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Sources: Chinese zinc smelter cancels contract with Teck Alaska mine over tariffs
Two sources with knowledge of the matter said that Zhuzhou Smelter Group - one of China's biggest zinc smelters - broke a contract to supply Teck Resources’?Red Dog Mine in Alaska due to high tariffs caused by Washington and Beijing's trade war. Teck, a Vancouver-based company, supplies zinc concentrates from Red Dog, the world's biggest zinc mine, to clients around the globe, including Asia. At the height of their trade war, two of the world's largest economies have imposed tariffs in triple digits on each other's imported goods. After multiple rounds of talks, and a'meeting' between U.S. president Donald Trump and his Chinese equivalent, Xi Jinping in South Korea, both sides reached a 'trade truce' and lowered the tariffs. The first source said that the reciprocal double-digit tariffs make it difficult for Chinese smelters who import zinc concentrates from the United States. The first source said that as long as tariffs remain in place it is impossible to import zinc concentrates from the U.S., and added that this also applies to imports of lead concentra. The sources asked to remain anonymous as they were not authorized by the company to discuss sensitive commercial issues. Zhuzhou Smelter Group was unable to complete the contract with Teck due to the current tariffs, and they had to pay a fee to break up the deal, according to the first source, who declined to reveal the amount. Zhuzhou Smelter is a subsidiary owned by the China Minmetals state-run company. Teck also did not respond to our request for a comment. According to the first source, China's zinc smelter buys 30 percent of its concentrate from abroad. Customs data show that China imported only 2 kilograms (78,871 pounds) of zinc concentrate in the first 10 months of the year. This compares to 78,871 tonnes in the same period of 2024. Customs data shows that China's total imports of zinc concentrate from January to September jumped 37% on an annual basis. Zhuzhou Smelter is based in Hunan Province, eastern China. It has a zinc production capacity of 680,000 tons per annum. (Reporting from Amy Lv in Beijing and Lewis Jackson in Houston, with additional reporting by Tom Daly and Leslie Adler in London)
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Fitch: Current electricity prices are a problem for France’s EDF
Antonio Totaro, senior director at Fitch Ratings, said that the current low electricity prices will affect EDF's earnings as well as its ability to leverage debt. This is especially true if these prices continue to be so low while EDF prepares to build six nuclear reactors. After a spike during the energy crisis of 2022, when industries shuttered factories and reduced consumption, the average price for power in France is now about 30% lower than it was in January. Totaro stated that there shouldn't be any major changes in price either up or down. "For the time being, the electrification of the grid is only on paper. You'll need a contribution from demand to increase prices. We don't have that yet. He said that it will happen, but is taking longer than expected. Fitch Ratings predicted EDF's earnings, before interest, tax, depreciation, and amortization, at between 20 to 25 billion euros per year for the next several years, based on lower market prices. This is down from the 36,5 billion euros that the company reported in 2024. EDF must also organize a massive maintenance program for its existing nuclear fleet. This is expected to cost more than 100 billion euros in 2035. About 70% of France's electricity is generated by nuclear power. EDF didn't respond to our request for comment. Totaro stated that the return of EDF's nuclear fleet after the 2022 outages was a positive development. However, as they increase production, prices will decrease without any additional demand for the system. Reporting by Forrest C. Crellin, Editing by Alison Williams
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Silver records new record after Fed rate reduction; gold reaches over one-month high
The dollar fell on 'Thursday, as the U.S. Federal Reserve cut interest rates by a quarter point. Silver also surged and reached a new record high. As of 11:49 am, spot gold rose 1.2% to $4,275.39 an ounce. ET (16:49 GMT), it reached its highest level since the 21st of October. U.S. Gold futures for delivery in February gained 1.9%, reaching $4,303.90 an ounce. Spot silver rose 3.2% to $63.77 an ounce, nearing the session's record high of $63.93. Edward Meir, Marex analyst, said that silver is pulling up gold and also platinum and palladium. "There's a lot going on right now," he added. The U.S. Dollar has fallen?to a seven-week low versus a basket rival currencies. This makes greenback priced gold more affordable for overseas buyers. Meir continued, "Inflation hasn't yet reached the Fed's target of 2%, so when you lower rates in an environment where