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Canada's First Quantum signs $1 billion gold streaming agreement with Royal Gold
First Quantum Minerals, a Canadian mining company, signed a streaming agreement worth $1 billion with Royal Gold's subsidiary. The two companies announced the agreement in a joint statement released on Tuesday. A gold streaming financing method is one in which the buyer pays an upfront amount to a mining company in exchange for future production. First Quantum, in the agreement, will receive an upfront payment of $1 billion from Royal Gold AG for gold deliveries based on copper production at First Quantum Kansanshi Mine in Zambia. The deal is expected to be finalized on Wednesday. First Quantum receives 20% of the spot price for every ounce delivered. This will increase to 35% in certain cases, such as achieving credit or leverage targets. Royal Gold says the agreement provides immediate cash flow on a large-scale, long-term asset. The company anticipates receiving about 12,500 ounces from the stream in this year, and on average 35,000-40,000 ounces per year over the next 10 years.
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Aurubis beats profit expectations despite earnings dip
Aurubis reported a core profit of $1.2 billion for the first nine-month period of its financial year 2024-2025, which exceeded market expectations. Contributions from copper products, sulfuric acid and precious metals helped to boost this figure. The largest copper producer in Europe reported that operating earnings before taxes (EBT) dropped to 286 millions euros ($330.44) during the first nine-months of its fiscal year from 333million euros a year ago. This was higher than the 281 million euro estimate of analysts in a poll provided by the company. Aurubis expects the contribution from sulfuric acids, copper products, and metals will continue throughout the remainder of the financial year. However, it is also expecting a continuing shortage of copper concentrates, and recycling materials. The Hamburg-based firm has narrowed their forecast for 2024-2025 and expects an operating EBT of between 330 and 370 millions euros, down from the previous range 300 to 400 million euro. Aurubis stated in a press release that it anticipated the result to be in the middle of the range. Aurubis has also narrowed the range of its operating return on capital used, a measure for analysing profit, from 7% to 11%.
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Oil drifts lower on rising supply, concerns about demand
Oil prices fell on Tuesday due to concerns about oversupply. OPEC+ increased production despite a weak outlook for demand. This more than offset the possibility of a tightening Russian oil trade as a result of U.S. policy. Brent crude futures fell 11 cents or 0.16% to $68.65 per barrel at 0424 GMT. U.S. West Texas Intermediate Crude was down 12 Cents, or 0.1%, to $66.17 per barrel. Both contracts fell more than 1% the previous session, settling at their lowest level in a week. Both benchmarks have declined because the extra capacity of OPEC+ acts as a buffer to any deficiencies in Russian barrels. This is according to Priyanka Sackdeva, a Phillip Nova senior analyst. The Organization of the Petroleum Exporting Countries (OPEC+) and its allies agreed to increase oil production in September by 547,000 barrels a day. Analysts caution that the actual amount returned to the market may be lower. Analysts are concerned about the demand side of things, and some predict a slowdown in economic growth for the second half. Analysts at JPMorgan said that the risk of an American recession is high, as the labour demand has stagnated. The analysts noted that the July Politburo Meeting in China signaled no further policy easing, with the focus now shifting to structural rebalancing. Oil prices are now being driven by concerns about possible disruptions in supply, not the weakening of economic fundamentals. Donald Trump, the U.S. president, has stated that he may impose secondary tariffs of 100% on Russian crude purchasers such as India. This comes after Trump announced a 25% tariff in July on Indian imports. Trump threatened to increase tariffs again on Monday over Russian oil purchases. New Delhi branded his attack as "unjustified," and pledged to protect its own economic interests. This further exacerbated the trade gap between the two nations. India is the largest buyer of Russian crude oil by sea. It imported about 1.75 million barrels per day (bpd) from January to June, an increase of 1% compared to a year earlier, according to trade sources. Analysts fear that the latest U.S. trade tariffs could dampen demand for fuel and slow down economic growth. (Reporting from Anjana Anil, Bengaluru; Siyi Liu, Singapore; editing by Christian Schmollinger & Jamie Freed).
