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Imports of crude oil from China remained weak in August. Can this trend continue? Russell
China's crude oil imports by sea increased in August compared to July, but they remained 40% below the levels before the Iran conflict. According to Kpler, commodity analysts, China's largest oil importer saw seaborne arrivals increase from 6.93 million barrels per day in July to 7.14 million barrels per daily (bpd) during August. The imports in August were 4,27 million bpd less than the average of 11,41 million bpd for the three months leading up to the U.S.-Israeli attack on Iran, which took place on February 28. China is absorbing the majority of the Middle East's lower crude oil volumes, as its exports are falling due to the restricted flow through the Strait of Hormuz. While there are disagreements over the exact amount of crude oil and refined product that is getting through the narrow waterway, it's certain that the number is well below the 20 million bpd prior to the conflict. Asia's crude oil imports by sea were 22,64 million barrels per day (bpd) in August. This was down from 23,40 million bpd a month earlier, but still 4.29 million or 16% below the average 26.93 million barrels per day in the three-month period ending in February. The decline in Asia's seaborne imports of oil in August is only 20,000 barrels per day more than China's arrivals. The extent of the drop in crude oil imports is surprising. Most participants on the crude oil market expected Beijing to reduce its imports as a response to higher prices due to the conflict with Iran. China is known to cut imports during price surges, but boost them when prices drop. Benchmark Brent crude futures rose 75% since the beginning of the conflict, reaching a four-year peak of $126.41 per barrel on April 30. On September 4, they moderated, but the price remains above what most Chinese refiners are willing to pay. It is unclear whether China will keep limiting its imports despite the high prices or if its refiners are looking to secure cargoes to avoid having to use their inventories. IRAN, RUSSIA FLOWS Answering that question involves several factors. First, China's smaller independent refining companies are losing their access to Iranian crude because the U.S. blockade prevents any new Iranian crude from leaving the Gulf. The oil in tankers is also delivered and depleted. These refiners will either need to pay more or reduce their processing rates for the cargoes they receive from other suppliers. China buys more oil from Russia, a country also under Western sanctions. However, this puts China in direct competition with India, as refiners have replaced Middle East crude with Russian crude to replace the Middle East's limited supply. Kpler data shows that China's seaborne exports to Russia in August reached 1,68 million bpd, up from 1,40 million bpd during July, and the highest since March. China also purchases about 1 million barrels per day via pipelines. A factor to consider is whether China's refining companies try to export refined fuels given the high profit margins that are currently available in Asia for products like?diesel or gasoline. Exports of middle and light distillates reached 963,000 barrels per day in August. This is up from the average of 713,000 barrels per day for the three-month period prior to the beginning of the Iran War. The increase in light and middle distillates in August almost exactly matches the increase of crude imports. This may be just a coincidence but it illustrates the larger point that, if China increases product exports, then it will also have to increase crude oil imports. China's decision not to import crude oil has played a significant role in preventing the price of oil from rising since the beginning of the Iran War. Its lack of exports from 'April to June' is another factor that keeps fuel prices high in Asia. It may be better for the Chinese market to export more fuel than buy more crude oil, given the potential shortage of refined fuels in Asia. 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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Copper prices record high due to weak supply outside US
The 'price of copper' continued to rise on Tuesday. It reached a record high on speculative purchases on the backs of tight supply outside the U.S. and weak mine production. In open-outcry official trading, three-month copper on the London Metal Exchange rose 1.3% to $14,503 per metric ton, breaking the previous record. LME copper is up 18% in this year. This is largely because a large amount of metal has been moving to the U.S., anticipating?tariffs to be imposed on refined copper. Alice Fox, an analyst at Macquarie, stated that falling inventories outside of the U.S. - including in China - were the 'drivers' behind the gains. The resurgence of tensions in the Middle East has sparked concerns about acid prices and availability. Also, the bullish narrative regarding demand for data centres continues. The Shanghai Futures Exchange's most traded copper contract rose by as much as 1.5 percent to 110,890 Yuan, its highest level since January 30. COMEX inventories in the U.S. As of Friday last week, before the U.S. Holiday on Monday, swelled up to a record of 766,795 metric tons or short tons. The analyst of Chinese broker Everbright Futures stated that the still-elevated price spread between the?COMEX and LME suggests physical copper is continuing to flow into the United States. This has exacerbated the tightness of supply in markets outside of the U.S. Since late May, copper stocks in LME registered?warehouses are down?nearly 40 percent. SHFE inventories have also fallen. Last week, the number of tons was around 63,000. This is down by 85% from its peak in mid-March and it's lowest level since January 2024. Zinc prices also rose, with LME zinc at $4,002 per ton up 0.5%, its highest level in over?four years. Other LME metals include?aluminum, which rose 0.2% at $3,318.50 per tonne, lead, up 0.2% at $1,904, and nickel, up 0.5% at $16,805. Tin also gained 0.1%, to $55,175.
