U.S. Gulf allies. The six-week war has sent oil prices soaring, stoked inflation fears and 'upended global rates outlooks'. Countries and companies are scrambling to adapt to the energy shock. Gold prices increased by over 2% in commodities to $4,812 an ounce. (Reporting and editing by Jamie Freed, Chris Reese and Ankur Banerjee).
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Investor reactions to Trump's agreement to a two-week ceasefire.
U.S. president Donald Trump announced on Tuesday that he and Iran had reached an agreement for a two-week ceasefire, less than 2 hours before the deadline he set for Tehran to reopen Strait of Hormuz. Otherwise, he said, it would be subject to widespread attacks?on civilian infrastructure. The 'ceasefire' was seen as opening the door to a lasting peace, and the resumed export of Gulf oil and natural gas. Here are some comments from analysts and investors: ANDREW LILLEY IS THE CHIEF RATES STRATEGIST AT BARRENJOEY IN SYDNEY. "We have a way to go to get back where we were when this started. Now the worry is that the markets are unsure about the extent to the which oil prices will return to $75. "This little precipice, where oil is flowing and no one is in shortage, but it remains at an equilibrium price $90, is actually where you remove the risk of central banks cutting. "It is a scenario that will result in permanent high yields, because we'll have damaged infrastructure for months and a high oil price that won't go down. This means that inflation will be higher." GEORGE BOUBOURAS, HEAD OF RESEARCH, K2 ASSET MANAGEMENT, MELBOURNE: Restocking the energy supply is key in the coming week, as the conflict could re-ignite quickly. It is less likely that a recession will occur, especially if oil, gas and fertiliser are available in the coming week. The markets are never complacent and are always looking through the conflict. They are also not complacent because they want to see if there is a resolution and that valuations will remain compelling over a year. MARTIN WHETTON HEAD OF FINANCIAL MARKET STRATEGY WESTPAC SYDNEY This is what always happens. Does this mean people will take on new risks? It doesn't. "It'd have to be a lasting peace" (to change the situation). The people are not taking any risks. "This is just algos doing things." BRIAN JACOBSEN CHIEF ECONOMIST ANNEXWEALTH MANAGEMENT MENOMONEE FALLS WISCONSIN "President Trump?said that he had agreed to a ceasefire of two weeks. This is enough to keep the hope alive that not only will a civilization NOT be destroyed but oil could start flowing through Strait of Hormuz. "Is it just throwing the can down the road, moving goal posts, or TACO Tuesday? Or whatever metaphor we want, only for tempers to flare and bombs to drop again? Who knows? "But it's enough to get a positive reaction from the markets for now." (Reporting from Tom Westbrook in Singapore and Ankur Banerjee; editing by Sumeet chatterjee.)
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INSTANT VIEW: Investor reactions to Trump's agreement to a two-week ceasefire.
U.S. president Donald Trump announced on Tuesday that he had reached an agreement with Iran to establish a two-week ceasefire, less than 2 hours before his deadline for Tehran to reopen the Strait of Hormuz. Oil fell, bonds rose and stocks soared after the ceasefire. It was believed that the ceasefire would pave the way for a "lasting peace" and the resumption in Gulf oil and natural gas exports. Below are some responses from analysts and investors: MARTIN WHETTON HEAD OF FINANCIAL MARKETS STRATEGY WESTPAC SYDNEY This is what always happens. Does this mean people will take on new risks? No, it does not. "There would have to be a lasting, stable peace for things to change." The people are not taking any risks. "This is just algos doing things." BRIAN JACOBSEN CHIEF ECONOMIST ANNEX WEALTH MANAGEMENT MENOMONEE FALLS WISCONSIN "President Trump stated that he had agreed to a ceasefire of two weeks. This is enough to maintain hope that an entire civilization will not be destroyed and oil could start flowing through the Strait of Hormuz. "Is this just about kicking the can 'down the road, moving goal posts, TACO Tuesday, or whatever metaphor you like to use, only for tempers to flare and bombs to drop again?" ?Who knows? It's good enough for the moment to get a positive reaction from the markets."
Investors' reactions to Trump's agreement to a two-week ceasefire in Iran
Donald Trump, the U.S. president, announced on Tuesday that Iran had agreed to a ceasefire lasting two weeks. This was less than 'two hours' before Trump set a deadline for Tehran to open up the Strait of Hormuz or face attacks on civilian infrastructure.
Oil fell, bonds rose and stocks soared after the ceasefire. It was seen as opening the door to a lasting peace as well as resuming Gulf oil and gas exports.
Here are some comments from analysts and investors:
JAMIE COX MANAGING PARTNER HARRIS FINANCIAL GROUPS, RICHMOND VIRGINIA
Markets had predicted that Trump would be looking for a way out of Iran. He got it today and took advantage of it.
The markets have been moving higher in the last few weeks due to a rise in the number of tough talks, which is usually followed by the inevitable twist in order to reach a settlement.
BESA DEDA, CHIEF ECONOMIST, WILLIAM BUCK SYDNEY
Markets are likely to show cautious optimism, since this is the first meaningful truce since hostilities started. Investors will be aware that the ceasefire may not last. It is hoped that this will happen, thus reducing the risk of an economic impact.
Even if a ceasefire is ultimately reached, the damage to refineries will take some time to repair. It's better than the prolonged impact.
ANDREW LILLEY IS THE CHIEF RATES STRATEGIST AT BARRENJOEY IN SYDNEY.
"We have a way to go to get back to where we started. Now, the market is unsure about the extent to which the oil price will return to $75.
"This little precipice, where oil is flowing and no one is in shortage, but it remains at an equilibrium price $90, is where you actually remove the tail risks that central banks are cutting.
It's a scenario that will result in permanent high yields, because we'll have damaged infrastructure for months and a high oil price that is going to stick around. This means we're going get higher inflation."
GEORGE BOUBOURAS, HEAD OF RESEARCH, K2 ?ASSET MANAGEMENT, MELBOURNE:
Restocking the energy supply is key in the coming week, as the conflict could re-ignite quickly. It is less likely that a recession will occur if oil, gas and fertiliser are available in the coming week. The markets are never complacent and always pragmatic as they look through the conflict. Valuations'remain compelling from a one-year perspective.
MARTIN WHETTON HEAD OF FINANCIAL MARKETS STRATEGY WESTPAC SYDNEY
This is what we see all the time. Does this mean that people will take on new risks? It doesn't.
"It would have to be a lasting, peaceful peace (to make things change). The people aren't taking any risks. It's a bunch of?algos?"
BRIAN JACOBSEN CHIEF ECONOMIST ANNEX WEALTH MANAGEMENT MENOMONEE FALLS WISCONSIN
"President Trump stated that he had agreed to a ceasefire of two weeks. This is enough to maintain the hope that not only won't an entire civilization be destroyed but oil could start flowing through Strait of Hormuz.
It's just like moving the goalposts, TACO Tuesday or whatever metaphor you want, only for tempers to flare up and bombs to drop again. Who knows? "But it's enough to get a positive reaction from the markets for now." (Reporting from Tom Westbrook in Singapore and Ankur Banerjee; editing by Sumeet chatterjee).
(source: Reuters)