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Heerema Installs Substation at Inch Cape Offshore Wind Farm
The Inch Cape Offshore Wind Farm offshore jacket foundation and substation platform have been installed at the North Sea site of the 1.1 GW Scottish project.The Siemens Energy Offshore Transformer Module (OTM) and its 68-meter jacket foundation are now in position 21 kilometers from the Angus coast having been installed by Heerema Marine Contractors (HMC) semi-submersible crane vessel Sleipnir.The compact 2700-tonne platform comprises two circuits with two transformers and reactors, making it Siemens Energy’s first ever double OTM.The modular fabrication, which enables offshore wind platforms to be smaller and lighter than conventional alternating current designs, has now been in use for 10 years.A team of more than 250 at the Smulders yard in Newcastle, fitted out and assembled both the OTM and its jacket foundation over the past approximately 18 months. Around 80 local U.K. sub-contractors supported the project with work that included lifting, scaffolding, engineering and coating.Owned in a 50-50 equal joint venture by ESB and Red Rock Renewables, Inch Cape, is the largest offshore wind farm now in construction in Scotland. Once complete it will generate almost 5 terawatt hours (TWh) of energy each year or enough to power half the homes in Scotland.“This has been an impressive team effort by Siemens Energy, Smulders, Heerema and the myriad smaller contractors who contributed to ensuring the safe and efficient fabrication and installation of these major Inch Cape components,” said John Hill, Inch Cape Project Director.Inch Cape Offshore Wind Farm is owned by Inch Cape Offshore Wind, an equal joint venture between ESB and Red Rock Renewables.Construction of the project’s onshore substation and landfall works in Cockenzie, East Lothian, are well advanced and the next key offshore activity will be the installation of the first of two export cables, scheduled for late summer this year.First power is expected in late-2026 and with commercial operation date in 2027.
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Toyota and Honda prepare for profit drops as US tariffs and strong yen weigh
Toyota Motor and Honda Motor will report lower first-quarter earnings in the coming week as U.S. tariffs on imports and a stronger Japanese yen impact profits, despite strong demand for hybrids from their largest overseas markets. Japanese automakers are facing increasing uncertainty in the U.S. where tariffs on imported vehicles are driving up vehicle prices, and testing consumer demand. Investors are looking for clues as to how Japan's largest automakers will offset such burdens. According to the average forecast of seven analysts surveyed by LSEG, Toyota, the top selling automaker in the world, will post a 31% drop year-on-year in operating profit on Thursday. This would amount to 902 billion yen ($6.14 billion). This would be its worst quarterly result in over two years. Honda will report its second consecutive quarterly decline of 36% in operating profit, to 311.7 billion Japanese yen. The automaker had already predicted a 59% drop in its full-year profits. Following a bilateral agreement last month, both companies are now facing 15% tariffs on Japanese imports of autos to the U.S. The same tariffs and stronger currency have caused other Japanese automakers to report lower earnings. Christopher Richter, an autos analyst with CLSA, said that the first quarter will be tough for Toyota. He said that things should improve in the future, thanks to lower tariffs. Honda's dependence on the U.S., in particular, has grown in recent years due to the decline in sales in other areas. Both companies manufacture key models for the U.S. markets in Canada and Mexico. Honda's U.S. sales accounted for about two-fifths in the first six months of the year. The company's sales worldwide fell by 5% during the period. This was mainly due to double-digit drops in China, Asia, and Europe. Toyota's sales worldwide rose by 6% during the period, largely due to the strong demand for hybrid petrol-electric cars that typically have higher margins than traditional petrol cars. The Camry and Sienna Hybrids are still strong sellers in the U.S. In recent months, the company's performance in China has improved. It posted a 7% increase year-on year in vehicle sales in the first half year. Honda announced in May it would scale back its investments in electric vehicles due to a slowing market and focus on hybrids, with several redesigned models. The company had delayed its plans to establish an EV base in Canada because of the slowing demand for electric vehicles. Investors are looking forward to updates on pricing strategies and revisions of full-year forecasts from both companies. CLSA's Richter stated that the Japanese automakers are taking steps such as transfer prices to reduce the import tariff burden. Toyota shares are down 16% this year so far, while Honda's are flat.
