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Copper continues to lose value as the dollar gains strength
The dollar strengthened on Tuesday as the U.S. Federal Reserve was divided over a rate cut in December. In addition, the delayed September payrolls were the main focus. The Shanghai Futures Exchange's most traded copper contract closed the day trading at 85,650 metric tons down by 0.88%. By 0708 GMT, the benchmark three-month price of copper at the London Metal Exchange had fallen by 0.97%. It was now $10,674 per ton. Dollar benefited from a decline in expectations that the Fed will cut rates next month. The dollar's strength makes commodities traded in greenbacks more expensive for investors who use other currencies. Thursday is the date for the official release of September's jobs data. The shutdown of the U.S. federal government caused the delay. Investors are more sensitive to the labour market signals, as they reassess near-term Federal Reserve path. Nickel, among other SHFE base materials, led the sell-off on Tuesday, and ended daytime trading at 114.840 yuan per ton, down by 1.67%. Metal, which is used to make batteries and stainless steel, fell by as much as 1.8% to 114.68 yuan per ton earlier, reaching its lowest level since July 2022. The London Metal Exchange's three-month nickel fell 0.85%, to $14,525 per ton. The London Nickel reached its lowest level since last April. Traders said that nickel fundamentals have been showing signs of weakness in the past two weeks. Nickel pig iron Nickel, a raw material used to make stainless steel, traded at just over 900 yuan a unit. This is down from 950 yuan around mid-October. Nickel sulfate is used as a battery feedstock Also showed signs of weakness entering November. LME nickel stocks Nickel stocks rose to 252,090 tonnes on November 17 while the corresponding gold stocks decreased On Friday, the SHFE sheds reached 35 826 tons. Shanghai aluminium fell 1.22%. Zinc dropped 0.58%. Lead lost 1.12%. Tin declined 0.36%. Aluminium fell 0.92% on the LME, while zinc dropped 0.80%, Tin tumbled 0.88% and Lead was down 0.34%.
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Dalian iron ore prices continue to rise, but profit-taking limits gains
Dalian iron ore prices rose for the second session in a row on Tuesday, reaching a new two-week-high due to strong near-term demand from China's top consumer. However, profit-booking and a declining basis limited some gains. The contract for January iron ore on China's Dalian Commodity Exchange closed the daytime trading 1.41% higher, at 792 Yuan ($111.35), its highest price since November 3. On Monday, the contract also reached a new two-week high. As of 0758 GMT the benchmark December iron ore price on the Singapore Exchange had remained unchanged at $104.4 per ton. This follows a day-ago gain of over 1%. Two analysts and a trader reported that the prices were supported by a resilient demand for the near-term, as some mills resumed production following maintenance of equipment. A Singapore-based trader stated that "Spot Liquidity was quite lukewarm and weighed on sentiment". Mysteel, a consultancy, reported that the volume of seaborne and portside cargoes fell by 25,8% and 24,3%, respectively, from Monday's previous session. A Shanghai-based analyst said that higher prices have reduced mills' purchasing appetite. Industrial participants remain bearish on the price trend, amid increasing inventories and seasonal weakening of steel demand. The trader from Singapore said that the upward momentum also slowed down due to the narrowing of the basis, which is the difference between the spot and futures price. The narrowing gap between spot prices and futures also supported futures, which fell at a faster pace than spot prices earlier in the month. Analysts and traders have requested anonymity because they are not authorized to speak with media. Coke and other steelmaking materials, such as coking coal, fell by 3.86% and 2.86 %, respectively. The Shanghai Futures Exchange has seen a rise in most steel benchmarks. The rebar price rose 0.46%. Hot-rolled coils increased 0.21%. Wire rod increased 0.12%. Stainless steel fell 0.12%. $1 = 7.1126 Chinese Yuan (Reporting and editing by Subhranshu Sahu, Mrigank Dhaniwala and Lewis Jackson)
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Gold falls for fourth day as dollar firmness and Fed rate-cut betting eases.
