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Iron ore is a robust alternative to China's soft steel: Russell
In August, the gap between China's steel industry and its appetite for iron ore imports widened. This highlights the difference between hope and reality. China, which produces just over half the world's steel, saw its output fall for a third consecutive month in August, to 77.37 millions metric tons. The month was the weakest since December and was down by 0.7% compared to August and 2.9% compared to the 79.66 millions tons recorded in July. The steel output in the first eight-month period was 671.81 millions tons, which is a decrease of 2.8% compared to the same period last year. Iron ore imports and prices remain robust, despite the weakness in steel. According to data released by the Chinese government last week, China imported 105.23 millions tons of seaborne iron ore in August. This was the third consecutive month that imports were above 100 million tonnes. This trend is expected to continue into September when commodity analysts Kpler predict imports of 112,2 million tons. If achieved, this would be the highest level since December last. Iron ore prices have also been rising, with benchmark futures at the Singapore Exchange closing Monday at $105.50 per ton, just under the six-month peak of $106.75 reached on September 9. The front-month contract has increased 13% since its lowest point of this year, which was $93.35 per ton on July 1. The price of iron ore is rising due to the strong Chinese demand. But why are steel mills purchasing more of this key raw material when they are experiencing lower production and shrinking margins? Answer: They are still hopeful that Beijing's efforts at stimulating steel-intensive industries, such as construction will be fruitful. It is difficult to prove this, as new home prices dropped by 0.3% from August of the previous month. This is a continuation of a downward trend which began in May 2023. The number of new construction starts is also low, falling 19.5% from August 2024 to August 2018. RECOVERY OF STEEL IN SEPTEMBER The positive side is that there's optimism about the steel production in September, after a soft August. Some of this was blamed for production curbs during the lead-up to Beijing’s military parade to celebrate the end of World War Two on September 3. Even if the steel production does improve in September, it is unclear how large or long-lasting this recovery will be. Beijing is thought to have an informal goal that the annual steel production be kept at the same level of around 1 billion tonnes that has prevailed over the last five years. After subtracting the total steel production for the year from 1 billion tons, there are 328 millions tons left over to use in the final four months of the calendar year. This is an average of about 82 million tonnes per month. There is room for growth in the third quarter and September. The visible inventories of iron ore and steel have increased but remain at levels which suggest that more stockpiles could be added. Stocks of steel rebar SteelHome consultants monitored the rise to 4,69 million tons during the week ending September 12. Rebar stocks tend to peak in March after a build-up over the winter months. The current level, however, is below the peak of March 2025 at 6.36 million tonnes and the 8.37 millions tons from March 2024. Iron ore stocks at China's port The week ending September 12 saw a drop to 132.6 millions tons from the 149.4 that was recorded in the same period last year. You like this column? Open Interest (ROI) is your new essential source of global financial commentary. ROI provides data-driven, thought-provoking analysis on everything from soybeans to swap rates. The markets are changing faster than ever. ROI can help you keep up. Follow ROI on LinkedIn, X. These are the views of the columnist, an author for.
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Peak Rare Earths, Australia's rare earths company, accepts a $130 million Shenghe bid; rejects a higher U.S. offer
Peak Rare Earths, a company based in Australia, said it had approved the takeover of Shenghe Resources by a Chinese rare earths producer. The decision was made to choose certainty over a more lucrative but conditional U.S. bid. Shenghe Singapore will purchase all shares of Peak that it does not own at A$0.443 per share. This value is A$195 ($129.9 millions) for the miner. The Chinese company holds a stake of about 19.7% in the Australian miner. The approval came after General Innovation Capital Partners, a U.S.-based company, made a non-binding bid of A$240m. rejected The bid was rejected earlier on Tuesday due to a lack of clarity regarding due diligence and execution. Shenghe has said that it will not support the proposal of GICP. Shenghe is a partly state-owned company raised Its offer, which was made earlier in the month, increased by over 23% mid-May . This would allow it to control Peak's Ngualla Project in Tanzania, which is one of the largest deposits of neodymium & praseodymium(NdPr), crucial for electric vehicles. Shenghe is expanding its presence in Australia's rare-earths sector. In 2022, Shenghe purchased nearly 20% of Peak and signed a contract to buy Ngualla products that same year. Canberra is examining the possibility of a deal. Price floor Support critical mineral projects and position yourself as an alternative supplier to China. The peak share price rose by 3.6%, to A$0.435 at 0313 GMT. This is the highest it has been in over two years.
