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Copper prices rise on weaker dollar and hopes of stronger Chinese demand
The copper price rose on Friday, as a lower dollar and expectations of stronger demand in China boosted prices ahead of the U.S. Jobs Report later in the day that could provide greater clarity about the U.S. rate trajectory. In open-outcry official trading, the price of three-month copper at the London Metal Exchange increased by 0.5% to $9.947 per ton. On Wednesday, the contract reached a five-month peak of $10.038 due to the growing expectation of a U.S. rate cut in the latter part of the month. A lower interest rate improves prospects for metals that are growth-dependent, and a weaker U.S. dollar, which fell by 0.3% last week, makes metals priced in dollars more attractive to holders of other currencies. JX Advanced Metals, a leading copper smelter in Japan, said that it would likely cut its copper production by thousands of tons during the fiscal year that ends in March. Inventory in Comex warehouses in the U.S. The Comex copper futures, which were already at their highest level in 22 years, continued to climb this week because of the premium that remained between the LME benchmark and the Comex copper contracts. A copper trader stated that the premium fell at the end July when Washington removed refined copper metals from its import tariffs for some copper products. However, the drop was not enough to cause a sell-off of U.S. stock. Stocks at the LME registered warehouses The market was stable. It has risen by 74% since June and the discount on the cash for the next three months is still in place. At $61 per ton. Analysts at Macquarie wrote in a report that "Even though copper is still distorted due to the hangover from U.S. stockbuilding, LME spread has shown signs of a loosening ex China market. However, any price weakness seems to have been met with Chinese buying." Yangshan Copper Premium The price of copper, which is a measure of the demand for imported copper into China, remained at 57 dollars per ton, its highest level in three months. Other London metals rose in official activity by 0.8%, to $2.612 per ton. Zinc increased 0.7%, to $2.864.5; lead rose 0.5%, to $1.995; tin grew 0.3%, to $34,675; and nickel was up by 0.3%, at $15,275. (Reporting and editing by Hugh Lawson, Tomaszjanowski, Lucas Liew)
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Energy chief: EU will stick to its planned Russian oil withdrawal by 2028
Energy chief of the European Union said on Friday that Washington had not pressed him to move up this deadline. White House official: As U.S. president Donald Trump seeks an end to Russia's conflict with Ukraine, Trump told European leaders to stop buying Russian crude oil on Thursday, but did not specify a specific date. Fuel revenues, as Russia's most lucrative exports have helped Moscow fund its war. The European Union is currently negotiating legal proposals that will phase out EU imports of Russian gas and oil by January 1, 2028. Energy Commissioner Dan Jorgensen is responsible for EU energy policy. He said he was not personally under pressure by the U.S. government to stop Russian oil purchases before the 2028 deadline. However, he would welcome U.S. support for the EU plan. We are indirectly financing Putin's war and this must stop. "If President Trump supports that, that's a very welcome support because that's our main goal," he said. Hungary and Slovakia import between 200,000-250,000 barrels of Russian oil per day, which is equivalent to about 3% of the EU's oil demand. EU gas purchases remain much larger. According to EU figures, Europe will purchase 13% of its natural gas from Russia in 2018, down from 45% prior to Russia's full scale invasion of Ukraine. The White House official has asked for a comment from the Kremlin on Trump's remarks. India accuses the West of hypocrisy for imposing punitive tariffs against the United States because of its continued purchase of Russian oil. HUNGARY AND SLOVAKIA OPPOSE PHASE OUT Hungary and Slovakia continue importing Russian crude oil via the Druzhba pipe and oppose the EU's phase out plan, claiming it will increase energy prices. Jorgensen stated that he is in discussions with both governments to address their concerns, but that if necessary, EU countries can approve phase-out plans even without them. He refused to confirm whether Brussels would provide funding or legal assurances to try to win support from the two countries. Jorgensen stated that if there are domestic reasons that prevent some countries from supporting it, this does not require unanimity. The EU proposals were designed to be approved by a consolidated majority of members countries. EU diplomats said they expect energy ministers from member countries to approve the proposals at a meeting in a month. Jorgensen and Chris Wright, the U.S. Energy Secretary, will meet in Brussels on Monday to discuss the EU's commitment to purchase $250 billion worth of U.S. supplies of energy per year as part of a U.S.