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Aluminum supply problems intensify after Bahrain stops shipments and Qatar shuts down its smelter
Aluminium Bahrain, one of the largest smelters in the world, informed customers that it had halted all shipments because of the "widening" Middle East conflict. This exacerbated supply concerns following a Qatari melter shutdown the day before. After the news, the London Metal Exchange saw an increase of up to 5.1% in aluminium prices to $3,418 per ton, the highest since April 2022. Analysts said that prices could rise even further, since about 8% world supply is made in the region. Goldman Sachs stated on Monday that prices could reach $3,600 per ton if the production in this region is lost for one month. SHIPPING HALTED in the Strait of?HORMUZ Alba declared force majeure Wednesday and informed the affected customers about delays, according to a spokesperson. The shipping through the Strait of Oman between Iran and Oman has almost halted after Iranian vessels retaliated against U.S. We are unable to ship because of what is happening in the Strait of Hormuz. We're producing, but the metals are here in Alba," said the spokesperson. The spokesperson said that "the force majeure... was not caused by any disruption or damage at the smelter." The team is actively working to identify alternative shipping solutions in order to minimize the impact. Alba's website states that its smelter, which is the world's largest outside China, will produce 1.62 million tons of aluminum in 2025. The?price for lightweight metals used in construction and transport, as well as packaging, has risen 9% since Wednesday, following the U.S.-Israeli attack on Iran at the weekend. QATARI Smelter? TO SHUT Investors were on edge on Tuesday after the news that Qatari Qatalum smelter began to?shut down? and Norsk Hydro, its shareholder, issued a "force majeure" notice. Hydro has said that the shutdown of its 648,000-metric-ton smelter is expected to be complete by the end of March. A full restart may take up to 12 months. Smelters from Bahrain, Qatar and Saudi Arabia, as well as the United Arab Emirates, ship more than 5 million metric tons of metal through the Hormuz Strait every year. Bauxite, alumina and other large quantities of metal are transported 'the other way' to feed smelters. The European Aluminium Premiums (paid on top of LME metal prices) have increased to $436 per ton in April EPDc2, which is the highest level for 3-1/2 years. Meanwhile, U.S. Premiums have reached a new record of $1.075.
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SSR Mining, a Canadian company, will sell its Copler mine stake to Turkey for $1.5 billion.
SSR Mining, a Canadian company, announced on Wednesday that it had signed a binding agreement to sell its 80% stake in Turkey’s Copler Mine to Cengiz Holding A.S. in exchange for $1.5 billion. This boosted its stock by more than 12%. The gold miner also said that it was'reviewing its remaining platform in Turkey including a 20% interest in the Hod maden development project. The deal, which is expected to be completed in the third quarter of this year, will cover all SSR's mining licenses and assets located in eastern Anatolia. This includes Copler and nearby satellite deposits. Cengiz Holding A.S., one of Turkey's biggest industrial companies, has operations in copper, gold and aluminium mining and processing. SSR Mining suspended operations in Copler Mine, 2024. This was after a landslide that left at least nine missing miners. The company then conducted a review on the mine. According to RBC Capital Markets' analysts, SSR has spent approximately $149 million in reclamation and remediation activities since the landslide of February 2024. TD Cowen’s Steven Green noted that the purchase price was attractive “for a?what's seen as a?distressed asset." Green said that the deal also "supports" the Canadian miner’s strategic shift to assets in the Americas. (Reporting by Varun Sahay in Bengaluru; Editing by Shreya Biswas)
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Sources say that Chinese investors are considering selling their stake in Redexis Gas Network Operator.
People with knowledge of the discussions said that Chinese investors Guoxin Guotong Fund and CNIC Corporation are considering selling their 33.3% share in Spanish 'gas network operator Redexis' as the country prepares to introduce a new framework for remuneration. Three sources confirmed that the two investors had begun a process of hiring?advisers in order to evaluate the sale. Two sources say that a?deal could value Redexis between 2 billion and 2.5 billion?euros (2.3-$2.9billion). * In 2018, the two Chinese investors bought?33.3% Redexis. According to the website of Redexis, pension funds?Arbejdsmarkedets Tillaegspension?and Universities?Superannuation Scheme own each 33.3%. Sources say that pension funds and infrastructure funds are likely to bid for the stake. * Guoxin Guotong Fund & CNIC Corporation did not reply to a request for comments via email. Redexis declined comment. According to Spain's competition watchdog, a new?"regulatory framework" for?gas pipelines covering the period of 2027-2032 is expected to be approved later this year. Sources said that the'regulatory changes' are expected to lead to more asset sales, as buyers prefer to buy regulated assets at the beginning of the regulatory cycle to reduce uncertainty.
