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Copper prices ease as increasing inventories overshadow Mideast ceasefire hope
Prices of copper fell 'on Thursday due to rising stocks, and the waning appetite for the metal by top consumer China after a short dip in purchasing. Investors were waiting on clarity regarding the possibility of a 'ceasefire' in the Middle East. Benchmark three-month Copper on the London Metal Exchange fell by 1.21% at $12,173 a metric ton as of 0711 GMT. The previous day's support came from a weaker dollar. The Shanghai Futures Exchange's most traded copper contract, which had reached its highest level since March 19, at 96.590 yuan per ton ($13,991.05), ended the daytime trading session up by 0.17%, at 95.350 yuan. Stocks in LME-approved storage facilities pushed down the price of?red metal, used in construction and power. On Wednesday, the number of tonne-miles reached an eight-year record high. This is a 153% increase since the beginning of the year. After a period of dip-buying, traders said that some Chinese consumers had restocked after earlier declines. Investors are also closely watching developments in the Middle East where the conflict has disrupted energy markets and threatened the global economy. U.S. president Donald Trump stated that Iran is 'desperate' to reach a settlement to end the fighting. This contradicted the Iranian Foreign Minister who claimed his country was reviewing the U.S. offer but did not intend to hold a conciliation to end the conflict. Aluminium, nickel, and lead are among the other LME metals that have fallen. Other SHFE metals saw aluminium fall?0.52%. Lead retreated by 0.27%. Tin fell by 0.98%. Zinc gained 0.48%. SHFE nickel rose 0.41% after Nickel Industries, a company based in Australia, announced?on Friday that it had suspended operations at its Hengjaya Mine in Indonesia following an accident this week.
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BHP's Jimblebar Iron Ore Stocks in China Hit Near Two-Month Low After Ban Reprieve, Traders Say
According to traders, inventories of BHP's Jimblebar Fines, a kind of?iron ore?, in some Chinese ports?slid down to a two-month-low after steelmakers?rushed to get delivery?during an one-week?ban?reprieve. Four traders familiar with the matter stated that Jimblebar stocks in 15 major Chinese ports dropped 6% from one week to another, reaching 8.9 million tonnes on March 24. This is the lowest level seen since late January. One of the traders stated that this is the steepest weekly drop since March 2025. Sources requested anonymity because they were not authorized to speak with the media. China Mineral Resources Group, the state-run buyer of iron ore, informed domestic steelmakers that they can deliver 'Jimblebar Fines' from ports to plants for a week. This was shortly after CMRG widened its bans on another BHP product, Newman Fines. BHP's Jimblebar Fines began to accumulate after CMRG, the Chinese state-owned steelmaker and trader group, ordered Chinese steelmakers to not?buy BHP Jimblebar Fines while it was in talks with BHP about a 2026 supply agreement. Steelmakers couldn't?take delivery of their Jimblebar fins that were unloaded in?ports. The latest partial ban reprieve excluded traders. CMRG was established in 2022 in order to 'centralise iron-ore purchases in the largest steel-making ingredient consumer in the world and get better terms for miners. According to calculations based upon data provided by traders, despite a sharp drop in inventory, Jimblebar fines inventories at 15 Chinese ports were still 406% above the levels of late September.
