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Iron ore is in short supply as steel demand remains steady, despite a rise in ore production.
On Friday, iron ore futures were unable to find a direction as a steady demand for steel for construction was countered by?prospects for rising supplies of the steelmaking component. As of 0303 GMT, the most-traded?iron ore September contract on China's Dalian Commodity Exchange was?0.32%?higher. It stood at 787.5 Yuan ($115.19), a metric tonne. The contract is up 1.22% this week. The benchmark iron ore for May on the Singapore Exchange rose 0.1% to $106.8 per ton. This represents a gain of 0.95% in the last week. According to Mysteel, the Chinese supply of finished products increased by 78.900 tons or 0.9% week-on-week. Inventory decreased by 621.200 tons or 3.5%. Construction was the primary driver of the?increased demand for steel products, which indicates a steady demand for steel and feedstock. Prices were also supported by restocking before China's five day May Day holiday. The resolution of a long-running dispute between BHP and China Mineral Resources Group over BHP's contract to supply iron ore has raised the prospects for more shipments. Fortescue, an Australian mining company, reported a 5% increase in its third-quarter iron ore shipment, thanks to a strong performance from?its Hematite operations, and boosted contribution from the Iron Bridge Project. Iron ore was shipped by the world's 4th-largest miner in 48.4 Mt during the quarter ended March 31. This compares to 46.1 Mt a year ago. World Steel Association data released on Thursday showed that the crude steel production in China, which is the world's largest producer and consumer of the metal, dropped 6.3% to 87.0 millions?tons. Coking coal and coke both fell by 0.12% and 0.944% respectively. The Shanghai Futures Exchange steel benchmarks were mixed. Rebar rose 0.009%; hot-rolled coil fell 0.06%; wire rod increased 0.28%; and stainless steel gained 1.65%.
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Reliance Industries, India reports quarterly loss on the rise in crude prices
Analysts said that Mukesh Ambani's Reliance Industries, led by billionaire Mukesh, is expected to report a decrease in its March-quarter profit on Friday as the Middle East War-driven spike?in crude oil prices weighed down on their mainstay business of oil-to chemicals. According to an average estimate from six brokerages, the consolidated net income of the 'company' is expected to drop 3.7% in comparison to last year during a 'fourth quarter. Meanwhile, revenue is projected to rise 8.1%. Reliance Industries faces pressure because Brent crude has risen more than 40% in the last few months due to the U.S./Israeli conflict with Iran, and disruptions of the Strait of Hormuz. Analysts at JP Morgan stated that "refiners (including Reliance), earnings should benefit in theory from higher cracks. However, high crude premiums could be an uncertain and material drag." Jefferies stated that the operating profit of the oil-tochemicals segment will be affected by the scarcity premium, increased freight costs and the production of loss making liquefied petrol gas. The shares of the company have dropped about 8% in the past month since the 16th January, when it announced its third quarter earnings. This is below the benchmark Nifty50, which has fallen 5.8% during the same time period. TELECOM HOLDINGS FURTHER FIRM, RETAIL SLOWS. Brokers expect slower retail growth for the Indian oil-to-telecom company's retail division amid increased competition. However, its telecom business is likely to perform better due to continued subscriber growth. Jefferies anticipates that Reliance’s retail business will have grown at 8% during the March quarter. This would be the second consecutive quarter of growth below 10%. Analysts predict that the telecom industry will continue to add subscribers and upgrade to more expensive plans. Centrum predicts that Reliance Jio will have gained 5 million new users in the March quarter. The average revenue per customer is expected to be slightly higher than the previous quarter at 216 rupees. Investors will be 'watching for Reliance Jio Platforms IPO cues with the?earnings announcement.