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Starmer, UK's Starmer, vows to maintain a "cool head" after Trump's criticism
Keir starmer stated that Britain would respond to the "escalating conflict" in the Middle East with a "cooler head", after President Donald Trump had chastised Prime Minister Theresa May for not providing enough support for her strikes against Iran. Britain, a historically staunch ally to Washington, initially refused permission for the U.S. to use its military bases for an attack on Tehran. This position was only moderated when Iran attacked neighbouring countries, allowing UK bases for limited 'defensive' strikes. Trump responded to Starmer's criticism by berating him three times. This included in the Oval Office, where he said on Tuesday that "This isn't Winston Churchill we are dealing with". Starmer, who previously said that any British military action should?have a 'viable, well-thought-out plan, told the parliament on Wednesday, the so-called'special relationship' was evident every day in the conflict and did not depend on the words of U.S. President. He cited American planes that fly from British bases, British fighter jets that protect U.S. base and intelligence sharing as examples of the special relationship. "Holding on to the latest words of President Trump is not special relationship." Starmer stated that he knew people in Britain were concerned about the possibility of escalation. He said Britain would therefore act "with clarity, purpose, and?with a?cool head". Starmer was criticized from all sides in the UK for the decision. Opponents of the left called on him to condemn military action. Kemi Badenoch, a leading opposition leader on the right, and Nigel Farage, a prominent member of the left-wing opposition party attacked Starmer's failure to support Britain's most important ally in intelligence and security. Starmer stated that Britain has been in close contact with the United States regarding the pre-deployment of military assets to the region for several weeks. London announced that it would send HMS Dragon, a destroyer with air defence capabilities, and additional helicopters to counter the Iranian-made Shahed drone which hit the runway at the British Akrotiri base in Cyprus. (Reporting and writing by Sam Tabahriti; editing by William James).
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Bloomberg News: US exempts Rosneft Germany indefinitely from Russia sanctions
Bloomberg News reported on Wednesday that the U.S. Government will exempt Rosneft's German unit from sanctions indefinitely. A person familiar with this matter was quoted as saying so. Could not verify immediately the report. The German economy ministry didn't immediately respond to an 'ask for comment'. Germany placed local units of Rosneft, a Russian oil company, under trusteeship by 2022 following Moscow's invasion of Ukraine. This broke Berlin's decades long energy relations with Russia. Assets include a'stake' in the PCK Schwedt refinery, which is a major supplier of fuel for the capital area. Bloomberg News reported that the U.S. Treasury’s Office of Foreign Assets Control was expected to make a decision by Friday. However, this timing may change. The extension of the current U.S. sanction waiver would reduce the risk of disruptions in German?refining?operations, at a time the Middle East conflict is escalating and causing global energy markets to be uneasy. Reports in 'October' stated that Washington had written assurances to the effect that Rosneft-owned?Germany operations would be exempted from new U.S. sanctions on energy. Reporting by Anna Peverieri, Barcelona. (Editing by Jan Harvey, Mark Potter and Jan Harvey)
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Vopak delays investments in South African LNG Project to 2028
A senior executive at Vopak, the Dutch tank storage and terminal operator, said that it had pushed back a decision on a final investment (FID) for South Africa's 1st liquefied gas terminal until 2028. A court order in September halted Eskom's plans to build a gas-powered 3,000 megawatt plant at Richards Bay. This slowed down the progress. Oliver Naidu told a conference on energy that he was 'waiting to see how Eskom would proceed and just extended our pre FEED study. He said that the company expects to be ready to make a final decision by the first quarter 2028. Estimated cost of the two-phase project: $1 billion. VOPAK IN CONSORTIUM PICKED TO BUILD, RUN THE PROJECT Vopak has been selected as a member of the consortium formed by Transnet Pipelines in 2024 to build and operate?the Zululand energy terminal at Richards Bay Port for a period of 25 years. Naidu stated that they expect to sign preliminary agreements in the next few months with Eskom and possibly U.S. oil major Exxon Mobil for LNG use and distribution. He said that Exxon was one of his strongest potential customers. ExxonMobil is a global supplier of LNG. They have identified South Africa as their top priority market. The company did not respond immediately to a comment request. Transnet National Ports Authority has previously stated that the Zululand Energy Terminal, located along 'South Africa's East Coast, would initially import 2 million mtpa of LNG before ramping it up to 5 mtpa by 2027. Reporting by Wendell Roelf, Editing by Sfundo parakozov and Bernadettebaum