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Gold prices rise for a fourth session, as US job data boosts Fed rate-cut bets
Gold edged higher on Tuesday for a 4th session, supported by a weaker dollar and lower Treasury yields. Weaker-than-expected U.S. job data boosted expectations of a September rate cut. As of 0239 GMT, spot gold rose 0.1% to $3375.89 an ounce. U.S. Gold Futures gained 0.1%, reaching $3,430.40. Dollar index was near its lowest level in a week, making gold more accessible to holders of currencies other than the dollar. The yield on 10-year Treasury notes, the benchmark note, fell to a new low. OANDA Senior Market Analyst Kelvin Wong stated that "short-term momentum for the bullish story has improved...fundamental message supporting gold prices is the Fed's continued intention to cut rates in September." U.S. Employment growth in July was lower than expected, and non-farm payroll numbers for May & June were revised downward by 258,000 jobs. This suggests a worsening of labor market conditions. CME FedWatch shows that traders now expect a rate cut in September. Mary Daly, San Francisco Fed Bank president, said that rate cuts are imminent given the mounting evidence of a softening U.S. labor market and the lack of persistent inflation due to tariffs. In an environment of low interest rates, gold, which is traditionally viewed as a safe haven during times of political and economic uncertainty, tends thrive. Donald Trump threatened again on Monday, on the trade front to increase tariffs on Indian products over its Russian oil purchase. New Delhi called Trump's remarks "unjustified," and pledged to protect its own economic interests. This further exacerbated the trade gap between the two nations. Gold still faces technical resistance. "I do not believe traders will push up above $3,450. OANDA's Wong stated that the gold price will not rise above this level unless there is a clear catalyst. The price of palladium rose by 0.2%, while platinum was up 0.1% at $1,330.31. (Reporting and editing by Sumana Nandy, Sonia Cheema, and Brijesh Pate in Bengaluru)
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Iron ore continues to gain on China's resilient demand
Iron ore futures rose for the third consecutive session on Tuesday. This was aided by a resilient short-term demand from China, a major consumer. However, expectations of a possible steel production limit ahead of Beijing’s main event limited gains. As of 2100 GMT, the most traded September iron ore contract at China's Dalian Commodity Exchange was trading 0.38% higher. It was 792 yuan (US$110.33) per metric ton. The benchmark iron ore for September on the Singapore Exchange rose 0.3% to $101.5 per ton. Analysts at Shengda Futures, a broker, said that iron ore fundamentals remained strong due to a firm demand. This supported the price of this key ingredient in steelmaking. Since April, the average daily hot metal production, which is a measure of iron ore consumption, has hovered around 2.4 millions tons, even during off-peak season in July and August, when output usually contracts. According to data from the consultancy Mysteel, the production would drop to 2,21 million tons at the end of August 2024. Analysts at ANZ noted that iron ore prices were also supported by the "hope" that efforts to address overcapacity problems in China's Steel Industry would ultimately improve demand. Price gains were however limited due to the prospect of a possible restriction on steel production for the September 3, Beijing ceremony commemorating the 80th Anniversary of the End of World War Two. Chinese steelmakers, particularly those in the north, often restrict production in advance of major events in order to maintain air quality in Beijing. This could lead to a decrease in demand for raw materials such as iron ore and a rise in prices. Coking coal and coke, which are used to make steel, have both gained in value, up by 2.31% each and 0.47% respectively. The benchmarks for steel on the Shanghai Futures Exchange have advanced. The Shanghai Futures Exchange saw a rise in steel benchmarks. ($1 = 7.1782 Chinese Yuan) (Reporting and editing by Amy Lv, Lewis Jackson)
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Hong Kong issues its highest weather warning as rains close schools, courts, and hospital wards