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Google invests $6.8 billion in the UK ahead of Trump's visit
Google announced on Tuesday that it will make new investments of 5 billion pounds (6.80 billion dollars) into Britain in advance of U.S. president Donald Trump's visit to the nation, which is expected feature a flurry business deals and partnership. The U.S. technology company announced also the opening of a data centre near London to meet the growing demand for AI-powered Google Cloud, Search and Maps, as well as Workspace. In a statement, finance minister Rachel Reeves stated that the investment was "a powerful vote for confidence in the UK's economy and our strong partnership with the US". Alphabet's company stated that the investment will create 8,250 new jobs each year at British companies. The announcement is expected to be a boost to the Labour government of British Prime Minister Keir starmer, who hopes to attract private investments to help grow an economy that has been stagnant and to regain momentum on national opinion polls. Trump's visit will also be expected to strengthen economic ties between both Western allies. Senior U.S. government officials have stated that deals worth more than $10 billion will be announced. Google said in its statement that it has also agreed to a deal Shell, which will contribute to grid stabilization and Britain's transition towards a cleaner energy. Google's Waltham Cross Data Centre, located about an hour from London, is equipped with air-cooling technologies to reduce water consumption and can reroute heat to homes or local businesses to minimise its environmental impact. Google's UK operations will be running at or close to 95% carbon-free energy by 2026, thanks to its clean-energy initiatives and its partnership with Shell.
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As the market assesses the supply risk posed by Russian refinery attacks, oil prices are on the rise.
The price of oil edged upwards on Tuesday, after rising the previous day. Market participants were concerned about a possible disruption in supply from Russia following drone attacks by Ukraine on its refineries. Brent crude futures were up 15 cents at $67.59 per barrel as of 0354 GMT, while U.S. West Texas intermediate crude was also up 15-cents. Brent crude settled at $67.44, up 45 cents. WTI closed 61 cents higher on Monday at $63.30. Ukraine intensified its attacks on Russia's infrastructure to undermine Moscow's military capability as the talks to end their war have stagnated. In a note to clients, Tony Sycamore, IG's market analyst, said that "heightened fears of supply disruptions by Russia, a major producer accounting for more than 10% of the global oil output", is helping oil price. U.S. Treasury secretary Scott Bessent said on Monday that the government will not impose any additional tariffs on Chinese products to encourage China's purchase of Russian oil, unless European countries impose steep duties on China and India. Analysts at JP Morgan said that an attack on a Russian export terminal such as Primorsk would have a greater impact on Russia's ability sell oil overseas, and thus affect export markets. The attack also suggests that there is a growing willingness among oil companies to disrupt the international oil market, which could add upward pressure to oil prices. Investors will also be watching the U.S. Federal Reserve meeting on September 16-17, where the bank is expected to reduce interest rates. Lower borrowing costs may boost fuel demand. Sycamore stated that "a weaker U.S. Dollar, driven by the expectation of a Federal Reserve interest rate cut this coming week, has further supported crude oil." The U.S. Dollar Index, which measures the strength of the greenback against six other currencies, has fallen to a near-week's low. Oil becomes cheaper for holders of currencies other than the dollar when the dollar falls. The markets also factored in the expectation of a decline in crude inventories in the U.S. in last week's official data, which is expected to be released on Wednesday at 1430 GMT. Energy strategist Walt Chancellor of Macquarie Group stated in a note to clients that U.S. crude stocks are expected to drop by 6.4 million barrels during the week ending September 12. This follows a build-up of 3.9 million a week prior. According to a poll conducted on Monday, analysts expected that U.S. crude and gasoline stocks would have decreased last week while distillate stockpiles likely increased. (Reporting and editing by Christopher Cushing in Bengaluru, Anjana Anil from Bengaluru)
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Gold reaches new highs as Fed hopes for rate cuts dent the dollar
