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Copper prices fall as inventories rise; weaker dollar provides support
The copper price?fell on Thursday, as more stocks arrived at?warehouses. However, losses were minimal due to the weaker dollar following a move by the U.S. Government?to calm down bond markets. Benchmark 'three-month' copper on the London Metal Exchange fell 0.4% to $13,988 per metric ton at 1025 GMT after adding 0.5% the previous session. LME copper reached a six-month high on Monday due to concerns about low inventories. However, since then the price has eased as metal is now flowing into storage facilities. The Treasury's announcement of yesterday's copper buyback helped stop the decline that we saw as inventories began to return to LME, said Ole Hansen. He is the head of commodity strategy at Saxo Bank. The announcement is a very strong one and indicates the possibility of a weaker dollar in the future. The announcement also shows that there is a competition among investors to fund debt and also hard assets. Copper has been at forefront of this recently. The dollar index dropped to a 3-month low as the Treasury Department acted to calm down a bond-market selloff which had driven long-end yields up to their highest level since 2007. The weaker dollar means that commodities priced in U.S. dollars are cheaper for buyers of other currencies. The Shanghai Futures Exchange's most traded copper contract edged up 0.2% to 107200 yuan (15,943.13) per ton. Data showed that LME inventories increased by another?3,950 tonnes, bringing gains for the week to 17%. On-warrant stocks of copper, meaning that metals not already designated for?warehouse removal' on the LME The prices of most items have risen by over?50% in the last week but remain less than half the levels they were three months ago. Other metals include LME aluminium, which?lost 1.1% at $3,196 per ton, and nickel, which?shrank 1.3% to $15,890. Zinc gained 1.2%, to $3.751, while lead increased 0.1%, to $1,890, and tin rose by 0.3%, to $55,705.
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Sources say that Indian Oil is close to signing a LPG import agreement with Algerian Sonatrach in 2027.
Indian Oil Corp., the top refiner in India, has signed a contract with Sonatrach of Algeria to import LPG from 2027. India is diversifying its sources of LPG (mainly used for cooking) to reduce its dependence on the Middle East. The recent blockade of energy flows in the Strait of Hormuz forced the South Asian nation, which was forced to ration LPG supplies, to rely less on Middle Eastern suppliers. IOC will lift one large?gas container containing between 45,000 and 55,000 metric tonnes of LPG (a mixture of propane?and butane) every month. IOC had a contract with Sonatrach for a period of time until a few?years ago, but then switched to purchasing?from the Middle East. A second source confirmed that the LPG prices in Algeria are lower than Saudi Aramco's Contract Price. The deal between IOC and Sonatrach, however, is to lift the cargoes free-onboard. IOC and Sonatrach have not responded to emails seeking comments. According to preliminary LSEG trade flow, India is expecting to receive 110,000 tons of LPG in August. India has 'increased their?intake?of U.S. LPG in order to offset the loss Middle Eastern supplies while encouraging customers to switch to piped gas. Sources said last month that India will buy up to a quarter (25%) of its LPG imported from the United States by 2027. Sources said that the three state-owned?retailers – Indian Oil Corp., Hindustan Petroleum Corp. and Bharat Oil Corp. – are expected to launch a joint bid to import LPG imported from the U.S.
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Investors take profit after gold's recent rally.
Gold prices fell on Thursday after a?4?% gain in the previous session. A surprise U.S. Treasury move to increase liquidity pushed bond yields down and the dollar, while higher oil prices and hawkish U.S. Fed signaling prompted profit taking. By 0946 GMT, spot gold had fallen 0.7% per ounce to $4487.93. Bullion prices were at $4,525.79 earlier, after they reached a two-month high on Wednesday. U.S. Gold Futures were little altered at $4,544.50. Treasury Department announced on Wednesday that it would double its liquidity-support purchase operations for longer-dated bonds and notes, helping to ease the pressure in the bond market. The U.S. Dollar was hovering around three-month lows. Ricardo Evangelista, senior?analyst at ActivTrades, said: "I'd describe the lower prices this morning as a short term?correction and not the start of a broader downtrend." He said that the outlook for the next few weeks will be largely determined by expectations about Federal Reserve policy, and the developments in the Persian Gulf. The minutes of the Fed's last meeting revealed that inflation fears had intensified, and several policymakers were prepared to increase interest rates. The oil prices rose to a three-week high on Thursday, amid fears that the Iran conflict impasse would continue to disrupt Middle East supplies. This was after Trump warned about economic consequences for any nation providing Iran with "any kind of lifeline." The total U.S. outstanding debt surpassed $40 trillion for the very first time. This prompted new warnings about fiscal crisis. According to the CME FedWatch tool, traders are currently pricing in a 67% probability of a Fed Hold in September. Morgan Stanley believes that gold will surpass $5,000 per ounce by 2027, and possibly sooner, because the Fed is expected to remain on hold. However, it said that U.S. inflation could cause volatility, while low COMEX-short positions limit the scope for short-covering gains. Gold is generally viewed as a hedge against inflation, but rising interest rates have a tendency to make it less attractive. Silver spot fell 0.4% per ounce to $66.68, platinum slid 1.5% to 1,797.77 and palladium dropped 0.2% to 1,323.86.
