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China's coal-based fertiliser protects its farmers against global fertiliser turmoil
China's unique dependence on coal to produce urea may have farmers around the world switching to less nutrient-hungry plants as the Iran War affects the supply of fertilisers. Analysts say that China could 'not?allow?exports of urea, the most widely-used fertiliser in the world, after spring planting, as it usually does, because this would drive up local prices. Beijing usually waits until May to determine if there's a surplus before deciding how much it can export abroad. China produces 78% of its urea with coal, a cheap and abundant resource. Other big exporters like Russia, Qatar, and Saudi Arabia produce urea using gas. Willis Thomas, CRU's head of fertilisers analyses, said that China is self-sufficient in urea. China's massive deployment of coal, which it?uses for oil, gas and to produce other products, has been particularly prescient, even though it is more pollution than natural gas. It reduces the need for imported energy that could be "cut off" in a war. Price increases outside China The benchmark price for urea has risen by 70% since February, as the war is preventing ships from crossing the Strait of Hormuz. This route is vital for 30% of global fertiliser trade. Last week, urea prices in Indonesia were around $700-780 a metric ton. Thomas of CRU said that in contrast, the price per tonne was around 1,760-1.840 yuan (about 255-$267) last week in northern China. The U.S. Department of Agriculture announced last week that U.S. Farmers plan to plant less of the nitrogen-intensive corn crop than they did last year and more soybeans. Australian farmers are expected to prefer barley in the coming season over nitrogen-intensive canola and wheat. In China, where the government has already restricted exports of other fertilisers and ordered an early release of commercial reserves of fertiliser, there is little chance of a switch. "I'm still sticking with corn this season because it's more profitable than soy beans," said a farmer named Guo, who lives in the north-eastern Heilongjiang Province. AMPLE UREA SUPPLIES According to the China Nitrogen?Industry?Association, China will produce 76.5 million tonnes of urea in 2018, an increase of 6.3% over last year. The domestic demand is estimated at 66 millions tons, including 43,000,000 tons for agriculture. Thomas stated that nine new plants will be starting production in the coming year. This will add 4.9 million tons of coal per year. According to StoneX, China's exports last year were?4.9 millions tons. This is below the historical norms of 5 to 5,5 million tons that would normally account for 10% of global trade. India, which imported over 40% of its DAP and urea, a mixture, from the Middle East last year, asked China to permit the sale of certain urea cargoes. Analysts said that China could continue to restrict exports over the next few months. If China exports, the local urea price will soon jump up to match the global market. StoneX analyst Josh Linville said that the government does not want this situation. The National Development and Reform Commission and China's General Administration of Customs did not respond immediately to requests for comment. India is among the few countries to have explored coal gasification for urea as an alternative feedstock. However, these projects are still in their early stages.
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Andy Home: LME traders at the ROI were wrongly pricing metal supply crises.