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Gold to drop by a week as oil prices rise, fueling inflation fears
Gold was largely?stable' on Friday but?was heading for a weekly drop as high oil prices fueled fears of inflation, and interest rates that would continue to rise in the face of stalled U.S. - Iran peace talks. As of 0230 GMT, spot gold was down by 0.1%, at $4,686.29 an ounce. After a four-week streak of gains, the metal has fallen 3% this week. U.S. Gold Futures for June Delivery fell by 0.5% to $4702. Brent crude prices are up over 17% this week, hovering above $100 a barrel. The Strait of Hormuz remains largely closed in spite of an extended ceasefire with Iran. Kelvin Wong is a senior analyst at OANDA. He said that as long as the risk of a prolonged closure of Strait of Hormuz exists, oil prices will remain high, and gold prices will be under pressure. A rise in crude oil prices could cause inflation by increasing transportation and production costs, which would increase the probability of interest rates rising. Gold is considered a hedge against inflation, but high interest rates are making yield-bearing investments more appealing, which reduces the appeal of bullion. Wong stated that gold is trapped between the 50-day average of $4,900 at the top and the 20-day average of $4,645 at the bottom. "Everything now boils down to what's happening in the Middle East," he said. Iran showed off its increased control over the Strait of Hormuz on Thursday, with a video showing commandos storming a cargo ship in a speedboat. This was after peace talks collapsed that Washington had hoped would "open" one of the most important shipping routes of the world. Trump told reporters he thought Tehran was interested in a deal, but its leadership is in turmoil. He said that he wasn't in a hurry to make a deal but that if Iran didn't want one "I will finish it militarily." The U.S. Dollar is up 0.7% this week so far, making greenback priced bullion more expensive for currency holders. The benchmark 10-year U.S. Treasury yields are up over 2% in the last week, which increases the cost of non-yielding gold. Spot silver dropped 0.3% to 75.22 dollars per ounce. Platinum fell 0.6% to 1,993.63 dollars, while palladium declined 0.3% at 1,464.12.
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Concerns over the escalating tensions in Middle East cause oil prices to rise
The oil prices rose Friday due to?fears that military tensions in the Middle East would escalate after?Iran released video of commandos board a cargo vessel in the Strait of Hormuz, and reports that Tehran's air defenses had engaged 'hostile targets. Brent crude futures increased $1.23 or 1.17% to $106.3 per barrel at 0107 GMT. West Texas Intermediate futures climbed $1.07 or 1.12% to $96.92. The benchmark oil contracts both rose more than 3% and $5 per barrel on Thursday after reports of air defences engaging targets above Tehran and a power battle between Iran's moderates and hardliners. U.S. president Donald Trump stated that Iran might have stocked up on its weapons "a little bit" during the ceasefire of two weeks, but that the U.S. army could destroy it in a single day. Haitong Futures stated in a recent report that the ceasefire phase was increasingly resembling a war preparation phase. It said that if U.S.-Iran negotiations fail to reach a breakthrough by the end April, and the fighting resumes, oil prices could rise to 'new highs for this year. Iran posted video on Thursday of commandos storming a cargo ship in a speedboat after peace talks collapsed, highlighting its control over the Strait of Hormuz where 20% of the world's oil and gas normally flows. Trump stated that, as investors and governments look for a lasting?peace around the globe, he will not set a 'timetable' for ending the conflict in Iran. He also said he wants to make a "great deal". When asked how long he would be willing to wait for an enduring?peace agreement with Iran, he replied: "Don't hurry me." Mingyu Gao is the chief researcher at China Futures for energy and chemical products. She said that prolonged disruptions to the Strait of Hormuz may push global crude and refined-product inventories down below seasonal lows of five years by late May or early June. This would add a premium of supply risk back into oil price. Trump announced on Thursday in a post to social media that Israel and Lebanon?agreed?to extend their ceasefire for a period of?three weeks following a meeting at the White House Oval Office between high-level representatives from both countries. Israel had warned before the announcement that it was prepared to resume attacks against Iran. (Reporting and editing by Shri Navaratnam, Helen Clark and Sam Li)