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Fuel shortages in Moscow have returned, and drivers are faced with long queues at the fuel stations.
This week, disgruntled Moscow motorists waited in long queues at 'gasoline stations to fill up their cars with limited fuel. It was the second wave of the 'crisis due to high seasonal demand and Ukrainian strikes against oil refineries. Witnesses and fuel suppliers report that fuel stations in Moscow have set new limits on the purchase of gasoline due to fuel shortages. In May, shortages began to grow and spread throughout most Russian regions in July. However, fuel stations in Moscow were able ease an earlier round of restrictions. Ukraine has targeted Russian oil refineries to reduce energy revenues and undermine Moscow's war efforts. The queues at the gas stations can be as long as a kilometer. Witnesses also reported long queues at filling stations, with some extending up to one kilometer (0.6 miles) in Moscow and the surrounding area. Many other stations also had closed their doors or only offered diesel. We have visited five petrol stations and still there is no fuel. Fuel was available last week. "Now, fuel is unavailable again," said a German resident of Moscow who refused to reveal his full name. Marat, a taxi driver, complained as well. "Everything's very bad." You'd need to drive the length of Moscow in order to find fuel. Even in this situation, you will not find any fuel. You'll have to wait two or three hours." Other motorists have downplayed the shortages. Artur, a resident of Moscow, stated, "I believe everything will return to normal in a few weeks." In order to boost the domestic supply, Russian authorities?banned gasoline and diesel exports,?assuaged fuel quality requirements, and?started importing petroleum products. On Wednesday, Russian Deputy Premier Alexander Novak confirmed that Russia had begun importing fuel. Normally, Russia is a net oil and fuel exporter. (Reporting and Editing by David Holmes).
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Monte dei Paschi CEO to unveil strategy to fend off Intesa's EUR36 billion bid
Three people familiar with the matter have confirmed that Monte dei Paschi di Siena CEO Luigi Lovaglio is preparing to present a strategy to the Italian board of directors on Thursday to counter the EUR36 billion bid from Intesa Sanpaolo, the bank's bigger rival. Analysts suggest that MPS can use an asset it acquired by taking over Mediobanca in 2025, a 13% share of Italy's largest insurer Generali. It could also draw from its cash reserves to boost returns to its shareholders and counter Intesa's EUR3 billion?in cash offer. Analysts have stated that the Generali stake, worth EUR8.5 billion, could be traded or sold for another asset. MPS CEO Luigi Lovaglio refused to give any details on an analyst call held on August 7. Lovaglio had previously been ruled out of selling the Generali stake by people familiar with his plans. MPS explored a possible deal with Banco BPM in order to stop?Intesa from taking over. However, the two banks announced on July 31 that they had ended their discussions after Credit Agricole France, BPM's largest investor, expressed its disapproval. One of the sources stated that the board began its meeting at 0700 GMT in order to discuss options. BREAK-UP Intesa will retain Mediobanca and the Generali stake as well as roughly half of MPS’s branch network. The other half has been sold to address antitrust concerns. Lovaglio criticised the plan and said it would destroy value. Prime Minister Giorgia meloni expressed her hope that MPS might not be "dismembered", even though she insisted that the government was playing no active role. Intesa’s unsolicited offer of cash and shares in June was the latest in a wave of consolidation that has reshaped Italian Banking over the last 21 months. Italian banks spent years restructuring to reach record profits when interest rates began to rise in 2022. MPS was the poster child of the overhaul. After being rescued by the government in 2017 and then?reprivatised between 2023 and 2024, Generali bought Mediobanca for EUR16 billion in a hostile bid and took control of Generali's prized stake. MPS's largest shareholders are Delfin - the investment vehicle for the Del Vecchio business family, an eyewear dynasty - and Francesco Gaetano Caltagirone, a construction magnate. Both are major Generali investors. Intesa made its bid as UniCredit was busy taking over Commerzbank in Germany. UniCredit also acquired a Generali stake in recent months, which it referred to as a financial asset. (Reporting and editing by Elaine Hardcastle, Giulio Pioloavaccari, Andrea Mandala)
