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Investors balance Iranian and Chinese demand as copper claws reach a three-week high
On Friday, copper prices reached their highest level in over three weeks as investors weighed up signs of increased demand from China's top metals consumer against the uncertainty surrounding a fragile ceasefire during?the Iran War. In official open-outcry trade, benchmark three-month copper on the London Metal Exchange rose 0.6% to $13,755 per metric ton and reached its highest level since March 17, at $12,845. The week was expected to close with a gain of about 4%. LME copper rose 1.2% after the official rings, when a Federal Reserve official stated that a rate reduction was possible if oil prices fell. LME copper is up 10% since March 23 when it fell to its lowest level in three months on hopes that the Middle East war would end. Ole Hansen is the head of commodity strategy for?Saxo Bank, Copenhagen. He said: "I do not think that there's a desire to invest in commodities where there's a risk of deterioration?ahead?of those negotiations in Islamabad." Investors were cautious as a fragile ceasefire agreement between the U.S., Iran and other countries that has been in place for two weeks showed signs of strain on Friday. This was a day before negotiations are scheduled to take place in Pakistan. Markets were supported by signs that demand was improving in China. Copper inventories in SHFE-monitored warehouses fell 11.5% in the past week after falling 37% in the last three months. Data showed that the Yangshan copper price premium, which represents demand for copper imported to China, has risen to $73 per ton. This is its highest level since June of last year. Hansen explained that "even though there is concern about Iran, actual numbers on the ground point the opposite direction. The market tries to navigate between these two elements." He added that the key technical resistance to the upside is $12800. This is based on the retracement of February and March, as well as the?50 day moving average. The copper price rose to its highest level since December 2013 despite a new increase in LME inventories. LME aluminium official activity rose by 1.1% to $3,482.50 per ton as the ongoing closure of the Strait of Hormuz brought to light?supply problems in the Gulf which account for?about 8% of the global production. Nickel gained 0.5% at $17,175 while tin increased 0.7% to 48,000.
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The Lithium Bulls are set to crash the Copper Party in Chile
Chile will break from 'precedent' and host a panel on lithium at its annual global gathering of copper next week, in an effort to radically diversify its economy beyond the red metal which has been?powering it for decades. On Monday, the World Lithium Conference, organized by the International Lithium Association and the consultancy 'CRU', will launch what the copper industry calls CESCO Week. After months of stagnation, lithium prices have risen to levels not seen in two years as renewed interest in the metal is sparked by concerns about oil supplies in the Middle East. The lithium supply is tightening as a result of the closing of a major mine in China, the export ban in Zimbabwe and the dwindling stocks in lithium carbonate. According to the U.S. Geological Survey, Chile is home to 13 million tonne of lithium, the third largest in the world after Argentina and Bolivia. NEW PRESIDENT, NEW EXPECTATIONS Five mining companies including Rio Tinto are vying for rights to develop the country's vast deposits. The new Chilean president, Jose Antonio Kast is spoilt for choices. Ignacio Mehech is CEO of CleanTech Lithium. He said, "The lithium strategies rolled out by 2023 were a good direction. We hope the new government will take it up, and make?it easier and faster to award contracts." CleanTech, a London-listed company, has received a licence to produce lithium. However, it needs to obtain an environmental permit before mining. It is raising money to build a $750m mine at the edge of the rich lithium-rich Salar de Laguna Verde. DEMAND FOR MORE MINE AND MORE MINES According to CRU, there is a strong movement behind lithium. The number of active mining operations has doubled in the last four years, and will reach 80 mines by 2026. Martin Jackson, CRU's director