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Iron ore is a major concern for supply disruption in Australia
Iron ore futures were higher on Thursday due to a concern over the supply of iron ore from Australia, following the closure of key ports in the Pilbara region because of a cyclone. The most-traded May iron ore contract at China's Dalian Commodity Exchange rose 0.18%, to 817 Yuan ($118.40), per metric ton. As of 0711 GMT, the benchmark April iron ore traded on Singapore Exchange was trading at $107.35 per ton. The operator of the iron ore port said that the key ports were closed on Thursday due to a tropical storm which struck the resource-rich Pilbara region. Pilbara Ports reported that operations were shut down at Ashburton, Cape Preston West?Dampier?and Varanus Island due to strong gales caused by Tropical cyclone Narelle?a system of category 3?as well as storm force winds. Mineral Resources uses the Port of Ashburton for exporting iron ore. Rio Tinto is the largest user of Dampier's port, mainly for exporting iron ore and salt industrial. Port Hedland remains open, which is the largest iron ore exporting point in the world. Iron ore futures gains were limited, however, due to production restrictions at the Chinese iron-ore hub Tangshan. This could lead to a lower demand. Local authorities reported that the city activated an emergency response level-2 for heavy air pollution, on March 25. Mysteel, a consultancy, said in a note that steel mills in Tangshan also face restrictions on scrap trucks entering their facilities. The high energy prices have led to concerns about global inflation and a decline in expectations of U.S. interest rate cuts. Shanghai Metals Market stated in a report that the broader caution increased the risk of price corrections across bulk commodities. Coking coal and coke, which are used to make steel, also fell on Thursday, by 1.13% and 1.18 percent, respectively. The Shanghai Futures Exchange steel benchmarks were mixed. Hot-rolled coils fell 0.45%, while wire rods dropped 0.12%. Stainless steel rose 0.31%. $1 = 6.9006 Yuan (Reporting and editing by Ruth Chai, Sonia Cheema, and Subhranshu Sahu).
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Oil gains, stocks fall as Mideast ceasefire prospects dominate
Investors treaded carefully amid the rapid pace of Middle East developments, as Asian stocks fell in choppy trade. Oil prices rose. Iran said it would consider a U.S. offer to end the conflict. This month's widening conflict has shaken the global markets, sending oil prices skyrocketing, reigniting inflation fears, and upsetting global interest rate expectations. Investors are on edge due to the contradictory messages sent by both sides in regards to ceasefire talks. U.S. president Donald Trump said Iran is desperate to reach a deal, while Iranian foreign minister Abbas Araqchi claimed that there has been no dialogue with the U.S. or negotiations. However, various messages have been exchanged via intermediaries. The Nikkei index of Japan reversed its early gains and traded 0.7% lower. South Korean stocks dropped 2.7%, while Hong Kong's Hang Seng index fell 1.7%. MSCI's broadest Asia-Pacific share index outside Japan fell by more than 1%, resulting in a decline of 9.5% this month. This is its largest monthly drop since October 20,22. Stock?futures indicate a lower opening in Europe. U.S. futures for stocks were also lower. Charu Chanana is the chief investment strategist for Saxo. She said, "It appears that the market's relief trading has started to wobble." "Traders also remember that one peace rumour doesn't undo inflation and rates damage in the system." After a nearly month-long conflict triggered by U.S. and Israeli strikes against Iran in late Feburary, Iran has effectively closed?the Strait of Hormuz. This is a conduit that carries a fifth of the world's oil and natural gas. Crude prices have risen?above 100 per barrel due to the disruption. Brent crude futures stood at $104.53, up over 2% for the day and set to see a 43.6% increase in the month. The dollar held steady near recent highs, and was on course for a monthly gain of 2%. This cemented its status as a preferred safe haven. Iran's latest remarks suggest that Tehran is willing to negotiate a ceasefire if it can meet its demands. The U.S. initially ignored a 15 point ceasefire proposal that the U.S. had sent to Iran. It will be difficult to reconcile the goals of the U.S., Israel, and Tehran, said Matthias Scheiber. He is the senior portfolio manager at Allspring Global Investments and head of their multi-asset team. "We think that there's a good case for higher energy prices at the moment." Fear of an inflationary 'aftershock' has pushed traders into pricing out any chance of Federal Reserve rate cuts this year. This is supporting the dollar. The bets on U.S. interest rate increases briefly gained momentum, but they have since been reduced. The yield on Japan’s two-year Government Bond hit its highest level for 30 years, as traders consolidated their bets that the Bank of Japan would raise interest rates as soon as April. The European Central Bank's Christine Lagarde said on Wednesday that she would consider raising interest rates if the war in the Middle East continues to drive up inflation for a while in the Eurozone. Lagarde said in Frankfurt that if the shock leads to a large but not too persistent overshoot, then a measured adjustment of policy may be warranted. The euro remained at $1.1564, and sterling was $1.3362. The?yen was hovering at 159.44 dollars, close to the 160 dollar level that traders watch as a possible trigger for intervention. As the yellow metal continued to sell off, gold reversed its course and traded 0.3% lower. The gold price is set to drop 14% this month. This would be the steepest monthly decline in gold since October 2008. (Reporting from Ankur Banerjee, Singapore; editing by Shri Navaratnam).
