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Iron ore prices rise on the optimism that Iran's resolution will revive steel demand
Iron ore futures rose on Wednesday, as renewed interest in the Iran War?lifted metals market sentiment. A ceasefire is expected to restore Middle Eastern demand for Chinese steel. As of 0246 GMT, the most-traded contract for September iron ore on China's Dalian Commodity Exchange was trading 0.53% higher. It stood at 760.5 Yuan ($111.51). On the Singapore Exchange, the benchmark May ore was up 0.24% to $103.75 per ton. Metals have rallied due to renewed interest in ending the conflict in the Middle East. Zhuo Guqiu, a Jinrui Futures analyst, stated that the war had disrupted trade flows through the 'Strait of Hormuz. This led to lower steel shipments into the Gulf and, consequently, the annual 'lower steel shipment in March. As other countries erected trade barriers, the Gulf became China's second largest steel export destination in 2013. Donald Trump, the U.S. president, said that talks to end the Iran War could resume in Pakistan within the next two weeks, following the failure of the weekend negotiations, which led Washington to stop shipping to and from Iran. A note from Shanghai Metals Market stated that iron ore consumption in China is currently?near peak levels', which provides strong support to iron ore price. The World Steel Association announced on Tuesday that global crude steel demand is expected to increase by 0.3% to 1.72 billion metric tons this year. Coking coal and coke, which are used to make steel, also grew by 1.6% and 2.56% respectively. A separate note by 'Shanghai Metals Market' stated that due to the rising production of hot metals, demand for coking coal and coke was high. Steel mills had relatively low levels of coke in stock, which led to an urgent purchase?of cargoes. The Shanghai Futures Exchange steel benchmarks mostly rose: Rebar was up by 0.23%; hot-rolled coils were up 0.3%; and stainless steel gained 1.89%. Wire rod, on the other hand, lost 0.12%.
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Gold falls from a one-month high due to a stronger dollar and US-Iran talks.
The gold price fell on Wednesday, after reaching a 'one-month high in the previous session. As of 0249 GMT spot gold was down 0.3%, at $4,828.07 an ounce. It had earlier reached its highest level since March 18. U.S. Gold Futures for June Delivery were unchanged at $4,851.30. The dollar has recovered from its lowest level in more than a month, making commodities denominated in greenbacks such as bullion more expensive for holders of other currencies. dollar rebounded from its lowest level in more than a month, making the greenback-denominated commodities, such ?as bullion, more expensive for holders of other currencies. Oil prices dropped while stocks soared as investors hoped that Iran would resume talks with the U.S. in order to end the conflict which has closed the Strait of Hormuz - one of the major waterways used for the transportation of crude and refined products. Marex analyst Edward Meir said that gold prices will react to Middle?East headlines over the next few months, in hopes of two countries engaging in talks. Gold prices rose 1.6% this past week despite a slight decline, on renewed hope for U.S. Iran peace talks. Meir said that if things go wrong again, they can return to the pattern before the ceasefire, which was lower gold prices, a stronger US dollar, and lower stock prices. Donald Trump, the U.S. president, said that talks to end the Iran War could resume in Pakistan within the next two day after the weekend's failed negotiations prompted Washington to impose an Iranian port blockade. The?U.S. The?U.S. military announced?late Tuesday that American forces had completely stopped economic trade entering and leaving Iran via sea due to a 'blockade. The chance that the U.S. will cut its interest rate by 25 basis points this year has increased from 13% to 30%, compared to last week. Prior to the war, two rate cuts were expected for this year. Analysts at OCBC stated in a report that "while?gold? and?silver? rallied strongly overnight? the broader signal was decidedly risk-on, rather than defensive positioning." (Reporting by Noel John in Bengaluru; Editing by Rashmi Aich and Subhranshu Sahu) (Reporting and editing by Rashmi aich and Subhranshu Sahu in Bengaluru.