-EU Trade Deal. Analysts say the pledge to buy energy is unrealistically high, in part because the EU does not have much control over energy imported by its companies. Jorgensen stated that they would be discussing options on how the EU administration and the U.S. government can ensure that the deal is implemented. The Commission, for example, has stated that it could pool the demand of European companies in order to purchase more U.S. Gas. It's obvious that our role is facilitation. "The EU is not a trader of gas," Jorgensen stated. (Reporting and editing by Jan Strupczewski, Barbara Lewis and Kate Abnett)
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Focus on US job data, European stocks and yields rise
European stocks rose on Friday, while yields on long-dated bonds eased as markets averted concerns over fiscal deficits across various countries. The S&P 500 reached a new record high on Thursday, after the weekly jobless claims data revealed more than expected. Overnight, Asian stocks followed Wall Street's upward trend. At 1127 GMT, the MSCI World Equity Index rose 0.3% for the day. Europe's STOXX 600 also gained 0.3%. The STOXX 600 is expected to finish the week with a slight gain after recovering from the dip that occurred earlier in the week. The FTSE 100 and France's CAC 40 both rose 0.3%. Wall Street was set to continue its gains, with S&P futures rising 0.2% on the day and Nasdaq Futures rising 0.5%. According to LSEG, the markets are almost certain that the Fed will cut rates by a quarter point at the end of its two-day meeting. The monthly U.S. employment report, due in the afternoon session, will confirm traders' expectations. Stocks rise when the labour market is weaker, as it increases expectations that Federal Reserve will lower rates. Francesco Sandrini is the head of Amundi's multi-asset strategy. He said, "We saw yesterday a sign that there may be a weakening of jobs, which will pave the way for an agreement in September." Sandrini said that today's numbers can confirm, to a certain extent, an easing of the Federal Reserve. Fed Chair Jerome Powell reinforced speculation about rate cuts with a dovish, but unexpected, speech at the Fed symposium held in Jackson Hole last month. Ken Crompton is the head of rates at National Australia Bank. He said that unless there's a really stellar payrolls report, it's difficult to see anything that will change the market's mind about a September rate cut. The terminal rate, and how to get there, is still up for debate. The market sentiment has improved in recent days, after stocks in Europe fell and investors were concerned about the financial state of different countries, especially Britain and France. The yields on 30-year bonds in France and the UK were lower on Friday. France's yield was 4.3873% compared to a high of 4.523% reached on Wednesday. The benchmark German 10-year yield is 2.7051%. German industrial orders fell unexpectedly in July, according to data released on Friday. The yields on Treasuries 30-years were at 4.8533%. They had reached their lowest level in three weeks, during Asian trading. The dollar index fell 0.2% to 98.023 while the euro rose 0.3% to $1.1683. The U.S. has signed an agreement to lower auto tariffs for Japan after months of negotiation. The dollar fell 0.2% against the Japanese yen. It was trading at 148.21. The oil prices are in their third consecutive day of declines. Brent crude futures dropped 0.6% to $66.56 per barrel while U.S. West Texas Intermediate crude fell 0.8% to $60.00. The European Union energy commissioner said that the EU would welcome U.S. president Donald Trump's plans to stop buying Russian crude oil. Gold was unchanged at $3,546.24, after reaching a record high of $3,578.50 earlier in the day.
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As margins shrink, a major Japanese copper smelter will reduce output and capacity.