of lithium and batteries, stated that the demand for stationary lithium batteries is continuing to increase, which helps to offset the weakness in EV markets. He said that lithium will continue to be the most competitive energy-density technology for many years. According to CRU the average lithium carbonate price in China is expected to be around $22 per kilo this year. This represents a 135% increase from last year. Investors are also optimistic. Macquarie, an investment bank, estimates that global lithium demand is expected to increase by over 20% a year until the end of this decade. This will be due to energy storage demand. Asad Farid is the director of?J's strategic materials equity funds. Safra Sarasin Sustainable Asset Management. US-CHINA TENSIONS WEIGH Chile's diversification of its lithium industry comes at a moment when tensions between China, the U.S. and other natural resource rich regions like South America are "spilling over". China's share of the global lithium market has increased steadily over the last four years from 75% to almost 90%. The Guangzhou Futures Exchange lithium price has become a benchmark for the industry. Chile has already tasted the diplomatic balancing act that is required when it pursues the China Mobile-backed fiber-optic connection between the wine-town of Valparaiso, and Hong Kong, despite U.S. opposition. "With President Trump's current approach, we may have to think twice about going for Chinese investors," said Marcelo Adwad. A mining veteran from Chile, he advises?Wealth Minerals a Toronto Stock Exchange listed lithium company. Wealth Minerals has been in talks with India’s state-run Coal India Limited regarding a possible joint venture and is seeking investors for its $750m lithium mine. Some people believe Chile should maintain its neutrality. Mehech, CleanTech's CEO, said that Chile could not afford to pick one country. Reporting by Fabian Cambero in Toronto, Divyarajagopal in London, and Tom Daly, with editing by Veronica Brown and Ernest Scheyder.
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As US rate-cut betting rises, gold is set to gain for a third consecutive week but will edge lower.
The gold?prices dipped, but remained on a?track to a third consecutive?weekly - gain, as the markets reassessed if there would be a U.S. rate cut if the fragile U.S. - Iran ceasefire held. By 1113 GMT, spot gold was down 0.2% at $4755.45 an ounce. This week, it has risen by 1.7%. U.S. Gold Futures for June Delivery fell by 1.1% on Friday to $4,767.30. Dollars were set to drop by 1.4% per week, which made bullion in that currency more affordable for holders of currencies other than the dollar. The UBS analyst Giovanni Staunovo said that the announcement of the ceasefire caused the market to sell oil, causing inflation expectations to fall. Rate cuts were also priced in this week. Inflation and rate cuts are in question Oil prices rose on Friday, driven by concerns over disruptions of Saudi Arabian supplies. Still, they faced a?a 12% drop in one week. This is the biggest weekly fall since June 2025. The spot gold price has dropped about 10% since the beginning of the war against Iran on February 28. High energy prices have led to expectations of inflation and higher U.S. rates of interest, which is a disincentive for holding non-yielding gold. According to CME's FedWatch Tool (a tool that tracks interest rates), investors expect at least one rate reduction by December, up from just 12% in the previous week. The conflict in the Middle East will continue to influence the system. Staunovo stated that he still had a positive outlook for the long term because of all 'the structural factors which remain in place. Iran's near-total blocking of the Strait of Hormuz is not lifting. Tehran cites Israel's ongoing attacks on Lebanon which included the most heavy strikes of the war on Wednesday as the sticking point. The markets are also focusing on the March U.S. Consumer Price Index, which is due later that day, for further clues about the?Fed?s monetary policy. In India, gold demand has risen slightly. Premiums in China have decreased as the retail market in China slowed. (Reporting by Ishaan Arora in Bengaluru; Editing by Barbara Lewis and Jan Harvey) (Reporting from Bengaluru by Ishaan arora; Editing by Barbara Lewis & Jan Harvey).