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Asia's refinery cuts are intensifying due to the war in Iran, putting jet fuel and diesel supplies at risk
Analysts and refinery sources say that Asian refining output is expected to fall in April and may as 'crude imports have hit a decade-low and the Iran War forces refiners into processing lighter grades. This will reduce diesel and jet fuel production by at least 1 million barrels a day. The Strait of Hormuz closure has had the greatest impact on Asia. This region, which accounts for 37% of global refinery output, and normally sources two thirds of its?crude? from the Middle East. Run cuts at refiners have exacerbated the tight fuel supply in the area and kept prices high. Kpler's preliminary data shows that crude imports into Asia will fall by 22% annually to 20.40 million bpd, which is the lowest level in 2016. This is despite refiners buying sanctioned Iranian oil and Russian oil on the sea, and paying record prices for alternatives from the Middle East. The International Energy Agency reported that Asian refineries had to reduce their runs to 29.4 mbpd by 2.7 mbpd, and they are expected to further decrease to 28.6?bpd, and then 28.5 bpd, in April and may, respectively. Consultancy Energy Aspects predicts that crude processing will drop to 28,4 million bpd by April and 28,7 million bpd by May from 30.4 millions?bpd during March. Amir Abu Hassan is a senior oil analyst with consultancy FGE NexantECA. He said that the deepest cuts would occur in April, as Middle East crude supplies continued to be short. Alternative barrels are only expected this week. Some analysts predict that the recovery will begin in June. However, this depends on the resolution of the conflict which keeps the Strait of Hormuz wide open. North Asian Refineries China, which has the largest refining industry in the world, has curtailed fuel imports since last month in order to maintain domestic supplies. The IEA estimates that Chinese refinery output was 14 million bpd for March, down slightly from 15.2 millions bpd during February, and at 14.8 million bpd per year on average through 2025. The Chinese research firm Horizon Insight estimated China's throughput to be 13.4 million BPD in the week ending April 17 - down from 15.4 millions BPD in the week prior to the start of the war on February 28. Horizon Insight analysts stated that the Chinese run-cuts are mostly at state owned refineries which have increased yields in transportation fuels to the detriment of naphtha used for petrochemicals and energy security. Hassan, of FGE, said that the utilisation rate for refineries in South Korea and Japan will drop from its normal level around 70 to 80 percent to 65 percent by late April or early May. According to data from the Petroleum Association of Japan, Japan's refineries were operating at 68% of their designed capacity in April. Hassan stated that the average refinery utilization rate in Singapore's energy hub has been below 50%. This is down from the usual 70%, Hassan added. Nithin Prakash, an analyst with Rystad energy, reported that Indian crude production fell by 13% in April compared to February. LESS MEDIUM-SOUR CRUDE, MORE LIGHT GRADES COMING According to Vortexa, of the 12 million barrels per day of crude oil that could not reach Asia due to the closure of the Strait of Hormuz in March, 8 million were medium density with high sulphur, or medium sours. Most Asian refineries have been designed to process medium sours to maximize diesel output. As a replacement, Asian refiners bought light West Texas Intermediate and medium-sour Mars from the United States, Kazakhstan's light-sour CPC Blend, and sweet West African crude oil. These grades typically produce more gasoline or naphtha. Vortexa data show that the share of Asia's crude oil slate containing light-sweet crude has reached a record-high of 21%. This is up from just 11% in February. DIESEL, JET ?FUEL OUTPUT LOSS Middle distillates, such as diesel and jet-fuel, have been lost at Asian refineries due to the switch in crude grades. Middle East crudes produce 60 percent of middle distillates compared to 40 percent for WTI. Rystad's Prakash stated that a 1%-2% drop in Asian refining yields could result in a loss of between 250,000 and 500,000 bpd diesel and jet fuel supply. This, combined with the export restrictions imposed by some governments, and refinery run reductions, could reduce diesel and Jet Fuel availability in the short term by up to 1 million bpd. Sumit Ritolia (Kpler's Modelling and Refining Manager) estimated that the total middle distillate supplies losses in April were between 1.8 and 2.0 million bpd. Most of this diesel. He added that a lighter crude slate would lead to a lower use of secondary units, such as hydrocrackers and cokers, which are designed to upgrade residual gasoline into diesel.