JX Advanced Metals is likely to cut copper production in fiscal 2025 by tens or thousands of tons compared with previous plans. The company will also unveil a roadmap for reducing smelting capacities by March. Due to the shortage of concentrate and increasing smelting capacity, Japanese copper smelters have been struggling with tumbling treatments and refining costs (TC/RCs). Some Chinese smelters have agreed to process copper at no cost for Chilean miner Antofagasta. Hayashi said this week that "in the short-term, we plan on reducing annual electrolytic output by several tens thousands of tons compared to our previous estimate because we cannot purchase concentrates in current conditions." JX, a major copper smelter in Japan with a production capacity of 450,000 tons per year, warned that possible cuts could be made. Its fiscal period ends in March. Hayashi, who did not give a scale, said that Hayashi intends to shrink the capacity in order to reduce risk when it comes to concentrate procurement and smelting. JX exports roughly half of its refined copper, mostly to China. However, the demand for this product could fall as more domestic smelters are built. Mitsubishi Materials, a rival company, is also considering reductions. Hayashi, when asked if a lower output of copper would have an immediate impact on domestic industries, said that there would not be any immediate impact as only half was used in the country. He said that if more capacity is needed, then the government should support it. Hayashi said that despite the cuts, smelting is still essential to recover rare metals such as tantalum. This metal is critical for semiconductor materials and a key business growth. He said, "We are reviewing optimal scales from different perspectives including the use recycling materials." Sources in the industry said that mid-year negotiations between Japanese smelters, and global miners, broke down without a TC/RC agreement, forcing firms not to fulfill their contractual term supplies. Hayashi said that some miners were willing to negotiate with Japanese companies different terms from those of the Chinese benchmark agreements to sustain the fourth largest smelting industry in the world. JX has accelerated its shift away from mining and melting towards semiconductor materials. In June, JX announced that it would purchase a stake of the Copi mineral-sands project, which is led by RZ Resources in Australia, in order to secure rare metals for chip materials. Hayashi stated that the company is actively looking for new projects. He added that its future upstream deals will be much smaller than their previous Chilean copper mine investments, which resulted heavily in impairment losses. JX has improved investor engagement and streamlined its decision-making since its March listing. Hayashi, the CEO, expressed confidence that it would be able to achieve fiscal 2027 goals including an operating margin between 12% and 17%. JX wants to double its operating profit by 2040 to 250 billion yen (US$1.7 billion). Hayashi stated that "achieving our goal of 2040 will require both organic growth and large-scale M&A beginning in fiscal 2028." (Reporting and editing by Jamie Freed, Tomaszjanowski and Jamie Freed; Kentaro Okasaka and Yuka Obayashi)
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Minister says Poland will freeze energy prices for the fourth quarter
Energy Minister Milosz Motyka announced on Friday that the Polish government would extend the price limit for electricity through the fourth quarter. This could eliminate one uncertainty regarding the inflation outlook of the country. Motyka announced that the power prices would be frozen in the fourth quarter at 500 zlotys ($137) per Megawatt Hour. The central bank has warned that the electricity price cap in Poland for households will expire at the end of October. This is a factor which could lead to inflation and uncertainty. Last month, President Karol Nwrocki vetoed legislation that included regulations to extend a price-freeze. The bill was intended to make it easier for onshore wind farm construction. Motyka stated that the government had prepared a bill to freeze prices for the fourth quarter. The parliament would adopt it by the end September. He said he didn't think that there would be any need to further freeze prices. He told journalists that he did not believe there was a need to freeze the prices, as he expected energy prices to drop below 500 zlotys a MWh. Motyka’s statement increased the market's expectations of interest rate reductions within three months. ($1 = 3.6405 zlotys) (Reporting by Marek Strzelecki, writing by Anna Wlodarczak-Semczuk; Editing by Emelia Sithole-Matarise)
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Workers of Thyssenkrupp approve restructuring plan and await financing