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SpaceX's $1.75 Trillion price tag: An unconventional rationale
Wall Street uses some unconventional yardsticks in order to value 'Elon Musk’s SpaceX. One of SpaceX's largest institutional investors benchmarks the rocket and satellite firm not against aerospace competitors like Boeing or telecom titans like AT&T but against AI infrastructure players like GE Vernova, Vertiv and Palantir Technologies in a bid justify a $1.75 billion valuation ahead of the biggest IPO ever. A source familiar with SpaceX's thinking described the framework to me?for the very first time. It illustrates the unusual challenge of valuing a company without obvious public competitors - and how far Wall Street will go to justify a premium valuation. SpaceX filed for a U.S. IPO in secret, according to a report last week. As previously reported, the company will hold an analyst's day on April 21. SpaceX's potential $1.75 trillion valuation is expensive by most traditional measures. This includes comparisons with the earnings and revenues multiples of firms that are often used as references for its business. Boeing and Lockheed Martin's joint venture United Launch Alliance, which competes with SpaceX for launch services, are the peers in space. AT&T, Verizon and other internet service providers would be the peers in this case. Financial backers of SpaceX, which is on track to raise 75 billion dollars in an IPO in this year, argue that comparisons with established firms in legacy industries miss the point. They say SpaceX and Musk's other companies are positioned to benefit from long-term "secular economic shifts" at a time where few competitors have the ability to do so. Musk's companies are known to command high multiples, in part due to?investors betting on him personally. Tesla is the most obvious example. And SpaceX investors anticipate that this dynamic will carry through into any public offering. SpaceX CFO Bret Johnson told IPO banks on a recent conference call that it was "pretty exciting" to be able to sell into the "largest total addressable market" in human history - a $370 billion potential space business. According to the sources, Bret Johnsen estimated the market potential for Starlink's internet service as $1.6 trillion. SpaceX has not responded to a comment request. RETHINKING COMPARABLES The fierce debate about the price of SpaceX's massive IPO is centered on finding the right comparables. Bankers and investors are struggling to determine the value of the company, despite the fact that there are few or no closely comparable public counterparts. Investors and bankers often sort comparables by industry, based on the assumption that this is a good way to measure financial risk and opportunity. Many investors believe that companies need not be in the same sector to be comparable. They say it is more important for them to compare cash flow, growth and risk profiles. According to this approach, a better comparison is made with companies that are selling into AI data-center buildsout. These companies have been famously rewarded by rising share prices and high multiples. Jay Bala said that the?calculus for smaller funds is different. AIP in Toronto manages assets of?approximately $100 million, with a significant portion concentrated in SpaceX. "I am piggybacking the biggest funds in the universe. Due diligence has been carried out in great detail. "I'm not going second-guess the world's biggest investors," he said. He admitted that it was difficult to get detailed financial information on SpaceX. "You only can get so much." Sometimes it's difficult to get numbers. STARLINK VERSUS STAR TELECOMS Starlink, or what SpaceX refers to as its "connectivity business", is compared with legacy telecom companies. However, some investors claim that these comparisons have been skewed due to aging infrastructure, saturated markets in the United States, and years of modest revenue growth. I wouldn't consider AT&T or Verizon to be very relevant for the Starlink economic model, even though both companies are in the business to provide communication, said a senior executive from one of SpaceX’s largest institutional investors, who spoke on the condition of anonymity because the work was confidential. Palantir is a better choice for SpaceX investors because of its high returns on capital invested, good margins, and asset-light structure. These qualities, say fans, justify the high multiples that the stock commands, and indicate greater opportunities in the future. Palantir, a well-known stock in the market that trades at 43 times revenue expectations and 75 times earnings, is known for being one of the most expensive stocks. Skeptics claim that these levels are unsustainable. However, SpaceX