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Solvay and One Investment Management discuss rare earths partnership
Solvay, a Belgian chemicals company, is currently in discussions with One Investment Management regarding a possible strategic partnership for its rare earths division. Solvay announced this on Tuesday. OneIM, led by Rajeev Misra (former SoftBank executive), would gain exposure to rare-earths processing. This would complement its existing investments in this sector, which is dominated primarily by China. Sources with knowledge of the situation said that Solvay has been in talks with OneIM about Solvay’s rare earths operations since March. The West is looking to reduce its reliance on China as a supplier of rare earth minerals. These minerals are essential for the energy transformation, electronics, and defence industries. In response to an email from a customer, Solvay confirmed that it was currently in discussions with OneIM about a possible strategic partnership regarding its rare-earths business. At this stage, it is impossible to know if these discussions will lead to an agreement or transaction. If and when it is appropriate, a further announcement will follow. Solvay published a later statement about the discussions to?the Stock Exchange. OneIM had no immediate comment. Solvay shares rose 3% after the news. They were in the red before the story. SOLVAY FRENCH PLANTS A LEADER IN THE 1980S Solvay’s unit for rare earths includes a French processing plant that was once among the largest in the world. The processing expertise of the company is considered to be a strategic asset, even though it only represents a small part of Solvay's business, which includes chemicals such as soda ash and silica. The 78-year old processing plant of the company in La Rochelle, France on the Atlantic coast, set the benchmark in global rare earth prices during the 1980s. It is also one of only two plants outside China that can separate 17 rare earth elements. OneIM, run by Misra - former CEO of SoftBank Group Vision Funds - has invested in many rare earths companies. Some of these have already signed supply agreements with Solvay. Misra stepped out of SoftBank in 2022 and founded OneIM with Yanni PIpilis, other former SoftBank executives. Assets worth $11.8 billion are managed by the alternative investment manager with offices in Abu Dhabi and London, New York, Tokyo and Tokyo. ONEIM OFFERS A STRING OF RARE EARTH INVESTIMENTS OneIM announced late last month that it would be a cornerstone investor in Viridis Minerals and Mining by committing up to $75,000,000 to the company developing a rare-earths mine in Brazil. Viridis had signed a letter with Solvay two months earlier proposing a partnership. This included supplying rare Earths from Viridis' mine to Solvay’s processing plant. OneIM also invested in private U.S. rare-earth magnet producers. In January, $200 million was invested in Noveon Magnetics and in August an undisclosed amount in Vulcan Elements. Solvay signed a contract in November of last year to supply rare earths to Texas based?Noveon. Only a few Western companies have proven technology in each of the seven stages, from mining to magnet manufacturing. China controls 90% of the global magnet production capacity. Solvay’s Speciality Chemicals division includes rare earths and fluorine. These two chemicals accounted for 15 percent of Solvay’s sales in the last year, out of a total of EUR4.3 billion ($5billion). Solvay reported its second-quarter core earning above market expectations late in July, and CEO Philippe Kehren stated that it planned to invest EUR15 to EUR20 millions of additional investments to further expand the La Rochelle plant. He added that the industrial scale separation of heavy rare Earths such as dysprosium, and terbium would begin in autumn.
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MMG faces EU Antitrust Warning over Anglo American Deal, Sources say
EU regulators will warn the?Hong Kong listed mining and metals?MMG about its plans to purchase Anglo American's Brazilian Nickel business? based on competition concerns?, according to three people familiar with this matter. This step is a reflection of the growing concern in Europe about China's export controls on vital minerals that are essential to renewable energy, defence and technology. According to the people, the European Commission, which is the EU's competition enforcer is about to issue a "statement of objections" or a "charge sheet",?outlining the concerns and issues that need to be addressed before the deal can be approved. The?people spoke under condition of anonymity as the?matter has not yet been made public. MMG may be able to stave off charges by offering remedies, but this is unlikely according to one person. MMG and the EU antitrust watchdog declined to comment. Anglo American declined to comment as well, but pointed out a statement it issued two weeks ago in which they said that the deal should be cleared without condition. The European ferronickel industry has 'benefited from an important structural expansion in ferronickel supplies from a number of producers,' while European customers have demonstrated how easily they can switch suppliers. The EU steel measure, it said, had capped Chinese imports into the EU. Therefore, Chinese stainless steel could not be redirected towards the EU. In November, the Commission said that the deal would allow MMG to divert ferronickel away from Europe. This could undermine the competitiveness and efficiency of European stainless steel producers.