The gold price reached a new record on Tuesday. This was largely due to the weakening dollar, which is expected to be a factor in the Federal Reserve meeting scheduled for this week. Gold spot rose by 0.1%, to $3.681.18 an ounce, as of 0326 GMT. It had earlier reached a session high of $3.689.27. U.S. Gold Futures for December Delivery were unchanged at $3,718.50. "The mood is bullish... the markets are buying rate cuts going into this FOMC Decision." "The outlook for gold remains positive in the short-to-medium term," said Kyle Rodda of Capital.com. If the Fed does not support this in their forecasts and guidance, gold prices could hit an air pocket. If the Fed supports market pricing, it could be the catalyst that sends gold prices through $3,700. In a post on social media, U.S. president Donald Trump called for Fed chair Jerome Powell to implement a "bigger cut" to the benchmark interest rate. CME FedWatch shows that traders are pricing in an almost certain 25 basis-point rate cut by the end of the meeting, which will take place on September 17. There is a slight chance of a reduction of 50 bps. Gold becomes cheaper when interest rates are lower. The dollar was trading near a two-and-a-half-month low versus the euro, and close to its 10-month low versus the risky Aussie. SPDR Gold Trust (the world's biggest gold-backed ETF) said that its holdings increased 0.21% on Monday to 976.80 tons from 974.80 on Friday. A U.S. court of appeals refused on Monday to allow Donald Trump the firing of Fed Governor Lisa Cook, the latest move in a legal fight that threatens to undermine the Fed's independence. Silver spot fell by 0.4%, to $42.52 an ounce. Platinum fell by 0.5%, to $1394.37, and palladium fell 0.3%, to $1180.64. (Reporting and editing by Sumana Nady in Bengaluru)
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Orsted Initiates $9.4B Rights Issue, Majority Earmarked for Sunrise Wind
Danish offshore wind developer Orsted has priced its $9.42 billion rights issue at 66.6 crowns ($10.46) per share, a 66.7% discount to the stock's closing price on Friday, as it shores up its finances in the face of mounting challenges.The company has been grappling with supply chain disruptions, surging interest rates, project delays and U.S. President Donald Trump's anti-wind policies, leaving its share price down 85% from a January 2021 peak.Earlier this month, Orsted won shareholder approval for the capital raise, which it needs to help fund U.S. projects thrown into uncertainty.The company, which currently has 420 million shares outstanding, plans to add 901 million new shares in the rights issue, it said in a prospectus published on Monday.At the heart of its financial struggles are the U.S. projects Sunrise Wind and Revolution Wind."Today ...we're initiating a rights issue, through which we intend to raise capital to cover the additional funding requirement related to Sunrise Wind and create a robust financial foundation for Orsted to realise the potential of our business," it said in a statement.Two-thirds of the new capital is earmarked for Sunrise Wind, a project that saw potential co-investors flee after the White House ordered Norway's Equinor to halt a neighbouring wind farm in April.U.S. officials also issued a stop-work order last month against the nearly complete Revolution Wind project. The joint venture overseeing it subsequently filed a lawsuit against the administration.The rights issue closes on October 2, with trading in the new shares set to start on October 10, Orsted said.($1 = 6.3661 Danish crowns)(Reuters - Reporting by Stine Jacobsen, editing by Essi Lehto and Anna Ringstrom; Editing by Kirsten Donovan)
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Iron ore production in China is recovering.
The iron ore futures price rebounded Tuesday due to a rebound in Chinese concentrate production following weeks of declines. Meanwhile, gains in steel benchmarks were a reflection of improving sentiment, despite weak housing statistics. As of 0244 GMT, the most-traded contract for January iron ore on China's Dalian Commodity Exchange was trading 0.82% higher. It was 803.5 yuan (about $112.88) per metric ton. The benchmark iron ore for September on the Singapore Exchange rose 0.24% to $105.75 per ton. Chinese consulting firm Mysteel said that after weeks of decline, the production of iron ore by Chinese mining companies recovered last week. This is a sign of domestic miners gradually recovering their operations. China's crude output of steel in August fell for a third month in a row after steelmakers at Tangshan, China’s largest steelmaking hub, curtailed operations to prepare for upcoming military parades. Meanwhile, raw steel production in Brazil dropped 4.6% on an annual basis in August. As the property market continues to be weak, China's new homes prices dropped 0.3% month-on-month in August. On Thursday, the China Iron and Steel Association (a state-backed organization) will host a meeting for the heads of the iron ore purchasing at steelmakers. Coking coal and coke both increased by 5.42% and 4.03 % respectively. China's coal production fell by 3% in August compared to the same month last year, as production restrictions continued to be a drag. Mysteel, in a separate report, said that the capacity utilisation rate at coking coal mining was still up by 6.9 percentage points, to an average of 82.7%, and daily raw coal production increased by 9.1% from week-to-week. All steel benchmarks at the Shanghai Futures Exchange gained ground. Rebar increased by 1.41%. Hot-rolled coils grew by 1.34%. Wire rod rose by 0.52%. Stainless steel gained 0.19%. ($1 = 7.1184 Chinese yuan). (Reporting and editing by Rashmi Liew)