inflation is high, that's still not optimal, and gold will benefit." Federal Reserve policymakers signaled that they would likely take a pause on further reductions as they continue to monitor the labor market and inflation, which "remains elevated". Gold is more attractive when interest rates are lower, since it's a non-yielding investment. Donald Trump, the U.S. president, has been advocating for lower interest rates ever since he began his second term. His nominee to be the next Federal Reserve Chair is expected maintain this stance. White House economic advisor Kevin Hassett has been dubbed the 'leading candidate' for this position. Investors are now awaiting the release of the U.S. Non-Farm Payrolls Report, scheduled for?on 16th December. This report will provide fresh clues about the Fed's future policy. The Indian pension regulator has allowed the investment of gold and silver ETFs in pension funds. Palladium climbed 1.3% to 1,494.88. Platinum gained 2.5%. (Reporting and editing by Alison Williams, Vijay Kishore and Sarah Qureshi from Bengaluru)
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The stock market is mixed with Oracle adding AI worries; the dollar and US yields are down on Fed views
The major stock indexes mixed on Thursday. Technology-related shares fell after cloud computing giant Oracle warned about artificial intelligence profitability. Meanwhile, the dollar and U.S. Bond yields continued their declines from yesterday, when the Federal Reserve lowered interest rates, but provided a more dovish outlook than anticipated. Early on, the Nasdaq fell to its lowest level in a week. The Dow added to Wednesday's gains after the Fed rate reduction. Global stock indexes were also up. Oracle reignited fears over tech valuations when it missed analysts' profit and sales estimates, and announced a $15 billion AI expenditure. The S&P tech sector fell more than 1%, while its shares dropped 13.1%. Nvidia, the leader in Al shares, was down 3.4%. Broadcom's shares fell 4.4% and everyone is waiting for its quarterly results to be released after the closing bell. SoftBank, a partner of Oracle in the U.S. Stargate project and a partner to Japan's Nikkei index, slumped by more than 7.5%. Michael O'Rourke is the chief market strategist of JonesTrading, Stamford Connecticut. He said: "Overall the market is doing well, considering Oracle's trading and the fact that AI is weaker. But I think investors are being a bit cautious." Investors were instead still focused on the global interest rates outlook, after the Fed cut its benchmark funds rate by 25 basis points, as expected, to 3.5%-3.75%, in a split decision of 9-3. Fed Chair Jerome Powell was balanced in a recent press conference. He said that he didn't "think a rate hike is anyone’s base case." Interest rate futures now have at least two rate reductions priced in for the next year. The Dow Jones Industrial Average rose 481.38 or 1.00% to 48,539.65. The S&P 500 dropped 18.98 or 0.28% to 6,867.70. And the Nasdaq Composite declined 226.80 or 0.96% to 23,427.30. The MSCI index of global stocks rose by 0.47 points or 0.05% to 1,012.21. The pan-European STOXX 600 rose by 0.7%. The U.S. Dollar fell, reaching multi-month lows versus the euro, Swiss Franc, and Sterling and extending the losses from the previous day. The Swiss National Bank's decision not to raise interest rates supported the Swiss Franc. The dollar dropped 0.7% against the franc, to 0.7946 after previously touching its lowest level in November. After reaching its highest level since 3 October, the euro rose 0.4% to $1.1737. The dollar index (which measures the greenback in relation to a basket currencies) fell by 0.41%, reaching 98.18. U.S. Treasury Yields fell also for a second session straight in response to the Fed's policy statement. The Fed announced on Wednesday that it will start buying short-dated government debt on Friday. An initial round of around $40 billion worth of Treasury bills is expected. This was earlier than investors had anticipated. The yield of the benchmark 10-year Treasury bill in the United States fell 4.8 basis point to 4.116%, and was on course for its biggest two-day decline in two months. The yield ended a streak of four consecutive sessions of gains, the longest in five weeks. The yield on the 2-year note, which moves typically in line with expectations of interest rates for the Fed fell 4.8 basis point to 3.518%. The benchmark Bund yield in the euro zone hovered at a high of nine months as investors focused on next week's European Central Bank Meeting. The benchmark yield for the eurozone, Germany's 10-year bond, was down 1.5 basis points at 2.84%. On Wednesday, they reached 2.894%, their highest since mid-March. The difference between U.S. yields and German yields fell to 126.01, its lowest level since June 2023. Commodities: U.S. crude dropped 1.78%, to $57.42 per barrel. Brent, however, fell to $61.16 a barrel, down by 1.69% for the day. Gold spot rose by 0.55%, to $4.251.08 per ounce.