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Official: drones from Ukraine damaged area near one of Russia's largest oil refineries, according to an official
A Russian official said on Thursday that a drone attack from Ukraine damaged an industrial area near one of Russia's largest?oil refineries. According to reports on Wednesday, at least 40% of Russia's capacity for oil exports has been halted following Ukrainian drone strikes, a disputed assault on a major pipe and the seizure or tankers. According to Alexander Drozdenko, more than 20 drones have been shot down in the northern Leningrad area. "The attack has been repelled in the Kirishi district." Drozdenko told Telegram that there was damage to the industrial area. Drozdenko ?did not specify what part of the ?industrial area was damaged, but ?the town of Kirishi is home to one of Russia's largest oil refineries, Surgutneftegaz's Kirishinefteorgsintez plant, which was repeatedly targeted by Ukraine last year. Industry sources claim that the refinery will process 17.5 million tons of oil (350,000 barrels a day) by 2024. This is 6.6% of Russia’s total refining volumes. The country produced 2 million tonnes of gasoline, 7.9 million tonne of diesel, 6.9 million tonne of fuel oil, and 600,000 tonne of bitumen. Two sources said that the Russian Baltic Sea ports of Primorsk, and Ust-Luga - major export outlets - suspended crude oil and petroleum products loadings following Wednesday's drone attacks by Ukraine. Russian officials claimed that earlier on Wednesday, a fire had broken out in Ust-Luga following a drone attack by Ukraine. (Reporting and editing by Guy Faulconbridge, Jamie Freed and Ksenia Orlova)
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South Korea raises fuel price caps but expands tax breaks to cushion the blow of Iran conflict
South?Korea is raising the cap on fuel prices at midnight on Friday and expanding fuel tax breaks in order to reduce the burden for consumers who are dealing with the aftermath of the U.S. - Israel war against Iran. Finance Minister Koo Yon-cheol announced that the operating rate of nuclear power plants would be increased to 80%, and the seasonal limit on coal?power stations will be removed. The prolonged Middle East conflict is roiling global energy markets, and affecting Asia's 4th largest economy. Koo stated that "as the Middle East War, which began late in February, enters its fourth weeks, the economic impact such as higher prices and supply disruptions, and increased volatility on the financial and foreign markets, are becoming more evident." He said that the government was prepared to use its resources in order to address "a grave situation". It could also take further action. The South Korean President Lee Jae Myung convened a meeting of high-level economists to discuss how to respond to an "unpredictable" situation, which he described as a result of a complex global supply network. South Korea is particularly vulnerable due to its heavy dependence on energy imports that pass through the Strait of Hormuz. This strait has been closed in effect since early March. The government is set to announce a new limit on fuel prices just two weeks after the previous ceiling was introduced to control prices at the pump. This ceiling was originally based upon the supply and the global oil price before the conflict erupted. Koo stated that in order to cushion the shock of energy prices, fuel tax cuts would be increased to 15% from 7% for gasoline and to 25% for diesel from 10%. The new export controls on naphtha will take effect on Friday at midnight. This is due to the disruptions that have been caused by the petrochemical industry in South Korea, which imports half of its material through the Strait of Hormuz. The Finance Ministry announced on Thursday that South Korea will buy back treasury bonds worth 5 trillion won ($3.32billion) to stabilize the market and redeem additional bonds with the surplus budget. It said that the government plans to increase monitoring of foreign capital flows after South Korean bonds are included in the global government bond index in a month's time.