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Former US Treasury Secretary Yellen: One Fed rate cut this year
Janet Yellen, former U.S. Treasury secretary, believes that the Federal Reserve could cut interest rates this year. This is despite the fact that the 'Iran War' has created supply shocks in the global economy which are putting pressure on inflation. "Short-term expectations of inflation are slightly up, but they will be watching all that very closely, and I believe they have an open mindset," Yellen said Wednesday at the HSBC Global Investment Summit held in Hong Kong. If I were to write down one thing on paper before the next FOMC meeting, where forecasts are made, my guess is that there might be a reduction later in the year. Fed policymakers chose to maintain benchmark interest rates in their current range of 3.50% to 3.75 percent in March. A majority also predicted that at least one rate cut was likely to be appropriate for this year. Kevin Warsh is the nominee of President Donald Trump to replace Jerome Powell. He has repeatedly criticized Powell for failing to implement the rate cuts that he feels are necessary for the U.S. Economy. Yellen stated that the Middle East conflict has intensified economic uncertainty. She said that "it puts upward pressure on inflation, and we've seen it in recent reports of inflation. But we're more likely to see this," she said. "This is a broad supply shock." Investors are evaluating the impact of the six-week Iran War on interest rates and inflation in the major economies in the world. Crude oil prices have risen by more than 30% since the conflict began. U.S. consumer price increases?increased by the most since nearly four years, in March. This was due to a record increase in gasoline and diesel prices. The Fed has cut its interest rate by a quarter since the beginning of this year. Traders are no longer betting on this happening. (Reporting and writing by Kane Wu in Hong Kong, Scott Murdoch and Jacqueline Wong; editing by Kevin Buckland and Jacqueline Wong)
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Copper prices are at a six-week high on the back of renewed US-Iran discussions
The copper price rose on Wednesday, hovering near a six-week high as renewed U.S. - Iran 'peace talks' sparked hopes for a deescalation of the Middle East conflict. As of 0222 GMT, the most traded copper?contract at the Shanghai Futures Exchange rose 2.16% to reach 102,880 Yuan ($15,090.35) a metric ton. The contract reached its highest level since March 3, at 103.130 yuan, earlier in the session. Benchmark three-month Copper on the London Metal Exchange rose 0.56% to $13,358.5 per tonne after reaching its highest level since March 2, at $13,392.5. Donald Trump, the U.S. President, said that talks to end the Iran War could resume in Pakistan within the next two day after the weekend's failed negotiations led Washington to impose an economic blockade on Iranian ports. Oil prices fell, alleviating concerns about inflation and a global recession that could dent the demand for industrial metals. Demand for red metal, which is used in construction, manufacturing, and power generation, has also improved, which will help to keep prices down. A researcher from the state-owned China Minmetals Corp stated on Tuesday that refined copper consumption could increase by 3.7% per year in China over the next decade. China's plans to stop exports of the acid have stoked concerns about a possible impact on copper and nickel producers who use it. Nickel prices also advanced as a result of the shortage of sulphur caused by disruptions caused by the Iran War. This forced several Indonesian nickel processing companies to reduce their output by at least 10% from?last week. Shanghai nickel prices rose 2.57%, while London prices firmed by 0.38%. SHFE lead climbed 0.45%. Tin jumped 3.94%. Zinc grew 0.49%. Aluminium?shrank 0.12% due to easing supply concerns. The price of aluminium rose by 0.72%. Lead gained 0.28%. Tin increased 0.27%. Zinc grew 0.28%. $1 = 6.8176 Chinese Yuan (Reporting and editing by Amy Lv, Tony Munroe)
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The new Bank of Korea head signals a possible hawkish shift in the face of rising import costs
Shin Hyun Song, the nominee for the Bank of Korea Governor position, said on Wednesday that the central bank may have to tighten monetary policy if the supply-side shocks caused by the Iran War lead to persistent inflationary pressure. "A major test is about to take place." "I believe that price pressures will persist in the current Middle East situation, where the crisis hasn't been resolved quickly," Shin replied when questioned by a legislator about the direction of policy at a confirmation hearing for the parliamentary chamber in Seoul. "If it persists over a long period of time, it gets reflected on inflation expectations, core inflation and leads to overall?inflation then I think monetary policy will have a role." His comments coincide with Asia's fourth largest economy, which is struggling with lower growth and higher prices due to the Middle East conflict. The conflict could cause a greater supply shock for the economy than expected. On April 10, the central 'bank kept the benchmark interest rate at 2.50%, in the final policy decision overseen by Governor Rhee. His term ends on?April 20, 2019. Shin was asked if there is a greater risk of inflation due to rising import costs, and he replied that price stability was the bank's top priority to maintain economic growth. Shin reversed his neutral position on the currency he had previously taken. He warned against a "sharp deterioration" and vowed to intervene in the event of excessive volatility. Reporting by Cynthia Kim Editing By Ed Davies