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Australian shares fall as concerns over the Middle East weigh; Suncorp rises
Australian shares fell on Friday, and are on course for their worst week in more than a month due to uncertainty over a lasting peace agreement in the Middle East. However, insurer Suncorp has bucked the trend after securing a reinsurance policy. By 0034 GMT, the S&P/ASX 200 Index had dropped 0.2%. If losses continue, the benchmark is set to drop nearly 2%, making it its worst week since last March 16. After a meeting of high-level officials at the White House, Israel and Lebanon?extended a ceasefire for a period of three weeks. However, markets are still uncertain whether a lasting deal will be reached. Miners lost 0.6%. Lithium producer IGO fell 11.5% after announcing lower annual production and increased cost forecasts for Greenbushes lithium mine. The project is 51% owned jointly by Tianqi?Corp002466.SZ> and has the highest-grade ore reserves of any hard rock lithium mine in the world. Fortescue, the world's third largest miner, saw its shares rise 0.1% after it reported a 5% increase in iron ore shipment during the third quarter, despite missing estimates. The sub-index was further weighed down by gold stocks after they fell 0.8% as the price of the precious metal hit a new low. The shares of Evolution Mining fell 1.3% and Northern Star Resources dropped 1.5%. Suncorp, on the other hand, rose 9.5% after it secured reinsurance coverage of up to A$2.4 billion ($1.71billion) over a five-year period. The insurer also projected a growth in gross written premiums of 3% by fiscal 2026. Suncorp's performance helped the financials index to remain stable, but gains by top banks were offset. Commonwealth Bank of Australia dropped 0.4% while Westpac fell 0.5%. Energy stocks grew?0.5% as producers benefited from the surge in?oil price. Woodside Energy and?Santos, an oil and gas company, both gained 1.2%. The benchmark S&P/NZX 50 Index in New Zealand was unchanged at 12,884.19.
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Goldman predicts that Gulf oil production will rebound in a few months following the reopening of Hormuz.
Goldman Sachs stated on Thursday that Gulf oil production has been severely curtailed due to the Iran conflict. It is likely to recover in a few months, after the Strait of Hormuz reopens fully, but it could take significantly longer. In April, the?bank estimated that?about 14.5 millions barrels of crude oil per day from Gulf production - about 57% of supply before war - were offline. This was mainly due to precautionary shut-downs and stock-management rather than damage to oilfields. Strait of Hormuz is responsible for?about one fifth of the global oil flow under normal circumstances. Therefore, a prolonged disruption could have significant effects on global energy markets. Goldman stated in a research report that, in the absence of new attacks on oil infrastructure, a safe and sustainable reopening would allow production to be returned relatively quickly. This is supported by spare capacity in Saudi Arabia and the United Arab Emirates. Logistics and well performance will limit any recovery. The bank reported that the Gulf's empty tanker capacity has fallen by 130 million barrels or 50%. This will limit the speed at which oil producers can export once they resume. Prolonged 'well shut-ins' can also reduce flow rates. This is especially true in reservoirs with lower pressures. Workovers are required before production can be fully recovered. Goldman said that the longer production is curtailed, then the slower recovery will be. The Bank of International Settlements said that recovery prospects differed across countries. Iran and Iraq faced greater risks because of reservoir characteristics, infrastructure challenges and sanctions. Saudi Arabia, however, could ramp up production faster. Goldman noted that an average of external forecasts suggests Gulf producers could recover?about 70% of their?lost production within three months? and?around 80% within six months?. However, Goldman warned against a prolonged shutdown, which would increase the risk of long-term damage to supply. (Reporting and editing by Neil Fullick in Bengaluru, Anmol Choubey)
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Fortescue increases spending on green energy and maintains shipment forecast
Fortescue, an Australian mining company, announced on Friday that it would continue to invest in green energy as a way to 'insulate itself from the volatility of global oil markets. Its full-year shipment forecast remained unchanged. Iron ore is the fourth largest producer in the world. Its plan to reduce fossil fuels faster than its competitors will give it an advantage as global miners face inflationary pressures due to wars in the Middle East. Dino Otranto, Fortescue Metals & Operations Chief Executive Officer said: "We are already reaping the benefits of decarbonising our operations." "We are fundamentally changing how we run our business by reducing our dependence on fossil fuels at a time when energy supplies are becoming increasingly uncertain." Fortescue announced that it will invest $680 million in the development of new green energy infrastructure for Pilbara. This is a continuation of a previous commitment to accelerate the roll-out of a green energy off-grid system to eliminate fossil fuels. Fortescue shipped 48.4 metric tons of iron ore during the three-month period ending on March 31. This was just a little bit less than Visible Alpha's consensus estimate of 48.6 metric tons, but still higher than the reported 46.1 metric tons a year ago. The Perth-based miner maintained its fiscal 2026 forecast at 195 to 205 millions tons but reduced Iron Bridge shipment guidance to 9 to 10 million tonnes on a 100 percent basis. This is compared to the earlier estimate of between 10 and 12 million tons. The shipment of iron bridge project by Fortescue in Western Australia increased 33.3% in the third quarter to 2,000,000 tons. However, production and shipments decreased due to weather disruptions caused by Tropical Cyclones Mitchell & Narelle. The miner also noted a?rise in costs. Hematite operations exported 46.4 million tons compared to 44.6 million last year. C1 unit costs increased by more than 4%, to $18.29 for wet metric tons. Fortescue warned that a $10 per barrel change in Brent crude oil can affect its hematite ore C1 unit costs by $0.20 per wet-metric ton if all other factors are constant. (Reporting from Sneha Sunny and Sherin Kumar in Bengaluru. Additional reporting by Melanie Burton. Editing by Vijay Kishore and Maju Samuel.