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Indonesia's Agincourt claims it can resume its operations at Martabe Gold Mine after the government lifts sanctions
Agincourt Resources, an Indonesian gold miner, announced 'on Thursday' that the 'environmental?ministry has given it permission to resume operations at their Martabe mine. The mine was closed after allegations of environmental violations. Agincourt is one of 28 companies whose permits have been revoked after the government claimed that the firm was responsible for the environmental damage which worsened the floods last year in Sumatra. At least 1,200 people were killed. Astra International is the parent company of Agincourt. Astra's largest shareholder is Jardine Matheson. Agincourt spokesperson Katarina Sibirian said, "The company welcomes the decision of the Environment Ministry relating to the approval for the continuation of operations at the Martabe Gold Mine." Katarina stated that the company was making preparations, will adhere to all regulations, and is "committed" to safety and environmental standards. She added that operations had not yet resumed. Since December last year, mining operations in Martabe have been suspended. The Indonesian environment and energy ministers did not respond to requests for comment. According to Bloomberg Technoz, the deputy energy minister Yuliot Tanjung said that the mining permit had been restored. The ministry is still evaluating the company’s mining quota. (Reporting and editing by Bernadette Cristina and Stanley Widianto)
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France is among the nations that are interested in Australia's critical minerals, says Australian Minister
France is one of the countries that will invest in critical Australian minerals projects, according to Australia's Resources Minister on Thursday. Canberra's framework agreement with the U.S. encourages nations with advanced manufacturing industries to secure access to supply. Australia is on a mission for the past four years to create an industry that will produce?minerals? like rare earths, which are essential to technologies in future such as electronics and defense. Countries want to diversify away from China as their dominant supplier. Australia signed agreements with Japan, South Korea and India as well as France, Germany, Britain, France and Germany for cooperation in the sector. Madeleine King, Australian Resources Minister, said in an interview at the Minerals Week Summit in Canberra that "since the framework agreement with America" other partners have taken a new urgency in ensuring they too have access to vital minerals. She said that France is becoming more and more interested. France is involved at a policy level and has a financing framework, such as through Bpifrance Assurance Export. However, unlike the U.S. or Japan, it has not announced large-scale funding for Australian critical mineral projects. The French Trade Commission in Sydney didn't immediately respond to an inquiry for comment. Australia seeks billions more dollars in investment to fund?49 mine projects and 29 midstream projects in a critical minerals sector, which is expected to generate A$18 billion ($12.52billion) in?export profits in the financial period starting July 1. Australia joined the G7 Critical Minerals Production Alliance this month to advance its growth goals. After eight years of negotiations on Tuesday, Australia signed a free-trade agreement with the European Union. This could ease EU access to Australian essential minerals, but the EU did not announce a list of detailed investment projects, as it had done with the U.S. DECADES OF INVESTMENT King stated that Australia has committed A$28 billion to the sector's development since the current government took office in May 2022. The country may have to continue to support the industry for many decades. She said, "If you compare timelines, (China) took 40 years." "We'd like to get it done faster." We do have to consider it as a long term proposition. She said that the?Australian Government supported its massive iron ore and liquid natural gas markets in order to help them get off the ground. If anything, it might make it more difficult for critical minerals. Australia has developed a A$1.2 billion strategic reserve to provide antimony, gallium, and rare earths for its partners. It is expected to become operational in the second quarter of this year. King stated earlier this week that the reserve would "no doubt" include a price floor, but it will be structured so Australia can reap rewards in case prices rise. She added, "When there's an upside, government should be able to receive some of this benefit but also leave this part of the agreement." The U.S. also has a 12-billion-dollar stockpile of minerals, known as Project Vault. She added that details are still being discussed. ($1 = 1.4391 Australian dollars) (Reporting by Melanie Burton; Editing by Jamie Freed)
Helen Jewell explains why gold and defense stocks fell as the war broke out.