Gold dropped for the fourth consecutive session on Tuesday. The dollar was strong and there were fewer prospects for an interest rate reduction in the United States next month. As of 0646 GMT, spot gold was down by 0.8%, at $4,011.85 an ounce. U.S. Gold Futures for December Delivery fell 1.6%, to $4.010.90 an ounce. "The dollar has strengthened a little bit today, and some speculative positions have been cut back in the past week." "The gold market will consolidate for the time being," said Marex analyst Edward Meir. After a steep rise in the session before, the dollar remained stable against its competitors. Gold becomes more expensive when the dollar is stronger. Last week, Congress reached an agreement on the end of the longest U.S. Government shutdown in history. The absence of official data about the economy dampened expectations that the Federal Reserve would cut rates again in December. Fed Vice-Chair Philip Jefferson said Monday that the U.S. Central Bank needed to "proceed gradually" with additional rate cuts. This has dented expectations of a reduction next month. Gold that does not yield tends to perform well in low interest rate environments and times of economic uncertainty. This week, the focus will be on U.S. economic data, such as the nonfarm payrolls September report, which is released on Thursday. These releases can provide clues about the health of the largest economy in the world. "Expectations that the Fed would cut again next months dropped from a peak of almost 100% shortly after the September announcement to just 42% over night. ANZ noted that this has impacted investor appetite for the yellow metal. The medium- and longer-term investment demand is expected to be supported by structural tailwinds such as geopolitical uncertainties, concerns over U.S. debt sustainability and de-dollarisation. Spot silver dropped 1.1% to $49,63 an ounce. Platinum fell 1.3% to $1514,35 and palladium declined 1.2% to 1,369.78. (Reporting by Brijesh Patel in Bengaluru; Editing by Subhranshu Sahu)
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Asian markets fall as investors worry about tech valuations
The Asian stock market fell to a one-month low on Tuesday, with the most selling taking place in Japan and South Korea. Earnings from chipmaker Nvidia are expected later this week and will be a test of valuations in the entire sector. Bitcoin, the mood-barometer, is now below $90,000. This is the first time it has been under that level in seven months. Japan's Nikkei was on track to have its biggest one-day drop since April, with a decline of 3%. FTSE futures and European futures both fell more than 1%. Tareck Horchani is the head of prime brokerage at Maybank Securities, Singapore. He said that it was less about a catalyst than about a combination of positioning fatigue, valuation sensitivities, and the growing feeling that a pause is needed in this rally. MSCI's broadest Asia-Pacific share index outside Japan fell by 1.8%, to its lowest since mid-October. South Korea's KOSPI fell 3.3%, Australia S&P/ASX200 dropped almost 2%, and Hong Kong Hang Seng Index shed 1.67%. The stock market weakness in Asia was a reflection of the extended selloff that occurred overnight on Wall Street, as markets prepared for an influx of economic data. November has seen a greater level of volatility in global equity markets. "Unlike October, major indices are stalling, and have not been able to reach new record highs," Besa deda, chief economic advisor at William Buck in Sydney, said. NVIDIA ANTICIPATED Investors are eagerly awaiting the quarterly earnings of Nvidia on Wednesday, as they look for any signs that a sector has weakened in recent months. BNP Paribas' basket of Japan’s top AI-related stock tracked during Tuesday’s session fell by 4.7%, bringing its monthly decline from the end of October up to around 15%. The basket had risen 130% between the beginning of the year and October. Jason Lui is the head of APAC Equity and Derivative Strategy at BNP Paribas. Investors will be more selective in their investments as they analyze the spending and its sustainability. On the foreign exchange markets, the safe havens like the dollar, the yen and the Swiss franc are bought. The Swiss Franc was only 0.80 dollars strong. The dollar index was unchanged at 99.5. The yen rose by about 0.15 percent to 155 dollars, a relief for Japanese officials who had been vocally protesting the yen's weakness. JGBs SLIDE On worries over Prime Minister Takaichi’s ballooning budget plans, Japanese government bonds have also fallen, with some long-end rates reaching record highs. The first meeting between Takaichi and Bank of Japan Governor Kazuo Ueda since the new leader's inauguration last month was closely monitored at 0630 GMT. Ueda hinted at the possibility of an interest rate increase as early as next month. Takaichi, and her finance Minister, Satsuki Catayama, both want rates to stay low until inflation reaches the BOJ's target of 2%. "My expectation would be that another rate increase will be delayed until 2026." The BOJ could wait until the first quarter to see the results of wage negotiations. It is a conservative organization and they can continue to wait," said Tai Hui. Chief market strategist at JPMorgan Asset Management for Asia. Brent crude futures fell 0.67% during the Asian session, to $63.77 per barrel. Bitcoin fell almost 2%, dropping below $90,000. This is a drop of about 30% since its peak. (Editing by Shri Navaratnam & Christian Schmollinger).