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Silver reaches new highs after Fed rate cuts; gold holds steady
Gold was stable on Thursday after the 'U.S. Federal Reserve reduced borrowing costs by a quarter percent but indicated a pause on further rate cuts. Silver surged to a new record high. As of 10:05 am, spot gold was up by 0.1% to $4,233.39 an ounce. ET (1505 GMT), while U.S. Gold Futures for February Delivery gained 0.1% per ounce to $4,262.60. Daniel Pavilonis is a senior market strategist with RJO Futures. He said that investors are in a waiting-and-see-mode following the Fed's much-anticipated decision to reduce interest rates during its Wednesday meeting. Pavilonis said that prices are likely to rise towards $4,300/oz at the end of this year and could reach $4,500/oz in April 2019. The Federal Reserve announced its third quarter-point reduction in a row on Wednesday. Policymakers also signaled that they would likely take a pause from further reductions while they continue to monitor the labor market and inflation, which "remains elevated." Gold is more attractive when interest rates are lower, since it's a non-yielding investment. Donald Trump, the U.S. president, has been advocating for lower interest rates ever since he began his second term. His nominee to be the next Federal Reserve Chair is expected maintain this stance. White House economic advisor Kevin Hassett has been deemed the 'leading candidate' for this position. Investors are now awaiting the release of the U.S. Non-Farm Payrolls Report, scheduled for December 16th. This report will provide new clues about the Fed's future policy. Spot silver was up 1.5% last to $62.66 per ounce. It hovered around a new record high of $62.98. "We're at the first level of resistance at around $63... Pavilonis stated that adding the retracement to the upside would equal just under $68 in silver. India's pension regulator approved Wednesday investments in gold and Silver ETFs by the country's retirement funds. Palladium, meanwhile, fell by 0.2%, to $1.473.55. Platinum gained 0.1%, to $1.671.56. (Reporting by Sarah Qureshi in Bengaluru; Editing by Alison Williams)
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US CPC: La Nina will fade in the first half of next year and neutral Pacific conditions are likely.