supporters say that they are achievable if backed up by exceptional financial performance. According to PitchBook, Palantir, with a market cap of $1.75 trillion would still be cheaper than SpaceX on these measures, as it would trade at 110x revenue estimates for 2025. "Investors should size positions with the understanding that they are paying a platform premium today for infrastructure-monopoly economics tomorrow," PitchBook analyst Franco Granda said in a note ?last month. ROCKET MANUFACTURING COMPARISONS SpaceX investors argue that for the rocket manufacturing part of the business, the firm's achievements - such as the fact it built a reusable system, drove down unit costs drastically and expanded into a market where the demand for launch capability continues to grow - demand valuations much higher than those at Lockheed. Lockheed traded recently for around 20 times the expected earnings for next year. Boeing's high multiples reflect the fact that it is a?turnaround story. They instead turn to industrial names like GE Vernova or Vertiv whose stock has soared due to AI data-center expenditure, arguing that SpaceX launch operations should be re-rated to "picks-and-shovels" in the data-center era. These preferred comps are not very similar to SpaceX. GE Vernova traded at around 30x expected cash flow, and four times revenue last year. Vertiv, a company that sells cooling and power equipment for data centres, was recently traded at 19 times the expected operating profit, and 6 times sales last year. MESSY PRICES AND RATIONALIZATION Investors and bankers say that SpaceX is difficult to price due to the unique nature of its space operations and AI businesses, which are difficult to value in an early stage. Aswath?Damodaran, finance professor and valuation expert at New York University Stern School of Business, said: "Pricing will always be messy." "Nobody has the capacity to launch satellites at such a low price and in such large numbers as they do. That's their biggest advantage." He says that the current price is a reflection of investors' justifications for purchasing the shares, rather than traditional metrics. They're hoping that there is enough momentum and mood behind SpaceX and, when it goes public in the future, this will drive the stock price up. "They have already decided that SpaceX will be a good buy," Damodaran stated. "Now they are looking for a way to justify this, and the pricing is that exposed rationalization."
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UK gilts fall sharply as oil prices rise again
The price of British government bonds fell for the second consecutive day on Friday, as oil prices rose again amid concerns about the damage caused to Saudi Arabia's energy infrastructure by the Iran War. Long-dated gilts suffered?the largest?drops. The performance of gilts was below that of similar U.S. debt, German debt and French bonds. This reflects Britain's vulnerability due to the fallout caused by rising energy costs. Britain is heavily reliant on natural gas, and its public finances are stretched, making it difficult to provide state support. Long-dated gilts have been increasingly hurt by fiscal worries The 20-year bond yield, which moves in the opposite direction to the price of the bond, was up by?8 basis point on the day, at 1018 GMT. This is on track for a?small?weekly rise after having fallen on Wednesday following news of the ceasefire between Iran & the United States. The?optimism of the ceasefire holding provided a modest lift to Friday's?shares, but the?global bonds markets were hit by the rising oil prices following a report that Saudi Arabian energy facilities had been attacked. The Strait of Hormuz is also largely closed to tanker traffic. Emma Moriarty is a portfolio manager with CG Asset Management. She said that spikes in gilt yields have become more common in recent years, as the UK's economy has been left vulnerable by high public debt levels and anaemic growth. She said that inflation-linked bonds performed better than conventional gilts, unlike the "mini budget" crisis in 2022 that was driven by concerns about the fiscal cost of former Prime Minister Liz Truss’ tax?cutting plans. Investors have been willing to pay more than usual for inflation-protected bonds, especially at the'short?end' of the curve, where our funds are located, Moriarty stated. The yields on short- and medium-dated bonds were up 5-7 basis points in the past day. (Reporting and editing by Sharon Singleton: Andy Bruce)
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Big Tech invests in next-generation nuclear power as AI demand soars