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During talks, the foreign minister of Hungary hopes that Russia will release two ethnic Hungarian prisoner of war
Peter Szijjarto, Hungary's foreign minister, said that he hopes Russia will free two ethnic Hungarian war prisoners during his talks with Vladimir Putin in Moscow. Szijjarto traveled to Moscow one day after Hungary's prime minister Viktor Orban had a telephone call with Putin. They discussed the Middle East situation, Ukraine and whether crude oil and natural gases were available for Hungary. Orban's Government has made Russia's War on Ukraine a major topic in his campaign for the 12th April parliamentary elections, increasing tensions between Budapest & Kyiv. Szijjarto? said in a Facebook broadcast from Moscow that two ethnic Hungarian prisoner of war? have recently asked Hungary for assistance. Szijjarto stated, "I hope after our 'talks that more people will fly home on the plane as opposed to those who came this way." Ukraine is home for around 150,000 ethnic Hungarians. Most of them live in Transcarpathia. Orban's government has been at odds with Kyiv over the language rights of ethnic Hungarians for many years. Orban's government also accused Kyiv of conscripting ethnic Hungarians who Budapest claimed should not have been called into service. Last Friday, the Foreign Minister summoned Kyiv’s?ambassador in Budapest to protest against the conscription. Orban, the Hungarian prime minister,'maintained a warm relationship with Moscow after the beginning of the conflict in Ukraine and is unwilling to give up its purchases from Russia of oil and gas, which led to tensions between the EU and Hungary. Hungary announced last month that it would 'block' the next EU package of sanctions against Russia, as well as a 90-billion euro (105-billion dollar) EU loan to Ukraine for its defense against Russia until the Druzhba Pipeline resumes shipments.
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Asian petchem makers face naphtha disruption as Iran conflict widens
The Middle East supply chain is buckling under the U.S. - Iran conflict. Tanker traffic in the Strait of Hormuz has been halted and buyers are bracing themselves for delays and increased costs. Two sources familiar with the situation said that Chandra Asri, an Indonesian company, declared force majeure for all contracts on Tuesday, while Maruzen Petrochemical, a Japanese company, and Mitsui Chemical of Japan cancelled the second half April import tenders. Both Japanese companies declined comment. Asia imports Middle East naphtha in the amount of 4 million metric tonnes (36 million barrels). Naphtha, a raw material used to make petrochemicals for consumer products such as paints and plastics, is a source of Middle East naphtha. "Delays due to rerouting and increased security protocols are impacting voyages within and outside of the immediate conflict zones, complicating trade and further tightening logistical flows. This adds uncertainty to cargo scheduling and delivery deadlines," said Vasudev Baligopal, global director of petrochemicals trading at brokerage Marex. Some assets in Asia-Pacific are taking a more conservative stance towards future production. If disruptions continue, this precautionary approach may have an impact on operating rates. NAPHTHA MARGIN IS NOW AT A?4 YEAR HIGH The benchmark?naphtha refinery margin was impacted by the disruption Brent crude reached a four-year high in Asia of $173 per ton on Wednesday. The South Korean industry ministry stated on Tuesday that its petrochemical manufacturers are worried about supply disruptions if the Iran crisis continues. It is Asia's largest importer of Middle East Naphtha and 54% of the country's supply comes via the Strait of Hormuz. Lotte Chemicals, GS Caltex and LG Chem are among the buyers. South Korean industry sources said that these?firms would need to decide within the next two week whether they will source alternative regions, such as the U.S., or South Asia or reduce output. Another source said that Korean refineries, which supply naphtha for petrochemical companies, maintain crude oil stock to sustain?operations? for at least a month. Sources declined to name themselves as they weren't authorised to talk to the media. An executive from a global trading firm said that getting U.S. products will take an extra three weeks for shipping, which is very expensive. ALTERNATIVE SUPPLIES An Indian exporter stated that India would need to ensure sufficient crude supply to continue exporting naphtha. The South Asian nation's thin reserves make it a major oil importer that is most susceptible to crude supply shocks, if the Middle East war leads to a prolonged disruption of shipments. Two Singapore-based traders have said that some Asian buyers could turn to Russian naphtha if the situation becomes dire.