Metals traders began the year fretting?about an looming shortage of copper, but by the end of the first quarter they were facing a very impending supply crisis?in aluminum. In its fifth week of existence, the Iran war has dampened the speculative frenzy which erupted in the London Metal Exchange's (LME) base-metals complex in January. Aluminium has risen to its highest level in 2022, despite the fact that two Gulf smelters were damaged by Iranian missiles and shipping across the Strait of Hormuz is still severely restricted. Even though energy prices are surging, the metals bulls still have a good grip on the market. EXPLOSIVE ALUMINIUM The Iran War has revealed the fragility in the Western Aluminium Supply Chain. Around 9% of the world's smelting capability and 18% global exports are accounted for by the Gulf. Initial impact was the logistical squeeze that resulted from the closure of the Strait of Hormuz. The Qatari smelter Qatalum as well as Aluminium?Bahrain(Alba) both reduced their operating rates in order to conserve raw material stock. Next came direct attacks. Alba has been hit by Iranian missiles, and its capacity is down to 30%. The giant Al Taweelah aluminium smelter is out of commission after damage to the power plant. The supply chain is being shook by a crisis no one could have predicted. Western aluminium buyers face a double hit from both the rise in LME aluminium prices and the sharp increase in physical premiums. The LME copper price hit a nominal record of $14,527.50 a metric ton last January, as investors bought into its bull story of soaring demand and limited supply. However, there is no shortage of the metal in the present. Global exchange stocks closed March at a record high of just over 1.4m metric tons. LME's three-month copper ended the third quarter at $12335.50 per tonne, 15% lower than the peak of January and pretty flat compared to the beginning of the year. In January, tin reached a record-high price of $59 040 per ton as investors chased a similar meme of scarcity. Industrial players also responded to the scarcity of tin by delivering it into LME's warehouses. Since the beginning of the year, registered tin stock has increased by 60%. Another 2,951 tonnes are in the LME’s non-warranty stocks. As with copper, the LME spread structure for tin shows no signs of tightening. Both metals are in a wide contango, which indicates that there is no shortage of units. Nickel and lead markets are not in danger of a shortage. Both LME stocks are very high, and the time-spreads have been relaxed. In fact, LME lead stock?has mushroomed to more than 500,000 tons. The heavy metal is set to replace aluminium as the preferred metallic financing vehicle. Zinc?remains a outlier. The galvanising metal?still refuses to perform according to script. LME inventories have not been rebuilt in a meaningful way. Stocks are only up 7,900 tonnes on the start the year. It is trading with a marginal contango rate of $5.00 per ton. SECOND ROUND IMPACT As we enter the second half of the year, the biggest question hanging over LME base metals is the impact that the Iran war will have on demand. The escalating energy costs are bad news for both manufacturers and consumers. It is important to consider how long the hostilities will last. This is why, in January, metals were in the spotlight. By?March they had been largely replaced by them. The war in the Gulf has already lasted 'too long' for aluminium. And the impact of the loss of production assets will be felt over many months. Andy Home is a columnist at. This column is great! Open Interest (ROI) is your new essential source of global financial commentary. Follow ROI on LinkedIn and X. Listen to the Morning Bid podcast daily on Apple, Spotify or the app. Subscribe to the Morning Bid podcast and hear journalists discussing the latest news in finance and markets seven days a weeks.
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Iran's defiance on the eve before Trump's ceasefire deadline
Iran and Israel exchanged attacks on Tuesday, as Tehran defiantly refused to reopen Strait of Hormuz or accept a ceasefire agreement on the eve of the deadline set by U.S. president Donald Trump for Tehran to comply with his demands. According to a source familiar with the plan, Iran rejected the U.S. proposal that was mediated by Pakistan. The plan called for an "immediate" ceasefire, the lifting of the effective blockade in the Strait of Hormuz, and then talks about a wider peace settlement to be held within 15 to 20 working days. IRNA, the official news agency, reported that the Iranian response included 10 clauses. These included an end to conflicts, a protocol ensuring safe passage through Strait of Hormuz and lifting of sanctions. Trump stated on Monday that "the whole country could be destroyed in one night. That night may be tomorrow." He threatened to destroy Iranian infrastructure and?power plants if Tehran did not agree to the deadline. Trump warned that without a deal "every bridge" in Iran would be destroyed by midnight on Wednesday (0400 GMT). "Every power plant?in Iran will go out of business and be burned, exploded, and never used again." Fight