Thyssenkrupp Europe workers voted in favor of a sweeping restructuring program, paving the way for the revival and revitalization of Germany's biggest steelmaker. The IG Metall union announced on Friday that 77% members of the participating members voted in favor of the plan with 62% voting. The restructuring program includes reductions in jobs, working time, bonus payments and site closures. However, forced redundancies are avoided until 2030. According to a source with knowledge of the situation, the plan, which was agreed upon in July following marathon negotiations between management, IG Metall and IG Metall's board, should save over 100 million euros ($117) per year. Thyssenkrupp had announced earlier plans to cut up to 11,000 positions, or around 40% of their workforce, as well as reduce production capacity, from 11.5 millions tonnes per annum to 8.7-9.0million tonnes. Knut Giesler said that the decision "was not easy" for many of his members. They understood that the sacrifices were necessary for the future of the Steel Division. The agreement, which runs until September 2030 is seen as crucial for Thyssenkrupp’s broader strategy of spinning off its steel division into a joint-venture with the holding company of Czech billionaire Daniel Kretinsky, who already owns a 20 percent stake in tkSE. Thyssenkrupp intends to sell an extra 30% of its stake in the restructuring. The workers' representatives stated that it is now up to Thyssenkrupp AG to finalize financing arrangements. Tekin Nasikkol (head of the tkSE works council) said: "We have reached our limit and given our maximum contribution." Now it is time for the board of directors to act. $1 = 0.8542 Euros (Reporting and editing by Kirsti Knolle)
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WNA: Uranium demand to increase 28% by 2030, as nuclear energy gains momentum
The World Nuclear Association (WNA), in a Friday report, said that the demand for uranium in nuclear reactors will increase by nearly 30% over the next five-year period as more countries rely on nuclear energy to achieve zero-carbon goals. The WNA's Nuclear Fuel Report, published every two years, said that new uranium mining operations and re-starting of existing ones will be required in the coming years to satisfy the growing demand. It said that concerns over energy independence and security due to geopolitical issues have also increased interest in nuclear energy. The report stated that the demand for uranium used in nuclear reactors will increase by 28% in 2030, and by 2040 it is expected to more than double to 150,000 metric tonnes a year from 67,000 tons per annum in 2024. According to the report, the mine supply is sufficient in the short-term, but shortages may occur after 2030. The report stated that it takes 10-20 years for uranium to be produced after the first discovery. In order to avoid future supply disruptions, it is necessary to accelerate the development of new projects in this decade. The global nuclear capacity by the end of 2025 will be 398 gigawatts (GWe), with an additional 71 GWe under construction. The report stated that nuclear capacity will increase by 13% in 2030, and by 87% by 2040 to 746 GWe. It said that "a number of countries have implemented nuclear moratoriums or phase-out policies, and are now re-evaluating their long-term policies on energy and considering nuclear energy as a part of the mix." The report also said that small modular reactors are cheaper and easier to build. The global uranium industry has been recovering in recent years. Production is expected to increase by 22% between 2022 and 2024, to 60,213 tonnes. The production is expected to grow, and secondary supplies, along with the output, will be sufficient to supply reactors for the short-term, added the report. The output of existing mines will halve in the decade following 2030. This means that new mines and idle operations will need to be restarted. The report stated that the regional market disruptions caused by Russia's invasion of Ukraine have increased the need for enriched capacity. Reporting by Eric Onstad and Editing by Louise Heavens
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Gold Heads for Best Week in Three Months Ahead of US Jobs Data
Gold prices rose on Friday, and were on course for their biggest weekly gain in three-months, as investors looked forward to the U.S. Non-farm Payrolls Data due later that day. As of 0741 GMT, spot gold was up by 0.1%, at $3,548.09 an ounce. Bullion is up 2.9% this week. U.S. Gold Futures for December Delivery rose by 0.1% to $3.608.90. The U.S. unemployment claims increased more than expected in the last week. Meanwhile, ADP's National Employment Report revealed that private payrolls were below expectations for August. Both of these signals further evidence of a weakening labor market. Investors now focus on the U.S. Non-farm Payrolls Report, due at noon GMT. According to a poll it is expected that 75,000 new jobs were created in August, compared to 73,000 in July. Ole Hansen is the head of commodity strategy at Saxo Bank. He said that the short-term outlook for gold depends on the U.S. employment report, its impact on bond yields and rate cuts, as well as the dollar. A weak NFP will drive prices towards $3,650 while the support level between $3,450 and $3,500 will remain key. Speaking earlier this week, several Federal Reserve officials cited labour market concerns to support the case for rate reductions. The Fed is expected to deliver its first rate reduction of the year at the end of its two-day meeting beginning September 17, lowering interest rates 25 basis points. Gold, which reached a record-high of $3,578.50 Wednesday, has no yield, but it performs well when interest rates are low. Hansen stated that the combination of lower financing costs, Fed independence, geopolitical risk, a steepening curve, and a weaker US dollar, all point to further gains for precious metals. If the current trend continues, spot silver will be up 0.3% at $40.81 an ounce, and it could reach its third consecutive weekly gain. Platinum rose 1% to $1381.33 while palladium gained 0.2%, reaching $1125.74.