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Russell: China increased its crude stockpiles in October, as oil prices declined.
In October, China's crude oil storage volumes likely increased as a result of robust imports and domestic production outweighing an increase in refinery processes. According to calculations based upon official data, China's crude oil surplus was 690,000 barrels a day (bpd), up from 570,000 bpd a month earlier. China's rate of adding crude oil inventories to its reserves is seen as an important factor for the demand of crude oil in the world’s largest importer. It also adds uncertainty to price forecasts. According to the National Bureau of Statistics, data released on November 14, China's refineries produced 14.94 million barrels per day in October. This is an increase of 6.4% over the same period last year. However, this is down from the previous two-year peak of 15.26 millions bpd achieved in September. In October, crude imports totaled 11.39 million barrels per day (bpd) while domestic production stood at 4.24 million. This gives a total of 15.63 millions bpd available for refiners. After subtracting the refinery processing, there are 690 000 bpd of crude oil that can be added to strategic or commercial storages. China does not reveal the volume of crude oil flowing in or out of strategic and commercial stocks, but it can be estimated by subtracting the amount processed from total crude produced domestically and imported. Not all the excess crude is likely to have gone into storage. Some of it was processed in plants that are not included in the official data. Even if you allow for these gaps, however, it's clear that China imported crude oil at a much higher rate from March to July than was necessary to meet its domestic fuel needs. The surplus crude for the first ten months of the current year is approximately 900,000 barrels per day (bpd), given that the combined imports and domestic production are 15.65 millions bpd. Refinery processing was 14.75 million barrels per day. The surplus was built up from March, after refiners drew on their inventories for the first time in January and Feburary when they processed crude at a rate that exceeded available crude by approximately 30,000 bpd. It was the first since September 2023 when the throughput of crude oil from domestic production and imports exceeded the amount imported. Price Impact The decline in inventories for 2025 was accompanied by rising oil prices. Brent futures, the benchmark contract, reached their highest level so far this season of $82.63 per barrel on 15 January after steadily increasing from levels of around $70 at the beginning of December. Since then, crude oil prices have been trending lower with some spikes due to geopolitical tensions like the conflict between Israel & Iran in June. Brent crude oil ended Monday at $64.20 per barrel, the midpoint of the $60 to $70 range which has been in place since August began. China's refiners, as well as the authorities in Beijing, don't discuss their strategies publicly, but it is clear that they import more crude oil when they consider prices reasonable and reduce them when prices are too high. In September, the excess crude fell to 570,000 bpd from 1.10 million in August. Brent crude reached a six-month-high of $81.40 per barrel on June 23, when the Israel-Iran war was raging. China's refiners are now buying more crude oil as prices have fallen since June. China's storage flows are a floor and a ceiling for crude oil prices, which means that China is likely to absorb any global surplus as OPEC+ increases output targets. 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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Fear and caution grip the markets
Rae Wee gives us a look at what the European and global markets will be like tomorrow. The Asian markets were again a sea of red on Tuesday. This gloomy mood is expected to spread into Europe as investors prepare for the earnings report from artificial intelligence darling Nvidia, and the long-awaited U.S. employment report due later this week. The market sentiment leading up to the release was fragile. Nvidia had a high bar for delivering results that would blow the roof off and justify all the massive investments companies pour into AI. The semiconductor giant's AI chips have been a bellwether theme for a number of companies in the technology sector, as well as those involved with the massive infrastructure expansion that supports AI. The sector is still shaken by the fear of a bubble. It has been compared to the dotcom boom-bust in the 1990s. The latest sign that there is unease comes after a regulatory filing revealed that the hedge fund of tech billionaire Peter Thiel sold its entire stake in Nvidia. SoftBank Group, a Japanese company, announced last week that it had sold the 32.1 millions Nvidia shares held by it in October. The proceeds were used to fund CEO Masayoshi son's AI drive. In Japan, Prime Minister Sanae Taichi will meet Bank of Japan Governor Kazuo ueda in the afternoon. The yen has been falling to multi-month lows, and is now above 155 dollars per yen. This is close to levels that led to a currency intervention in Japan last year. Satsuki Catayama, Japanese Finance Minister, said that she was "alarmed by the one-sided and rapid movements" on the foreign exchange markets. Takaichi has promoted those who support fiscal and monetary stimuli to important posts, which is a blow to their efforts. The Nikkei reported on Saturday that Japan may spend around 17 trillion yen (110 billion dollars) for Takaichi’s first stimulus package. The yield on the JGBs of 20 years has reached its highest level since July 1999. The following are the key developments that may influence Tuesday's markets: Fed's Barr Barkin Logan Speak U.S. Factory Orders (August)