Unabashed The Israeli military announced early on Tuesday that it had successfully completed a wave airstrikes against Iranian government infrastructure located in Teheran and other places. It was using air defence systems in order to intercept missiles fired from Iran. The Saudi defence ministry did not specify who fired the projectiles, but said that debris fell near energy facilities. Saudi Arabia has been attacked by hundreds of Iranian drones and missiles since Israel and the U.S. launched their war against Iran on February 28. Authorities have confirmed that the majority of these were intercepted. Saudi Arabia, the United Arab Emirates, and Bahrain all issued public safety alerts at the same time on Tuesday. Trump dismissed questions about whether his pledge to destroy Iranian power plants would be war crimes. He said he was not concerned at all by the possibility. He said, "I hope I won't have it to do." Iran's ambassador to the United Nations stated on Monday that Trump's threats to strike were "direct incitement of terrorism" and provided clear evidence to commit war crimes according to international law. On Tuesday, Iran's deputy sport minister, Alireza Rahimi called for artists and athletes to create human chains in power plants throughout the country. The top military command of Iran said that Trump is "delusional." According to Mehr, a U.S. and Israeli projectile struck a synagogue located in the heart of Iran's capital on Tuesday. ChokeHold The price of oil hovered at $110 per barrel as Trump's deadline approached and there was little prospect of the Strait of Hormuz being reopened, a major global oil transit chokepoint which has fueled inflation fears around the globe. Iran has effectively closed Hormuz. This is a conduit that supplies about a fifth of the oil and gas in the world. It's a powerful bargaining tool for Tehran, which it does not want to give up. Brent crude futures increased 0.4% to $101.9 a barrel, while U.S. West Texas Intermediate oil futures climbed by 0.8%?to $113.31. Trump is on the brink of a political crises as Iran has proven to be a more formidable adversary than what he had predicted when he began the conflict. He said that the conflict was meant to stop Iran from developing nuclear weapons and missiles for them. After 13 U.S. military personnel were killed in the conflict, Trump found himself in a 'perilous situation' when an F-15E U.S. fighter jet crashed on Friday. One of the two airmen remained stranded on Iranian soil. The rescue mission by U.S. commandos, to bring the stranded weapons officer to safety, helped to avert an escalation in a political crisis that could have been disastrous for Trump. The war has killed thousands of people in the Middle East, including 3,546 Iranians, according to the U.S. rights group HRANA, and almost 1,500 Lebanese, where Israel is targeting the Iran-backed Hezbollah.
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China's iron ore trade returns; Trump's Iran deadline looms
After a long weekend of holidays, trading resumed on Tuesday in the 'top buyer China. Investors were awaiting clarity on the prospects for a resolution of the 'Iran War. Demand expectations were also a factor in the price rise, following Beijing's call to accelerate energy-related projects. By 0243 GMT, the most traded May iron ore contract at China's Dalian Commodity Exchange rose 0.5% to $805 yuan (US$117.03) per metric ton. The benchmark May ore traded on the Singapore Exchange rose 0.25% to $106.9 per ton. Iran on Monday said it wanted to?a permanent end to the conflict with the U.S., Israel and other countries, and resisted pressure to reopen Strait of Hormuz. Meanwhile, U.S. president Donald Trump warned that the country would be "taken" if they did not meet the deadline of Tuesday night to reach a settlement. As a'response to the global energy shocks' caused by the Iran War, Chinese President Xi Jinping called for accelerated planning of a new system to ensure the energy security of the country. The construction of the largest hydropower project in the world on the eastern edge of the Tibetan Plateau will support the prices of industrials and construction materials, including iron ore. Iron ore prices rose, but gains were restricted by the high inventory levels and anti-dumping policies on Chinese steel. Steelhome data showed that iron?ore stocks at major Chinese port cities increased by 0.65% from week to week. The increase was despite rising output of hot metal, which highlights difficulties in inventory reduction and weakening basic support. Vietnam's trade ministry announced that it has implemented a temporary anti-dumping tax of up to 27,83% on certain Chinese hot-rolled coil steel. Coking coal was down 0.45% and coke was up 0.33% on the DCE. The majority of steel benchmarks on the Shanghai Futures Exchange are negative. Rebar was not much changed. Hot-rolled coil and wire rod both declined 0.27%. Stainless steel rose 0.21%. ($1 = 6.8784 yuan) (Reporting by Ruth Chai; Editing by Subhranshu Sahu)
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South Korea's envoy will visit Kazakhstan, Oman, and Saudi Arabia in order to secure oil supplies