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China calls on South Korea to not take sides and blames US policy in Korea tensions
Wang Yi, China's foreign minister, urged South Korea to not take sides in the dispute between Beijing and Washington. He said that the U.S. North Korea should drop its "hostile policy" towards the peninsula. Wang made these remarks during a meeting on Thursday with South Korea’s National Security Adviser Wi-Sung-lac, reported the Chinese state news agency Xinhua, where he met South Korean president Lee Jae Myung. Wang was quoted by Xinhua as saying that "the fundamental solution to tensions on Korean Peninsula is to address the root causes and urge the United States abandon its 'hostile policy towards North Korea. Wang expressed China's hope that South Korea "will achieve genuine strategic autonomy and refrain from bloc confrontation and taking sides and develop relationships with major powers, including China and the United States, in parallel and without contradiction." The remarks come after U.S. president Donald Trump announced on Wednesday that he plans to meet with North Korean leader Kim Jong Un in the second half of this year. He also said that North Korea possessed 57 "very strong" nuclear weapons. Trump also ordered Pentagon officials that joint military exercises between South Korea and the United States be cut short, citing Kim's "very good relationship". The U.S. continues to demand that North Korea denuclearize, a demand Pyongyang consistently rejects. North Korea fired a suspected missile into the sea Thursday, according to Japan's coastguard and government. Wang, a Chinese diplomat, told Wi that China would welcome a peaceful coexistence on the peninsula between South Korea (North Korea) and South Korea. He called for a re-start of dialogue and restoring trust. Wang, in separate discussions with Lee, called on Seoul to adopt a policy of friendship towards China. He said that bilateral relations had "fully recovered", and they made progress this year. He said that a 'rational, pragmatist, and positive' policy towards China was in full accordance with South Korea’s interests, as well as the current trend. Wang called for a 'rapid completion of the second-stage negotiations with 'South Korea to establish a free trade deal, saying that the two countries must promote regional integration in light of the increasing fragmentation and protectionism in the global market. (Reporting and editing by Christian Schmollinger; Liz Lee, Ethan Wang)
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Tajikistan has requested 2.5 million tonnes of fuel and oil from Iran
The Central Asian country's Transport Ministry said that Tajikistan had asked for 2.5 million metric tonnes of?oil from Iran, while its traditional supplier, Russia, is also experiencing fuel shortages. The ministry posted a statement on its website last week stating that Tadjikistan had requested 2,55 million tons, which included?2 millions tons of crude oil, 150,000 tonnes of gasoline, 300,000 metric tons of diesel, and 100,000 metric tons of jet fuel. Tajikistan has traditionally imported up to 80% of its petroleum products from Russia. However, the Persian-speaking nation also shares close cultural and linguistic links with Iran. The timeframe was not given for the supply. In recent months, Russia has experienced a 'fuel shortage' as Ukraine waged a drone campaign against its oil refineries. In July, Tajikistan’s?energy? minister said that the authorities were in negotiations with Kazakhstan, Turkmenistan and Iran regarding additional supplies. Export bans for aviation kerosene, diesel fuel and gasoline have been implemented in Russia to stabilize the domestic fuel market. The ban does not apply to intergovernmental supply agreements. Reporting by Felix Light, Editing by Kirby Donovan
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Singapore's oil product inventory falls to a two-month low