Big Tech has reshaped the funding landscape of new nuclear technologies. It is seeking to boost electricity supply for power hungry AI data centers. Deals are being signed that offer both?funding for nuclear companies and a more clear path to make money. A number of?U.S. The U.S. is developing modular reactors which are smaller, more advanced and more scalable than conventional nuclear power plants. But no commercial electricity has been produced yet due to challenges like financing and unique risks. The sector is gaining momentum due to the need to provide enough energy to power the data centers in the face of the growing demand for AI. Meta has agreed to fund the construction of two Terrapower units that can generate up to 690 MW. Meta has also signed an?agreement with Oklo for the development of a nuclear technology campus capable of generating 1.2 GW in Ohio. Amazon is partnering with X Energy to bring more than 5 GW in small modular reactors online by 2039. Alphabet’s Google, meanwhile has signed an agreement to bring its first modular reactor online by 2030. Shioly Dong is a senior analyst at BMI Solutions, a division of Fitch. She said, "They provide the certainty of revenue that commercial banks require to finance construction debt." Investors interested, but cautious According to the Energy Information Administration (EIA), U.S. electric use is expected to rise by 1% in this year and by 3% next, mainly due to data center demand. Tim Winter, Gabelli Funds portfolio manager for the Gabelli Utilities Fund, (GABUX), said that small modular reactors have emerged as a more viable nuclear alternative because of their modular size and shorter construction timelines. He also added that he closely monitors companies such as NuScale, and Oklo. The industry needs someone to assume the risk of cost overruns or delays. He added that the degree to which hyperscalers will do this will determine "just how much (these agreements) give the sector". Bonita Chester, Oklo's spokesperson, says that AI is driving customers to sign long-term contracts which can help fund project development. According to the agreement between Meta and Oklo, funding is provided?to secure nuclear fuel, as well as advance the Ohio project's first phase. Some institutional investors are also interested in the prospect of long-term buyers, as the sector has traditionally relied on government funding and venture capital. Tess Carter is the associate director for the energy and climate practice of Rhodium Group. She said, "We've heard that banks are interested in making deals in this space. That would be a major development. We haven't yet seen that." The industry, which analysts and experts call "advanced nucleic", still faces many obstacles, such as high construction and technological risks. Institutional investors are interested but have not yet invested in the sector on a large scale. The Nuclear Scaling Initiative recently released a report that noted the looming shortage of skills and the competition for workers with other industries, including data centers. Chester, from Oklo, said that "demand alone is not enough to accelerate commercialization for advanced nuclear." (Reporting and editing by Saumyadeb Chkrabarty; Kavya Balaraman)
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Kremlin denies that the visit of Putin's envoy to the US means Ukraine talks are back on track
The Kremlin announced 'on Friday that the visit of Vladimir Putin’s special investment envoy to the United States did not mean that negotiations on a possible peace deal for Ukraine have resumed. According to sources familiar with the visit, it was reported that Kirill Dimitriev, Putin’s envoy in the U.S., met members of President Donald Trump’s administration on Thursday for discussions about a peace agreement and U.S.-Russian economic cooperation. When asked about this matter, Kremlin spokesperson Dmitry Peskov said to reporters: "Kirill Dmitriev does not negotiate a settlement in Ukraine and?this not a resume of the negotiations." "Kirill is the head of 'the group for economic issues. He continues to work in this group." Putin announced on Thursday a 32-hour truce over two days for Orthodox Easter Sunday. Volodymyr Zelenskiy, his Ukrainian counterpart, said that Kyiv will adhere to the measure. Peskov - who has stated that peace talks have been halted because of events in the Middle East - said 'the ceasefire is humanitarian in nature, and that Russia wants a proper peace deal, not just a ceasefire. Peskov stated that "we do not want a ceasefire. We want peace. A lasting, sustainable peace." As President Putin said in the past, Russia does not just 'want a peace deal. Peskov stated that "this 'peace' can be achieved today, if President Zelenskiy takes the right decision and is responsible." Reporting by Dmitry Antonov; Writing by Guy Faulconbridge, Anna Peverieri and Andrew Osborn.