Kang Hoon Sik, the South Korean chief of staff to the president, said that he was traveling to Kazakhstan, Oman and Saudi Arabia on Tuesday to procure crude oil and naphtha due to disruptions in shipping through Strait of Hormuz. Kang will depart on Tuesday evening as the special envoy of President Lee Jae Myung to hold discussions with governments, energy firms, and ship operators in order to ensure that cargoes arrive at 'domestic ports' and to maintain stable supplies of essential goods, such as medical products. He said that South Korea needed to diversify its supply lines urgently, as the country relied heavily on the Hormuz Route for 61% of crude oil imports and 54% of naphtha. Kang said that shipments of crude oil, naphtha and other products secured from the United Arab Emirates last month under a 24-million barrel supply agreement had already started arriving at South Korean ports. He said that the government worked with international?partners? to ensure the safe passage of 26 South Korean flagged vessels, which are currently waiting in the Strait of?Hormuz. Kang called on 'households and business' to actively participate in energy-saving initiatives so that the country can weather tight supply. (Reporting and editing by Ed Davies. Kyu-seok Shim)
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Fuel price surge pushes Philippine inflation above central bank target
The Philippines' annual inflation rate increased more than expected in March. It breached the central bank's target range of 2% to 4.0%. This was primarily due to the sharp rise in 'fuel prices' amid the escalating Middle East tensions. In March, headline inflation was 4.1% higher than a year ago. This is significantly higher than the 2.4% in February and also above the median polled forecast of 3.7%. This is the highest reading of inflation since July 2024 when it was 4.4%. Inflation grew at the fastest rate since January 2023 - 1.4% on a monthly basis. This reflects a dramatic increase in prices. Transport costs were the main driver, as they soared because of rising energy prices globally. Diesel prices jumped 59.5% from a year ago, and gasoline prices jumped 27.3%. These are the highest gains since September 2022 when Russia's invasion in Ukraine disrupted global energy markets. Diesel and gasoline both declined by 1.3% in February. The transport index has risen by 9.9% year-on-year. This is the highest since January 2023, when it soared 11.1%. The Philippines is heavily dependent on Middle East crude oil. This makes it susceptible to price fluctuations and supply shocks during times of geopolitical conflict. Core inflation (excluding food and energy) also increased to 3.2% in March, up from 2.9% the previous month, indicating emerging second-round effects. The central bank projected earlier that inflation would fall between 3.1% and 3.9% for the month of March. It kept its key rate at 4.25% in response to the rising risks at an unexpected 'off-cycle' meeting on 26 March. The policy will focus primarily on'second-round effects of global oil price shocks. The next monetary review is set for April 23. Reporting by Mikhail Flores, Nestor Corrales and Kevin Buckland; Editing by John Mair & Kevin Buckland
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Energy Transition Minerals, Australia's Energy Transition Minerals, faces a likely refusal of a licence renewal for its Greenland project
The Australian'miner' Energy Transition Minerals said that Greenland has informed it of a potential rejection of the exploration licence renewal request for its 'Kvanefjeld Rare Earths Project. Energy Transition Minerals shares fell 5.6%, to A$0.051, by 0152 GMT after trading resumed following a stoppage on Thursday. The benchmark S&P/ASX 200 index rose 1.5%. Kvanefjeld, a large-scale project to produce?rare Earths in the west, has the potential of becoming a major producer of minerals critical for consumer electronics. Energy Transition Minerals said it received a draft of a decision from the Greenland Government indicating the intention of the mineral resources ministry to recommend the denial of the application. Greenland said that its exploration activities "nolonger serve a purpose", and that under the current legal framework, a licence cannot be granted. The company stated that the decision was based on a law passed in December 2021 - "the 2021 Uranium Act" - which would ban uranium exploration, prospecting and exploitation. Energy Transition Minerals filed a claim with an arbitral tribunal in Copenhagen to determine the legal rights of unit Greenland Minerals A/S to receive an exploitation license for 'the project' under this law. Greenland had previously granted license renewals for the Project, including in the course of an active?legal Dispute and after the introduction of the 2021 Uranium Act, the company stated, calling the draft stance "inconsistent with the historical treatment" of the project. Sherin Sunny, Bengaluru. Sumana Nady and Subhranshu Sahu edited the article.
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As Asia and Europe compete for supplies, US crude prices have reached record highs.