The U.S. Climate Prediction Center said on Thursday that La Nina will likely continue for a month or two more before giving way to neutral Pacific weather conditions between January 2026 and March 2026. This is a probability of?68%. Climate Prediction Center reported on Thursday. The CPC's monthly update noted that "La Nina could still be a factor in the Northern Hemisphere early spring 2026, even after equatorial Pacific SSTs transition to ENSO neutral." Why it's important La Nina is a part of El Nino and the Southern Oscillation, which affects the water temperatures in central and eastern Pacific Ocean. La Nina causes cooler water temperatures which increases the risk of flooding and droughts, which could impact crops. When ENSO neutral, water temperature stays around?average, leading to more consistent weather and possibly better crop yields. KEY QUOTES Jason Nicholls is the lead international forecaster for AccuWeather. Nicholls said excessive rainfall in southern Brazil was a cause for concern, but added: "I don't really expect widespread drought problems in many of the global croplands over the next few months." Donald Keeney of Vaisala Weather's agricultural meteorologist said that conditions in the Pacific had?warmed up, with temperatures currently "on the threshold?of neutral and weak La Nina." Keeney predicts that La Nina will fade and wetter weather conditions will prevail in southern Brazil and Argentina. However, he warns: "The main threat to the U.S. hard-red wheat crop in the near term is the dryness of the central and south Plains." Matthew Biggin is a senior analyst with BMI, an Fitch Solutions company. He said that while there are isolated market challenges, they will be limited due to the expectation of a weak "La Nina" which won't persist for the entire crop season. CONTEXT According to a World Meteorological Organization forecast published last week, a weak La Nina could affect global weather patterns in the next three month. WMO stated that even though the La Nina pattern is expected to temporarily cool temperatures in the central and eastern Pacific Oceans, many regions will still be warmer than normal, increasing the chances of flooding and droughts which can affect crops. The Japanese weather bureau reported on Wednesday that it is currently experiencing conditions similar to the La Nina phenomena, but said such conditions will likely fade quickly towards the end the Northern Hemisphere's winter. Indian farmers are planting winter crops such as wheat, chickpea and rapeseed. The soil is moist enough to allow for cultivation in areas that would normally be left fallow. (Reporting and editing by Deepa Babyington in Bengaluru)
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After US pressure, the EU has simplified its rules for complying with the methane laws
By Kate Abnett BRUSSELS - On December 11, the European Union will ease compliance with its methane emission law for oil and 'gas imports. This could be a boon to U.S. exports of gas to 'the EU, after Trump pressured Brussels to change?the?"policy. In an effort to reduce the emissions of this powerful greenhouse gas, the EU has mandated that importers of gas and oil to Europe monitor and report methane emission associated with these imports. U.S. Energy Sec. Chris Wright has criticized the world's first climate policy, calling it impossible to implement. He has also warned that it could disrupt U.S. Gas Supplies?to Europe. In a document sent to EU member countries, the European Commission stated that it offered two?routes of compliance for situations where the source of the gas was difficult to trace. This could be the case with liquefied natural gas from the United States, in which a single shipment may contain fuels from multiple?gas fields. The document of the Commission stated that "the Commission has identified?solutions to a simple, predictable implementation." Companies could comply with the regulations by purchasing certificates from third party verifiers, who would assign to imported gas a value for emissions at their production site. Second, there is the "trace-and-claim" method. This involves assigning a digital ID to each volume of fuel. The digital identifier is then attached to every sale and purchase agreement as oil and gas move through the value chain, from the producer to the final buyer. The main requirements of the Methane Law remain unchanged -?which will continue to become more strict with time. In 2027, compliance with the methane regulations will be required for all new gas supply agreements. U.S. gas exporters warned that they would have difficulty complying with the new law because of the fragmentation in the industry. The national authorities of EU governments are responsible for the enforcement of methane laws. The Commission asked the countries to confirm what compliance rules they were willing to accept. The plan will be discussed by the energy ministers of all countries in Brussels on Sunday. Kate Abnett is the reporter. Mark Potter (Editing)
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OPEC data indicates a close balance between oil supply and demand in 2026. No glut
OPEC data published on Thursday showed that world?oil supply would match demand closely by 2026. This is in contrast to projections made by the International Energy Agency, and others, who predicted a massive glut. The OPEC+ group, which includes the Organization of the Petroleum Exporting Countries (OPEC), Russia, and other allies, plans to pause the production increases?in the first three months of 2026 amid predictions of an oversupply. In a report released on Thursday, OPEC stated that OPEC+ pumped 43.06 mn bpd of crude oil in November, an increase of 43,000 bpd over the previous month. The report 'forecasts demand for OPEC+ crude to average 43 million bpd by 2026. This is unchanged from the previous month, and very close to what OPEC+ was producing in November. OPEC predicted demand for its crude to be 42.6 million bpd during the first quarter. According to a calculation based upon the OPEC report, if OPEC+ 'kept pumping at its November rate in 2026, and all other things remained equal, production would have been 60,000 bpd more than demand. The IEA had earlier stated that 'global oil supplies will exceed demand by almost 3.84million bpd – an amount equivalent to almost 4% world demand - if next year. In its report, OPEC kept its predictions for world oil demand growth in 2025 and 2026 unchanged. It also said that the global economy remained on a sound footing. Mark Potter and Kirsten Donovan edited the article.