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Kemcore is planning to build mining chemical plants on the continent of Africa in an effort to reduce imports
Kemcore, an African mining chemicals importer, is planning to build its processing plants in?Botswana?and Angola?to reduce the geopolitical risks associated with imports from China?and the Middle East?. Africa is an important supplier of minerals that are critical to the energy transition. It's also a battlefield for the United States, as Washington tries to curb Beijing's dominance by securing the supply chains. Zambia and the Democratic Republic of Congo are the two countries that dominate Africa's production of copper, while Congo is the world leader in cobalt. This puts the central African copperbelt right at the center of the minerals competition for energy transition. ?Chemical inputs such as sodium metabisulphite and sulfuric acid, which are used to extract these metals, have to be imported. This exposes miners to supply disruptions - including geopolitical risks, most recently the war in Iran. Calisto Radithipa, founder and chief commercial officer of Kemcore, said that the sulphuric acid price in Tanzania's Dar es Salaam port is higher than usual after the war interrupted sulphur shipments. Radithipa stated that Kemcore Botswana's?plant? will be operational by?middle next year and feed copper and cobalt to producers in Zambia, and Congo. The facility will produce SMBS and sodium hydrosulphide, as well as flotation collectors like xanthates - chemicals used to process copper and cobalt ores. The facility is expected to produce 57,500 tonnes annually by 2027 and ramp up to 250,000 tons in 2032, which will be around 25% of Africa’s demand. Kemcore CEO Godfrey Johnson revealed that the total project costs are $103 million. A large part of this funding will come from Africa. Johnson said that some U.S. agencies had also shown early interest in investing, as Washington tries to loosen China’s grip on Africa’s mining industry. Johnson?added that no commitments had yet been made. He declined to name the firms. Washington will be focusing on partnering with countries to support transparency in their mining sector. This includes local processing when it is economical. Johnson stated that Kemcore's goal is to capture 25% of the $500 million African metals market. Local production will reduce costs for miners. A facility in Angola, already funded by the company and linked to a project for rare earths, is also being developed. The facility will produce a total of?88,000 tonnes of sulfuric acid per year and 50,000 tonnes caustic lime. Johnson stated that "Africa can't continue to export raw materials and import the products required to process them." The raw materials, customers and technology are all here. (Reporting by Maxwell Akalaare Adombila & Olivia Kumwenda-Mtambo; Editing by Janane Venkatraman)
The US utility stocks have had their best start in 2019 so far. Can they maintain their momentum?
U.S. Utility stocks have had their best start since 2019. This is due to a'retreat of investors from riskier assets during the Iran War and the strong demand for electricity from firms building artificial intelligence infrastructure.
According to LSEG, the S&P 500 Utilities Index grew 7.5% during the first three months of the year. This is the strongest start since the first quarter in 2019. S&P 500 fell by 4.6% during the same quarter, its worst since 2022. This was due to inflation fears and a spike in energy prices. Since then, the index has recovered some ground and is now approaching a month-high this week?after U.S.-Iran agreed to a 2-week ceasefire.
Utility companies have a long history of being a defensive sector, which offers investors steady dividends and less volatility in market fluctuations.
Stocks in the S&P 500 Consumer Staples and S&P 500 Real Estate, which are considered "bond proxies", also rose during the first quarter.
Matt Stucky is the chief equity portfolio manager at Northwestern Mutual.
AI DEMAND
Utility stocks have benefited from the increasing electricity demand by large technology companies who are building massive data centres in their quest to dominate artificial intelligent. Electricity consumption from data centers is expected to quadruple in the next decade, according to a study by the Electric Power Research Institute.
Gerry Sparrow is the president of Sparrow Capital Management. He said, "I have read some recent quarterly calls by utility companies and I can see that the main drivers are data centers and increased electricity demand. These factors are crowding out all other interests."
Data center demand comes from technology companies, namely Alphabet Meta Platforms, and Oracle. Their capital budgets include data center construction?for AI. This is a?selection of what's driving the market, particularly around individual utility firms."
RISK ON TRADE
Fund managers will likely start to move away from defensive positions and into more growth-oriented and cyclical names.
The utilities sector could lose some of its recent gains. Sparrow said that utility companies that have direct exposure to AI buildout, particularly those who serve commercial customers along 'data center corridors' in Virginia, Texas and Florida, as well as the Midwest, are expected to retain investor attention.
These companies include American Electric Dominion Energy Nextera Energy Xcel Energy Duke Energy.
Sparrow explained that a lot of their performance will be determined by how many industrial customers they serve compared to residential customers in the cities.
(source: Reuters)