Hong Kong's Weather Bureau said that its highest "black", or rainstorm, warning would remain in effect until 11 am on Tuesday. Heavy rains pounded the Asian financial center, forcing the closure of hospital wards and schools as well as the courts and register office. These storms come after deadly flash floods that occurred in Southern China at the weekend. Five people were killed in Guangdong Province and over 1,300 rescuers took part in a massive search. "Persistent rainfall will lead to serious flooding of roads and traffic congestion." The Hong Kong Observatory issued a warning on its website advising the public to seek shelter in a secure place. China's weather agency reported that between 6 a.m. and 6:59 am, 9,837 lightning strikes were recorded over Hong Kong. The city and nearby Chinese city Guangzhou are receiving 60-90mm of rain per hour. Hong Kong receives 2,220mm in average annual rainfall. More than half usually falls between June and August. Hong Kong Stock Exchange is open for business, after changing its policy late last year to allow trading in all weather conditions. Hong Kong's Hospital Authority announced that emergency and accident wards would remain open. However, general outpatient clinics as well as geriatrics and psychiatrics day hospitals will be closed due to extreme weather. In a press release, the judiciary stated that the courts, tribunals, and register offices will open "as quickly as possible within two hours of the cancellation of the 'black rainstorm' warning." Post office announced that it would suspend all of its services and premises until the storm warning has passed. Airports in the city have not reported any disruptions. Hong Kong Disneyland is still open with limited services.
Dollar falls against the yen after Fed rate-cut bets.
Investors increased their bets that the Federal Reserve would act to support the world's biggest economy by boosting the shares in Asia for the second consecutive session.
U.S. stocks rallied Monday, boosted by generally positive earnings reports. Bets on a Fed rate cut in September increased after Friday's disappointing jobs report.
Oil prices remained low after OPEC+ increased their output and President Donald Trump threatened to increase tariffs against India for its Russian petroleum purchases. The Nikkei 225 index of Japan rose after data showed a surge in service sector activity across the country in July.
Rodrigo Catril is a senior currency strategist with National Australia Bank. He said that there are signs of weakness within the U.S.
MSCI's broadest Asia-Pacific share index outside Japan rose 0.6% in the early trading. The Nikkei rose 0.5% on Tuesday after having fallen the most since two months Monday.
The dollar fell 0.1% to 146.96 Japanese yen. The euro remained unchanged at $1.1572, and the dollar index, which tracks greenbacks against a basket major counterparts, rose 0.1% following a two-day decline.
CME Fedwatch says that the odds of a rate cut in September are now at 94%. This is up from 63% on July 28. The market participants expect at least two quarter point cuts before the end of the year.
The poor nonfarm payrolls figures on Friday reinforced the need for a Fed cut, and added drama to the situation with Trump's decision of firing the director of labor statistics who was responsible for these numbers.
The news that Trump will fill the Fed governorship early has also raised concerns about the politicization of interest rates policy.
Trump threatened again to increase tariffs on Indian goods above the 25% level announced by Trump last month over its Russian oil purchase. New Delhi, however, called Trump's attack "unjustified", and pledged to protect its own economic interests.
Investors are eagerly awaiting the earnings reports of Walt Disney, Caterpillar and other companies this week.
Palantir Technologies' revenue forecast was raised for the second time in this year, as it expects to see sustained demand for artificial intelligence services.
Michael McCarthy, Moomoo Australia's market strategist, said in a recent note that "Company earnings continue to drive market movements."
The S&P Global final service purchasing managers' index in Japan grew to 53.6 from 51.7 in the previous month, which is the largest increase since February.
After three days of declining oil prices, the price was little changed on account of mounting concerns about oversupply. The potential for further Russian supply disruptions also provided support.
Brent crude futures remained flat at $68.76 a barrel while U.S. oil futures fell 0.02% to $66.28 per barrel. Gold spot was slightly higher, at $3381.4 an ounce.
Euro Stoxx futures in the Euro region rose by 0.2%. German DAX futures gained 0.3%, and FTSE Futures rose by 0.4%. The S&P 500 E-minis and U.S. Stock Futures were both up 0.2%.
Bitcoin's price was barely changed after a two day rally. It now stands at $114.866.06.
(source: Reuters)