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Sources: Sinopec purchases Russian oil to replace Mideast supplies after US waiver
Sinopec, the state-owned oil company of China, has purchased Russian crude oil in order to replace Middle Eastern oil after a temporary suspension of sanctions by the United States to ease global supply shortages. Sinopec purchased between 8 and 10 cargoes a year of ESPO blend oil from the eastern port Kozmino. Another source estimated that Sinopec bought about 10 cargoes a year of ESPO. Each ESPO shipment is 740,000 barrels. Sinopec purchased the cargoes for a premium of between $8 and $10 per barrel over ICE Brent. Before the Iran conflict, Russian crude was traded at a discount ranging from $8 to $10 per barrel. Sources spoke under condition of anonymity. As part of the U.S. Treasury Department's efforts to control energy prices in the U.S. and Israel war with Iran, a 30-day waiver expired on April 11. This waiver prompted Sinopec and PetroChina's trading arms to inquire about possible purchases with suppliers. Since October, they had stopped purchasing Russian crude by sea due to Western sanctions. Since then, it was not clear if PetroChina had purchased seaborne cargoes. Sinopec didn't immediately respond to an inquiry for comment. Big Middle East Exposure Sinopec is the world's largest oil refiner and sources about half of its crude oil from the Middle East. This leaves it vulnerable to the closure of the Strait of Hormuz during the U.S./Israeli war against Iran. Sinopec announced last month that it would cut runs in March by 5% due to the disruption. It also said that they were evaluating the possibility of buying Russian oil under waiver. Kpler data revealed that China's imports of Russian crude oil by sea in March were 1,82 million barrels per day, down from the record-breaking 1.92million barrels per day set in February. The imports for April are currently at 1,92 million bpd. The waiver from the U.S. boosted the?demand of Indian refiners, who bought?millions barrels of Russian crude oil at sea. The market expects Washington to extend its waiver, despite the fact that it has not made an announcement. Reporting by Siyi Liu, Chen Aizhu and Florence Tan in Singapore. Editing by Clarence Fernandez and Florence Tan.
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Prices of oil fall for the second day in a row on hopes that US-Iran negotiations may resume
Oil prices dropped for a second day on Wednesday, as the U.S. and Iran resumed peace talks. This could allow the supply to be released from the Middle East region that is currently trapped due to the Strait of Hormuz closure. Brent crude futures dropped 52 cents or 0.55% to $94.27 per barrel at 0054 GMT, after dropping 4.6% the previous session. U.S. West Texas Intermediate Crude was down $1.04 or 1.1% to $90.24 after falling 7.9% in the previous session. U.S. president Donald Trump announced on Tuesday that talks to end the conflict between the U.S., Israel, and Iran may resume in Pakistan within the next two day after negotiations failed over the weekend. Washington imposed a blockade against Iranian ports following the failure of the negotiations. The optimism that talks will eventually resolve the conflict, and allow crude oil and fuel to flow freely has been boosted by this. The war has closed the Strait of Hormuz - a vital waterway that carries crude oil and refined products out of the Gulf, to buyers in Asia and Europe. Sources said that despite a two week ceasefire, the transit through the Strait of Hormuz remains uncertain. Only a fraction the number vessels used to travel through the waterway prior to the war. An official from the United States said that a U.S. destroyer prevented two oil tankers leaving Iran on February 2. The Schork Group stated in a report that "while diplomatic headlines indicate the?possibility' of renewed U.S.Iran talks, and even a temporary easement of transit restrictions," the actual reality is still fragmented. The result is that the market continues to price options around disruptions in flow, rather than returning to equilibrium. "The result is a market that continues to price optionality around flow disruption rather than a return to equilibrium." The Energy Information Administration is expected to release official U.S. inventories data at 10:30 am ET. ET (1430 GMT). A poll indicated that U.S. crude stockpiles are?expected to be slightly higher last week while distillate and gasoil inventories will likely fall, according to the poll. According to sources familiar with American Petroleum Institute data, U.S. crude inventories rose for the third consecutive week on Tuesday.