Investors tend to raise money first, and then ask questions. Investors who are aware of this phenomenon will not have a problem. It's a great opportunity.
Gold dropped by nearly 4% in the four days following the first U.S./Israeli strike on Iran. So did European defence stocks. It seems strange. Gold has been historically a safe investment in turbulent times. Conflicts are usually the driving force behind military equipment demand.
This is due to investor positioning, or more specifically, crowded trading.
Many fund managers will execute a “program trade” to de-risk quickly and mechanically in order to raise money when a market-jolting, large event occurs.
Instead of selling only certain positions, they try to raise cash by reducing a percentage fixed across all their holdings. The positions that have increased the most are sold most. This is why, when magnified across the market, assets that should benefit from an event can fall the fastest.
CROWDING OUT
In the last few weeks, gold has been the most obvious example.
BlackRock data shows that in 2025, a record amount of money will flow into commodity ETPs. BlackRock data shows that $83 billion of the $100 billion in new money went to gold products. In January, $15.5 billion was added to gold ETPs - the largest monthly inflow in recent memory.
Bank of America data shows that gold was trading 30% above its 200 day moving average before the Middle East conflict. This is the highest of any major asset.
Shortly, gold was a very busy trade. It was because of this that its value dropped when war broke out, despite the fact that it had a reputation for being safe.
The same is true for European defense companies.
The index of the industry has risen more than three-times as much as the European market in the last 12 months. Some companies have soared since the beginning of the Ukraine War. Rheinmetall in Germany, for instance, has risen by 1,700%. In January, flows into an iShares European Defence ETF reached a record high.
This sector, which was a 'clear beneficiary of rising geopolitical conflict', weakened immediately after the war began. It was obvious that this was due to crowded positioning and not fundamentals.
What's next?
In a crisis, de-risking can be the easiest part. What to do next is the harder question.
Investors should ask themselves a few key questions. Is it essentially the same, in which case the original positions can be restored? Or is the world radically different?
Consider first two categories of wounded assets: European defense contractors and gold.
The case for European defense companies is still pretty good, if not even better than at the end February.
Our analysis on the gold front shows that mining firms are poised to generate record-breaking cash flows, while trading at a discount to their historical average valuations. This thesis is still valid, given that recent gold price weakness wasn't likely driven by a fundamental change in investor sentiment.
You can also take a look at South Korean chip stock prices, which have fallen sharply in value since the beginning of the war.
These stocks were the big winners of the first two month of the year. They rose more than 50%. This was due to the massive amount of capital being deployed by large technology companies for artificial intelligence hardware.
Why did they retreat? The war did not change much for the companies themselves. They were located in a region that was vulnerable and, perhaps most importantly, the stock prices had risen the most.
In February, Korean stocks were trading at a level nearly 40% higher than their 200-day moving average. The momentum score was also the highest of any market segment. Companies like SK Hynix gained 400% in the previous 12 months.
A retreat was to be expected. The retracement in the last few weeks was excessive, especially for large and cash-generating firms.
Asia's dependence on Middle East oil - and the rise in Asian fuel costs - are serious risks for the region. It could potentially affect the outlook of these companies if it persists.
In some cases, the crisis can change fundamentals in a short time, which can lead to mismatches in?price' and 'value.
This may be true for oil companies. Brent crude has soared to over $100 per barrel after Iran closed the Strait of Hormuz, through which a fifth of world oil used to transit. Oil producers' shares haven't kept up with the price of crude oil. This 'gap' could present an opportunity.
It is important to know the difference between a fundamental shift and a technical recalibration when navigating markets.
Helen Jewell is the author of this article. She is International CIO for Fundamental Equities at BlackRock. This column is intended for educational purposes and should not be taken as investment advice. This column is interesting to you? Open Interest (ROI) is your new essential source of global financial commentary. Follow ROI on LinkedIn, X 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.
(source: Reuters)