Oracle AI reality test knocks stock prices, Fed cuts dollar
The world stock market stalled Thursday after cloud computing giant Oracle warned about AI profitability. Bonds remained firm, and the dollar suffered losses following the U.S. Federal Reserve's third interest rate cut.
Oracle's failure to meet analysts' profit and sales estimates, and its flagging of a $15 billion AI expenditure caused jitters in many Asian and European heavyweight markets.
SoftBank, a partner of Oracle in the U.S. Stargate project and a major shareholder in the U.S. company, also fell over 7.5%.
Europe also saw a muted opening, with a drop of 2.5% for Germany's SAP leaving the region's technology indices in the red for a third day running. However, the prospect of lower interest rates globally meant that there were gains elsewhere.
ORACLE AT CENTRE OF AI SPENDING DELIBERATION
Hargreaves Lansdown's Matt Britzman, an analyst, said that Oracle was at the epicenter of the AI spending debate because it lacks Google, Amazon, and Microsoft's mammoth financial resources.
Britzman explained that the markets quickly looked past a massive earnings beat driven by an asset sale and focused instead on 'rising capex' and?weak cash flows. This sparked a broader concern about AI investments not turning into profits as quickly as firms hoped.
The Fed's decision to lower its benchmark funds rate by 25 basis points, as was expected, to 3.5% to3.75%, in a split decision of 9-3, had traders concentrating on the global rate outlook.
Fed Chair Jerome Powell was balanced in his press conference. He said that he did not "believe a rate increase is anyone's baseline case", and new language on "the amount?and timing of" further rate adjustments suggested a possible pause.
The euro briefly broke through the chart resistance, and was able to move above $1.17.
Alexandre Drabowicz, CIO of Indosuez Wealth Management, said that the bar for a further rate cut by the U.S. in the next few months is now quite high. It will likely be determined based on the state of the job market.
He said, "We expect another cut to occur in the first half." Forecasting the second half of the year is "too hard", but with Donald Trump's new Fed chair expected to be in place by May, "it will definitely lean towards more cuts."
Drabowicz said, "This is still a situation where we maintain a cautious outlook on the U.S. Dollar."
Bonds received a boost after the Fed announced that it would begin buying short-term Treasuries on Friday in order to help support liquidity.
Benchmark U.S. two-year yields dropped by 3.52%, while benchmark 10-year yields declined by?about 4 basis point to 4.12%.
The benchmark 10-year German yields were down by one basis point to 2.85% after reaching 2.894% Wednesday, the highest level since March.
The money markets were volatile in the last few weeks. This led to an increase in short-term interest rates due to the tightening of liquidity.
Jack Chambers, Senior Rates Strategist at ANZ, said: "The Fed doesn't want to see this type of thing continue as it inhibits monetary policy transmission."
DOLLAR SLIDES
The yen remained firm in anticipation of the Bank of Japan's meeting next week, where an increase is expected.
In Asia, the yen reversed its recent decline and rose to $155 in trade on Thursday. The euro reached a two-month peak of $1.1707 after Christine Lagarde, the president of the European Central Bank, said that another upgrade to European growth projections is possible.
Analysts at ING wrote in a report that the next important indicator will be November's non-farm payrolls released on 16 December. They asked whether a low number could keep the market price of two more rate cuts?in 2020 intact.
The EUR/USD may not be able to reach 1.1800, but it could still have a run up to that level.
The oil prices have also fallen after they rose on Wednesday, following the seizure by the United States of a tanker carrying a banned oil off the coast of Venezuela. This heightened tensions between Caracas and the United States, raising concerns about possible supply disruptions.
Brent and U.S. Crude Futures both fell by about 1.2% to $62.15 a barrel and $58.44, respectively. Gold and Bitcoin also moved lower, down to $4,216 per ounce and $90.358, respectively.
(source: Reuters)