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Gold continues to fall on a firm dollar, and Fed rate-cut betting eases
Tuesday saw gold fall for the fourth consecutive session, as a strong dollar and diminished expectations of an interest rate reduction in the U.S. next month weighed on it. As of 0444 GMT, spot gold was down by 0.9%, at $4,010 an ounce. U.S. Gold Futures for December Delivery fell 1.6% to $4.009.20 an ounce. "The dollar has been a little stronger today, and some of the speculation lengths have also been reduced in this last week. "The gold market will consolidate for the time being," said Marex analyst Edward Meir. After a steep rise in the session before, the dollar remained stable against its competitors. Gold becomes more expensive when the dollar is stronger. Last week, Congress reached an agreement on the end of the longest U.S. Government shutdown in history. The absence of official data about the economy dampened expectations that the Federal Reserve would cut rates again in December. Fed Vice-Chair Philip Jefferson said Monday that the U.S. Central Bank needed to "proceed gradually" with additional rate cuts. This has dented expectations of a reduction next month. Gold that does not yield tends to perform well in low interest rate environments and times of economic uncertainty. This week, the focus will be on U.S. economic data, such as the nonfarm payrolls September report, which is released on Thursday. These releases can provide clues about the health of the largest economy in the world. "Expectations that the Fed would cut again next months dropped from a peak of almost 100% shortly after the September announcement to just 42% over night. This has weighed down on the appetite of investors for gold," ANZ stated in a report. The medium-term investment demand is expected to be supported by structural tailwinds such as geopolitical uncertainties, concerns over U.S. debt sustainability and de-dollarisation. Silver spot fell by 1.2%, to $49.58 an ounce. Platinum fell 1%, to $1.517.73 and palladium dropped 1.5%, to $1.372.05. (Reporting by Brijesh Patel in Bengaluru; Editing by Subhranshu Sahu)
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Oil prices drop as Russian hub resumes loading; markets consider sanctions impact
The oil prices fell on Tuesday, as traders assessed the impact of Western sanctions against Russian flows, and supply concerns eased after the loading of cargo at a Russian hub was resumed following a drone strike in Ukraine. Brent crude futures fell 46 cents or 0.72% to $63.74 per barrel as of 0420 GMT. U.S. West Texas Intermediate crude futures fell 45 cents or 0.75% to $59.46 per barrel. According to two industry sources, and LSEG data, the Russian port of Novorossiysk resumed oil loadings Sunday after a two-day interruption caused by a Ukrainian drone and missile attack. In a note, IG analyst Tony Sycamore noted that crude oil prices are marginally lower as "reports indicate that loadings at Novorossiysk have resumed earlier than expected," he wrote. The exports of crude oil from Novorossiysk, and the nearby Caspian pipeline consortium terminal, which together represent about 2.2 millions barrels per day or approximately 2% global supply, were stopped on Friday. Crude prices rose by more than 2% in one day. Now, traders are refocusing their attention on the long-term effects of Western sanctions on Russian crude oil flows. The U.S. Treasury reported that sanctions imposed on Rosneft in October and Lukoil in November are already cutting into Moscow's oil revenue and will eventually reduce Russian export volumes. ANZ Research stated in a report that Moscow's crude oil has started trading at a substantial discount to global benchmarks. Vivek Dhar is a mining and energy commodities analyst at Commonwealth Bank of Australia. He said that buyers are concerned about the potential breach of sanctions as they assess the amount of oil stored on tankers. However, he added that Russia has proven its ability to adapt sanctions. We expect that any disruption caused by U.S. Sanctions will only be temporary, as Russia will find ways to circumvent sanctions again. According to a senior White House official, President Donald Trump will sign legislation imposing sanctions on Russia as long as the final decision is in his hands. Trump said that Republicans were drafting legislation to sanction any country that does business with Russia. He added that Iran may also be included. Goldman Sachs predicted that oil prices would decline until 2026. The company cited a large supply wave which keeps the market in excess. Goldman Sachs said that Brent oil prices could reach $70 per barrel by 2026/2027, if Russian production drops more dramatically.