Oil prices rise in Asia, but shares are mixed on the US-Iran standoff
Asia shares were down on Friday, and oil prices rose again. Investors had little reason to celebrate a shaky ceasefire in the Middle East conflict and the stalled U.S. Iran peace talks.
MSCI's broadest Asia-Pacific share index outside Japan rose by 0.3%, and is expected to end the week up 0.8%. Japan's Nikkei gained 0.45%, and stocks in South Korea and China fell.
Nasdaq and S&P futures both advanced by 0.6% and 0.1% respectively after the overnight cash session, while EUROSTOXX futures declined 0.65%, and FTSE Futures dropped 0.9%. The mixed performance underscored the market's tense mood, as investors this past week vacillated between the hope of an imminent end to war and the fear that it may not come soon.
"A ceasefire is a funny word to use when you have a blockade, rolling tensions, and animosity," said Vishnu Varathan Mizuho’s head of macro-strategy for APAC. Iran showed off its increased control over the Strait of Hormuz on Thursday with a video of speedboat commandos boarding a large cargo ship. Meanwhile, U.S. president Donald Trump ordered his Navy to "shoot down and kill" Iranian boats that were laying mines.
Trump's remarks?came only days after he announced he would extend indefinitely what had been a 2-week ceasefire between Iran and the United States to allow further peace negotiations.
Varathan said that there would not be a linear decline in violence, oil prices or the volatility of the supply shock.
Investors have been looking for an excuse to make opportunistic trades. I don't believe that anyone in the market believes this will be resolved?in just a few weeks. Prices on the oil market rose as the standoff in the Strait of Hormuz continued.
Brent crude futures rose more than 1%, to $106.21 a barrel. U.S. crude also gained 1%, to $96.77 a barrel. The markets, however, have largely ignored the news that Israel and Lebanon extended their ceasefire by three weeks following a high-level White House meeting.
The Yen at the Cusp of 160
The currency market was more subdued on Friday, but the dollar is on track to gain weekly due to renewed demand for safe-haven assets.
The euro, which last purchased $1.1684 was on track to lose 0.7% this week. Sterling was little changed and heading for a small weekly drop. Investors are focusing on the policy announcements of a number of central banks including the U.S. Federal Reserve and the European Central Bank.
Jane Foley is the head of FX Strategy at Rabobank. She said: "In light of the demand destruction implied in higher energy prices, it may be an understandable reluctance on the part of many G10 policymakers to press ahead with rate increases over the next months." Next week, the Bank of Japan will also meet. Expectations are that it will keep interest rates at current levels. Currency traders focused their attention on the yen, which was just a few cents away from the 160-dollar mark widely regarded as the trigger for an intervention.
The Japanese yen was slightly weaker last week at 159.78 dollars and was expected to fall 0.7% this week. Satsuki Katayama, Japanese Finance Minister, reiterated warnings about currency intervention Friday and stressed "decisive action" in close coordination to the United States.
Carl Ang is a fixed income analyst at MFS Investment Management. He said that the lower market liquidity during the Golden Week, which follows the BOJ meeting directly, could provide an opportunity to FX interventions and a knee jerk appreciation of the yen in the range 150-160. The markets will be closed for a few days during the Golden Week holiday that lasts until early May.
Other than that, the spot price of gold was unchanged at $4,691.60 per ounce. (Reporting and editing by Kate Mayberry; Rae Wee)
(source: Reuters)