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Minmetals: China copper consumption will grow 3.7% per year until 2035
The consumption of refined copper in the world's largest metals market, China, shows no signs of peaking. It could increase by an average 3.7% annually over the next decade. China's growth in demand this year is expected to be much smaller at 1%. Zuo Haoen said at the World Copper Conference, in Santiago. He cited a slowdown in the energy transition, especially solar power that uses copper, and high copper prices. According to Minmetals "most realistic" scenario, Chinese copper consumption will increase by 3.7% per year, reaching 22.95 millions metric tons in 2035. This is a 43% increase from 16 million metric tonnes in 2025. Zuo noted that China had a lot of ground to make up in terms if 'per capita copper consumption' compared with developed economies. * The 'Minmetals' forecast is based upon a population projection of 1,35 billion in China by?2035. "Even if there were a mild population decline in the future, copper demand would remain substantial," Zuo stated. Reporting by Tom Daly, Editing by Neil Fullick
Asian stocks reach a six-week high on the hope of US-Iran Peace Talks
As the dollar stabilized after seven days of losses, Asian stocks followed Wall Street's lead.
After the weekend's failed negotiations, President Donald Trump stated that talks with Iran may resume in Pakistan within the next two day after Washington imposed a blockade against Iranian ports. Both Pakistani and Iranian officials said that negotiations could resume.
The markets were calmed by signs that the diplomatic engagement will continue, and benchmark oil prices fell below $100 per barrel. Brent crude futures dropped 0.7% to $94.13 per barrel after falling almost 5% over night.
Stock investors rejoiced, as MSCI's broadest Asia-Pacific index outside Japan rose 1.5% to its highest level in the past six weeks. Japan's Nikkei climbed by 1.2%, to 58.561 points. This is close to the record high set in late February of 59.332.43.
The Hang Seng Index in Hong Kong and China rose by 1.2% each.
Tony Sycamore is an analyst with IG. He said, "The impressive price movement in risk assets shows markets are keen to look past the immediate 'impact' of the Middle East Conflict."
There is an increasing expectation that the standoff can be resolved soon, allowing for the U.S. government to declare victory before stimulating the economic activity ahead of the midterm elections.
Overnight, Wall Street saw the Nasdaq climb 2% for its 10th consecutive day of gains. The S&P 500 was also flirting with a new record high.
The U.S. producer data on inflation also showed some encouraging signs, as prices increased less than economists had expected in March. This helped to temper fears about 'war-driven inflation.
Investor optimism about the Iran War ending soon supported Treasuries.
Wednesday, the yield on two-year U.S. Treasury bonds fell by 1 basis point to 3.704% after falling 3 bps overnight. The 10-year yield also fell 1 bp to 4.2439% after falling 4 bps overnight.
The U.S. Dollar, a safe haven currency, has stabilised overnight after falling for the seventh consecutive session. The euro remained at $1.1791, after hitting a six-week high of $1.1811 over night.
The price of gold increased by 0.1%, to $4.846 per ounce.
The International Monetary Fund lowered its outlook for growth on Tuesday, warning that the global economy could be on the verge of recession if this conflict intensifies. Reporting by Stella Qiu, Editing by Kevin Buckland
(source: Reuters)