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Japan's Nikkei reaches record highs as tech stocks follow Wall Street gains
The Nikkei 225 index in Japan reached a new record on Tuesday as the technology stocks followed Wall Street's strong overnight performance ahead of this week's important policy meeting by the U.S. Federal Reserve. The Nikkei reached a high of 45,055.38, surpassing the important 45,000 mark for the first. By the end of morning trading, the index had risen 0.3% to 44,904.13. Monday was a holiday and the market was closed. The Topix index as a whole rose by 0.41% on Tuesday to 3,173.57. The Nikkei closed 4% higher on the week ending last Friday, reaching a record high for a third week in a row. Hikaru Yasuda is the chief equity strategist of SMBC Nikko Securities. He said that the rally was fueled by a strong corporate outlook which prompted analysts at SMBC Nikko Securities to raise their target prices for some local companies, as well as the expectation of a new premier following the resignation of Shigeru Shiba. He said that the Nikkei was also supported by the firm outlook for the global economy and the expectations of U.S. rate cuts. Yasuda said that the Nikkei could finish the year around the 45,000 mark, but it may briefly fall if expectations of U.S. interest rate cuts decline and Treasury yields increase. He said that "the market expectations are quite strong" for rate cuts in the U.S. Tokyo Electron shares rose by 2.17% and were the largest contributor to Nikkei's gains. Advantest, a maker of chip-testing equipment, recovered from losses early on to gain 0.04%. Sumco, a wafer manufacturer, soared by 9.8% and was the Nikkei's biggest gainer. Disco and Resonac Holdings, both chip-related companies, jumped by 6.9% and 5.4% respectively. Fast Retailing, the owner of the Uniqlo brand, fell by 1.26% and weighed the Nikkei most. On the Tokyo Stock Exchange, the prime market, 68% of the stocks traded advanced, 27% declined, and 3% were flat. (Reporting and editing by Sherry Phillips; Junko Fujita)
Sources say that Shenhua China has halted spot coal imports due to a rise in port inventories.
China Shenhua Energy, China's biggest coal miner and importer, has stopped buying imported coal on the spot market as port stocks grow. Three traders who are familiar with this matter said that it is a move which will dampen prices of imported coal.
According to two analysts and a senior coal trader in Singapore, who spoke under condition of anonymity, the decision of CHN Energy Investment Group, Shenhua’s parent company will impact purchases starting April.
According to a coal trader based in China, the decision was also applicable to deliveries made at the end of March.
Shenhua didn't immediately respond to an faxed comment request.
According to a second China based trader, the move by the state owned company will affect around 1 million tons per quarter of coal and is not applicable to term contracts. Two traders stated that no decision was made as to how long the halt in spot imports will last.
The affected volume may be small in comparison to China's record imports of coal of 542.7 millions metric tons by 2024. However, it has sparked market anxiety over whether other companies will follow and whether this import pause might become government policy.
The policy was designed to protect Shenhua’s coal sales on the domestic market. However, the coal trader based in Singapore could not remember the last time Shenhua stopped such imports.
Analysts with more than 10 years of experience in the sector said that this was the very first time Shenhua has stopped such imports.
Shenhua reported in a recent filing that its commercial coal sales fell by 21.6% on an annual basis to 30.2-million tons in January. The company cited warmer temperatures as a factor, and also the accumulation of stocks. Shenhua reduced production in January by 8.5% compared to the previous year, to 24.9 millions tons.
The Singapore-based trader stated that "coal is oversupplied domestically as well as globally", adding that this was bad news for Chinese import coal prices.
The unseasonably warm weather this winter has had a negative impact on the coal consumption. Normally, heating demand boosts the consumption of coal.
The data of consultancy Mysteel revealed that thermal coal inventories in 55 major Chinese port cities were 72.92 millions tons on February 21. This is moving closer to the all-time record of 77.46million tons set in August 2019.
(source: Reuters)