Why does OPEC+ often clash over oil production capability?
OPEC+ is working to agree oil production capacity for its member nations by the end of 2024, a concern that has developed tensions in the past because each country's output target is determined from its notional capacity.
Members of OPEC+ - making up OPEC and allies such as Russia - tend to push for greater capability to get greater output targets after the percentage cut required by the group is factored in.
OPEC+ has been suppressing output to support prices. But as lots of members depend on oil export earnings, they have a reward to push for the highest production quota they can.
OPEC+ members previously reported their own capacity figures. To attempt to diffuse arguments, the group has charged 3 independent consultancies - IHS, Wood Mackenzie and Rystad - to examine member capacity before completion of June.
These evaluations won't be all set for the next OPEC+ online meeting on June 2. But the group will need to make progress on the problem if it is to use brand-new capacity figures to estimate future cuts after the existing ones expire at the end of 2024.
Saudi Arabia, OPEC's de facto leader and the world's third largest producer, has stated nations that have broadened capability need to be rewarded for their investment.
The nations that have constructed more capability such as the United Arab Emirates (UAE) wish to use a few of it to get a. return on their investment.
Other countries such as Nigeria have actually struggled to fulfill their. existing targets due to a lack of investment and maintenance.
Even if countries can not hit their targets, they do not like. to see their notional capability cut by OPEC+ because that could. indicate a lower production quota.
In December 2023, Angola stopped OPEC after arguing it was. appointed a lower capacity than it should have and would have to. make much deeper output cuts than required.
STATED VS REAL?
Production capacity supplies a recommendation point from which. production targets are set and cuts are made.
Cuts are distributed proportionally to capability levels.
OPEC+ regularly publishes cuts however does not frequently publish. capability numbers, which further complicates matters.
Saudi Arabia, for instance, has actually a stated capability 12. million barrels daily (bpd) - not far off the 11.5 million bpd. utilized by OPEC+ as referral production for the kingdom from May. 2022, and agreed in July 2021.
Under its current quota, the kingdom produces around 9. million bpd, or at 75% of its capacity levels. It has just recently. shelved strategies to enhance capability to 13 million bpd, deciding its. money was much better spent on other tasks.
Meanwhile, the UAE's reference production authorized by OPEC+. is around 3.5 million bpd from May 2022.
The UAE states it has come very near to expanding its. capability to 5 million bpd and wants its OPEC+ quota increased.
Under existing cuts, the UAE produces 2.9 million bpd, or. just 60% of the capacity it states it has.
Among other countries promoting greater production capacity. are Iraq and Kazakhstan.
HISTORY OF SUSPICION
OPEC has a long history of distrust when it pertains to members. submitting their own information, whether production or capability.
In June 2023, OPEC+ revised down production targets for. Nigeria and Angola after they stopped working to fulfill previous targets. due to the fact that of underinvestment and security concerns. That set off. Angola's eventual departure.
The June 2023 meeting also raised the UAE's output targets.
Leading OPEC+ member Russia has also seen its production. capability affected by the war in Ukraine and Western sanctions,. which caused the exodus of a number of oil majors.
When the three consultancies send their reports, OPEC+. will determine each member capability as the average of the three. assessments, according to delegates.
Capability discussions can also be made complex by different. oil cost choices amongst OPEC+ members - some desiring greater. rates and lower output and others prepared to endure lower. rates with greater production.
The International Monetary Fund estimates Saudi Arabia requires. oil at $96.20 per barrel this year to stabilize its spending plan. By. contrast, the UAE's 2024 budget plan requires rates of $56.70.
(source: Reuters)