According to government data, oil product inventories in Singapore, Asia’s main fuel trading hub, fell for the second consecutive?week, reaching two-month lows. Light distillates inventories are nearing a 5-year low. Enterprise Singapore reported that combined onshore oil products inventories were around 37.67 millions barrels for the week ending August 19. This is down from 38.44million barrels one week prior. Even though the imports of refined fuels like diesel, gasoline, and jet fuel from China dropped, they were in line with the expectations that the market had set since Beijing began to loosen its control over exports in July. As U.S. peace talks with Iran faltered, the markets were still worried about supply risks. Meanwhile, shipping through the Strait of Hormuz was unchanged on Wednesday from the previous day. MIDDLE DISTILLATES LIGHT?DISTILLATES SLIP Stocks of both middle and light distillates fell from a previous week. The stocks of light distillates have fallen to just under 11 million barrels, the lowest level since November 2021. The majority of gasoline imports came from countries in Northeast Asia, such as China and South Korea. Exports of gasoline were mainly to Indonesia, Malaysia, and Pakistan during the week. The city-state is a net jet fuel importer despite a 89% decline in its net diesel and gasoil exports week-on week. Imports of diesel and gasoil increased by over?10 compared to a week ago, with China as the main contributor. It was the same for jet fuel and Kerosene as China's volumes grew to nearly 70,000 metric tonnes. The traders expect more Chinese cargoes to be exported in the remaining months of August and September. RESIDUAL STOCK REMAIN BELOW THE AVERAGE EVEN AFTER WEEKLY GAINS The residual fuel stockpiles rebounded after a drop last week but are still below the average. The data showed that inventories were up 6.9% on a week-to-week basis, at 18.42 millions barrels (2.90million tons), reaching a two-week high. The total imports of fuel rose by 77.9%, to over 746,000 tonnes. Mexico was the largest supplier of fuel oil for the past week. Exports increased by 40.1% compared to the previous week, reaching a total of?over 348,000 tons. The majority of these exports went to China. Market sources reported that spot premiums on the low-sulfur fuel market showed some signs of easing this week even though the supply was still tight.
Investors question Treasury's rescue measures as bond relief falls and stocks fall
Investors began to question the effectiveness of the Treasury's support on Thursday, as bond prices slid and stocks were under pressure.
The yield on the 30-year U.S. Government Bond rose by 3.05 basis points, to 5.2235%. It had fallen to 5.1765% a day earlier. This was after the Treasury announced that it would buy back additional longer-dated bonds. Prices and yields are inversely related.
The bond market was closely watching the moves to see if they were able to stop a downturn that had sent shockwaves through multiple asset classes.
The MSCI global stock index fell for four straight sessions, the longest losing streak since March. It then gained 0.30% on Thursday.
The buyback announcement was more of a temporary fix than a panacea. It is a reminder that Treasury Department is watching and will do everything it can to prevent yields from becoming too high, said Lawrence?Gillum. Chief fixed-income Strategist for LPL Financial.
The benchmark 10-year rate rose 1.9 basis point to 4.6723% after a 5 bps drop on Wednesday. Yields of government bonds in Germany, Japan and other countries have eased.
SOUR SENTIMENT WEIGHS STOCKS
The STOXX 600 pan-European futures and S&P 500 Futures both fell by 0.14% and 0.20%, respectively. Stocks are typically affected by higher bond yields.
The high oil prices dampened the mood as well. Brent crude futures increased by 1.54%, to $93.06 per barrel. The disruption in the Strait of Hormuz shows no signs of abating.
The drop in futures that track the tech-heavy Nasdaq 100 was more muted. This was helped by optimism about AI.
It's penny-wise and pound-foolish of tech companies to be concerned about the yield curve. "The fundamental story of AI is that it will continue to grow regardless," said Marta Norton. Chief investment strategist at retirement services provider Empower.
She added that tech firms cannot afford to cut back on their AI spending because they could lose out in the long run. This dynamic may help to limit the impact bond market volatility has on AI stocks.
The euro has risen 0.13% on the currency markets to $1.1694, its highest level since May. The yen fell 0.17% to $158,44.
The dollar index (which measures the U.S. Dollar against six major counterparts) was down by 0.11% to 98.72.
The minutes of the Federal Reserve’s most recent policy meeting, released on Wednesday, showed that inflation concerns have grown. "Several" policymakers appeared ready to increase interest rates. "Many" said a rise in borrowing costs will be necessary if inflation doesn't fall to the central banks' 2% target. (Reporting from Rae Wee and Niket Nishant, both in Singapore and Bengaluru; editing by Jamie Freed and Thomas Derpinghaus)
(source: Reuters)