European stocks increase, and long-dated yields decline ahead of US employment data
Early Friday, European stocks rose while bond yields on long-dated bonds fell as the markets awaited a rate cut by the United States. This helped to ease concerns over fiscal deficits across various countries.
The S&P 500 reached a new record high on Thursday, after the weekly jobless claims data revealed more than expected. Overnight, Asian stocks followed Wall Street's upward trend.
At 0752 GMT the MSCI World Equity Index had gained 0.3% for the day, and Europe's STOXX 600 Index was also up 0.4%. Both are expected to finish the week with a slight gain after recovering from the dip that occurred earlier in the week.
The FTSE 100 and France's CAC 40 both rose 0.3%.
According to LSEG, the markets are almost certain that the Fed will cut rates by a quarter point at the end of its two-day meeting.
The monthly U.S. employment report, due in the afternoon session, will confirm traders' expectations. Stocks rise when the labour market is weaker, as it increases expectations that Federal Reserve will lower rates.
Francesco Sandrini is the head of Amundi's multi-asset strategy. He said, "We saw yesterday the signs that there may be a weakened in the jobs market, which will pave the way for an agreement in September."
Sandrini said that today's numbers can confirm, to a certain extent, an easing of the Federal Reserve.
Fed Chair Jerome Powell reinforced speculation about rate cuts with an unexpectedly dovish address at the Fed symposium held in Jackson Hole last month.
Ken Crompton is the head of rates at National Australia Bank. He said that unless there's a really stellar payrolls report, it's difficult to see anything that will change the market's mind about a September rate cut.
The terminal rate, and how to get there, is still a question.
The market sentiment has improved in recent sessions, after stocks in Europe and globally fell this week. Long-term bond yields have also reached their highest levels in years as investors were concerned about the financial state of different countries, especially Britain and France.
The yields on 30-year bonds in France and the UK were lower on Friday. France's yield was 4.3944% compared to a high of 4.523% reached on Wednesday.
The benchmark German 10-year yield is 2.7122%. German industrial orders fell unexpectedly in July, according to data released on Friday.
The yields on Treasuries 30-years were at 4.8593%. They had reached their lowest level in three weeks, during Asian trading.
The dollar index fell 0.2% to 98.054 while the euro rose 0.2% to $1.1678.
The U.S. has signed an agreement to lower auto tariffs for Japan after months of negotiation. The dollar fell 0.3% against the Japanese yen. It was trading at 148.14.
The oil prices are in their third consecutive day of declines. Brent crude futures dropped 0.5% to $66.65 per barrel while U.S. West Texas Intermediate crude fell 0.6% to $63.05
Gold was unchanged at $3,546.24, after reaching a record high of $3,578.50 earlier in the day.
(source: Reuters)