Industry sources say that spot premiums for U.S. West Texas Intermediate Crude have reached all-time highs due to the fierce competition for supplies between Asian and European refiners to replace Middle Eastern oil flow disruptions caused by the Iran War. Europe is the biggest importer of U.S. oil, but the competition has increased as Asian buyers are searching for supplies from the Americas and Africa to Europe to replace Middle Eastern crude that cannot move through the Strait of Hormuz. Sources and analysts say that the increase in crude oil prices is driving up costs for refiners and increasing losses on both continents. This puts severe pressure on companies, including state-owned ones, who are required to produce fuel by governments for national security. In a note from April 3, Paola Rodriguez Masiu, Rystad's chief oil analyst, said that Asian refiners are aggressively bidding for every barrel of the Atlantic Basin. 'EVERY ?DAY THERE'S A NEW PRICE' The traders reported that the offers for WTI Midland crude to be delivered to North Asia on July's?very large crude carrier? had a?premium of $30 to $400 per barrel depending on which benchmark was used. One trader put the premium at 34 dollars a barril over Dubai quotes, while another said it was $30 above Brent dated. Two other traders said that offers were closer to $40 a barron above the August ICE Brent base. These levels are higher than the premiums paid by Japanese refiners, including Taiyo Oil, for WTI crude in late March and early April. One of the traders stated that "every day, there is a new price", adding that Asian refiners are facing?severe loss due to the premiums. One trader suggested that refiners should reduce their crude runs and buy products, if they are offered. The spot premiums increased after the WTI monthly spread reached its largest backwardation Thursday. Backwardation is when the current month's prices are higher than future months. The U.S. Gulf Coast has also seen a surge in demand for tankers due to the wider discounts offered on U.S. Crude Oil compared to Brent, which is the global benchmark. This has reduced vessel availability and pushed up freight rates. On Thursday, the bids for WTI?Midland to be delivered to Europe reached a record premium of nearly $15 per barrel compared to Brent dated. According to Rodriguez-Masiu, "At the current physical differentials as well as freight rates, European refiners who buy spot crude cannot make any money by running these barrels through their system."
MORNING BID - A breakthrough or a crude awakening in Europe?
Ankur Banerjee gives us a look at what the future holds for European and global markets.
The markets are 'holding their collective breath' as optimism about a possible deal to open the Strait of Hormuz combines with growing fears of an impasse which could lead to an escalation of violent conflict, and yet another U.S. deadline is looming.
Risk-off hasn't yet turned into a selloff as traders wait for the deadline set by U.S. president Donald Trump on Tuesday at 8 pm Eastern Time (00:00 GMT Wednesday) to reach a deal with Iran.
Both sides have exchanged barbs, insults and attacks as Iran rejected a proposed ceasefire. Instead, they are looking for an end to the war that has shut down the Strait of Hormuz - a vital waterway of energy supply that has affected markets and economies.
Trump, on the other hand, warned that Iran would be "taken" if they did not reach an agreement by his deadline. He threatened to destroy Iranian bridges and power plants, while he dismissed concerns that such actions could be considered a war crime.
The dollar's stability and the stock market's struggle for direction kept investors hesitant on Tuesday. Even the stellar earnings of chipmaker Samsung Electronics could not lift the mood.
U.S. Stock Futures dropped 0.44%, while European Futures indicated a subdued opening as the region returns from holidays on Friday and Sunday. Brent crude is currently at $111.43 a barrel, up $39 or 53% from the start of the war.
The yen is perilously close the 160 dollar level, which traders are worried will?bring Tokyo to the market to help support the fragile currency. The demand for U.S. dollars is unrelenting and any intervention could be futile.
The manufacturing data that will be released later today could give a glimpse into the impact the six-week war has had on the European economy, and whether or not the fears about the price 'pressure caused by the energy shock' are warranted.
Investors will be focusing on another binary event, which could have a significant impact on sentiment in the near term.
The following are key developments that may influence the markets on Tuesday.
PMI data for France, Germany and the Eurozone for March
(source: Reuters)