McGeever: Risk of dollar liquidity shock highlighted by Mideast crisis
This week, investors have been dumping dollars amid the turmoil in Middle East. It is a reminder of the potential rocky transition from a dollar-centric world to a multi-polar, fractured one.
Investors seeking relative safety in the world's most liquid asset, the dollar, are boosting its value as the war that has spread across the region since the joint U.S. and Israeli assault on Iran last Saturday.
Equity indices which were the best performers in the first two months of this year have plummeted. South Korea's KOSPI, which rose?50% in February, has fallen nearly 20% in just two days. The dollar has risen by as much as 2 percent in just two days and Treasury yields have also soared.
Matt King, founder at Satori Insights says that this sudden dollar surge has nothing to do with a sudden change in growth or inflation expectations. Money flow is the issue - investors are scrambling for liquidity as they unwind the speculative frenzy that has inflated many markets over recent months.
Investors in a foxhole, despite all their fears of dollar devaluation, still need and want dollars.
Will Dollar Demise remain 'Glastic'?
This brings up the question of what might happen in future crises, if the "long-term erosion" of the dollar's dominance continues.
Since the introduction of the euro currency in 1999 and China's entry into the World Trade Organization (WTO) in 2001, the dollar has steadily declined as the leader of global trade, finance, and foreign exchange reserves.
According to the International Monetary Fund, the U.S. dollar's share in global foreign exchange reserves has dropped to 57% from 70% at the beginning of the 2000s.
The erosion of dollar liquidity was smooth and gradual. This has allowed the global financial system to build buffers for liquidity crises, after the historical shocks in 2008 and 2020.
The U.S. alliances and rules-based order as well as the forces of globalization, which once ensured dollar liquidity lubricated the wheels of?the world economy and markets are now crumbling. In the last year, major trade, political, and military conflicts erupted, making the investment landscape in the world a very dangerous place.
On March 17, Barry?Eichengreen will publish his latest book, "Money Beyond Borders": Global Currencies From Croesus To Crypto.
Eichengreen examines the 2,500 year history of money and the reasons why certain currencies are important and then disappear. He also assesses the future of the dollar, as well as the role that cryptocurrencies and blockchain will play.
He argues that the dollar is still the dominant currency for FX reserves, international trade, finance, and invoicing. However, he worries that the decline of the dollar on these fronts could accelerate.
Eichengreen: "I am much more concerned than I used to be in the past." There is no obvious alternative to greenbacks, so we must continue to pray that the transition will be gradual and smooth. "But I think we are learning that things don't happen as smoothly anymore."
"A DELICATE POINT in Time"
The last few days were anything but smooth and have shown how desperately the world needs dollars.
According to the Bank for International Settlements, 89% of all foreign exchange transactions are on the U.S. Dollar's side. This is the highest level in 25 years. The euro is the second most traded currency, accounting for 29% of all FX transactions.
Additionally, the dollar is responsible for about half of all international payments. According to a Federal Reserve report, if you include intra-eurozone payments in the calculations, this share increases to about 60%. About 55% of bank claims in foreign currencies and international are denominated as dollars, while 60% of liabilities have the same currency.
According to estimates, up to 20% of crude oil is priced in currencies other the dollar such as the euro and Chinese yuan. That means that around 80% of the world's crude oil trade is still priced in dollars.
Eichengreen has said that he believes a multi-polar financial and monetary system for the global economy would be beneficial to the world. Just as a diverse ecosystem is healthy for the planet.
We're still not at the point where we could rely on other global sources of liquidity to?replace the dollar. We are therefore at a delicate time," says?Eichengreen.
This seems like a bit of an understatement at a time where trade wars, and even real wars, are raging.
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(source: Reuters)