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Solvay and One Investment Management discuss rare earths partnership
Solvay, a Belgian chemicals company, is currently in discussions with One Investment Management regarding a possible strategic partnership for its rare earths division. Solvay announced this on Tuesday. OneIM, led by former SoftBank executive Rajeev Mitra, would gain exposure to 'rare earths processing. This deal would complement its existing investments in this sector, which is dominated primarily by China. Sources with knowledge of the situation said that Solvay has been in talks with OneIM about Solvay’s rare earths operations since March. Rare earth minerals play a crucial role in the energy transition and electronics industries. The West is looking to reduce its reliance on China as a supplier. In response to an email from a customer, Solvay confirmed that it was currently in talks with OneIM regarding a possible strategic partnership for its rare earths business. At this stage, it is impossible to know if these discussions will lead to an?agreement? or?transaction. If and when it is appropriate, a further announcement will be made. OneIM didn't immediately respond to a comment request. Solvay’s rare earths division includes a French processing plant that was once among the largest in the world. The processing expertise of the Solvay business, which manufactures chemicals such as soda ash, and?speciality plastics used in aircraft and cars, is considered an asset. The company's processing plant, which is 78 years old and located on France's Atlantic Coast in La 'Rochelle, set the global benchmark for rare earth prices during the 1980s and 1990s. It's one of only a few plants outside China that can separate 17 rare earth elements. OneIM is run by Misra - former CEO of SoftBank Group’s Vision?Funds - and has invested in several rare earths companies. Some of these have already signed supply agreements with?Solvay. Misra stepped out of SoftBank 'in 2022, to start OneIM with Yanni Pipilis, and other former SoftBank executives. Assets worth $11.8 billion are managed by the alternative investment manager with offices in Abu Dhabi and London, New York, Tokyo and Tokyo.
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Stocks drop as yen firms, Gulf attacks push oil to $100 per barrel
The yen was trading at seven-month highs on Tuesday, and stocks were down after an attack on oil facilities in the Gulf drove prices of crude to close to $100 per barrel. Copper prices also hit record highs. Brent crude futures reached their highest level in six weeks and were nearing $100 per barrel after Houthis, Yemen's Iranian-backed Houthis, attacked energy installations and cities in Saudi Arabia. This highlighted the danger of the conflict spreading across the region, and complicating fuel supply to the world markets. Diesel prices have risen to record levels and gasoline prices are also higher than they were before the war. Even the prices of crude oil for immediate delivery, which is a physical product, are above the futures price. This shows the impact of the conflict on the global energy market. Inflation has risen in recent weeks and this is partly due to the increase in bond yields which have reached multi-year highs. This puts pressure on central banks to raise interest rates. The European Central Bank will almost certainly raise rates in the euro zone by a quarter-point on Thursday of this week. Meanwhile, the chances of the Bank of Japan raising rates next week have increased, setting the yen up for its biggest rally in the past two years. The STOXX 600 fell 0.2% in Europe, while the futures for the S&P 500 dropped 0.4%, and those of the Nasdaq declined 0.1%. This suggests that tech stocks will suffer less losses when Wall Street opens later this week after a long weekend. Unwinding Yen Carry Trades The U.S. data on inflation could be decisive for setting expectations about the outcome of next week's Federal Reserve meeting. Money markets indicate that traders currently attach a 58% chance to a rate increase. The yen's rise may be the biggest story on global markets. Oil was the focus of attention Tuesday, but it is likely that the yen will continue to surge. Due to its low yield, traders borrowed yen to buy higher-yielding assets, including currencies, bonds, and equities. This strategy is known as carry trading. This trade is beginning to unravel as the BOJ prepares to raise rates. Japanese bond yields are at or near records highs, and capital has begun to flow back home. The last time carry trades reversed and the yen appreciated so quickly was in 2024. A surge of volatility hit global equities. The yen gained almost 4% in the last week, which is its biggest weekly gain since July 2024. On Tuesday it was trading at around 154.4 and the dollar was roughly unchanged for the day. Francesco Pesole, a ING strategist, said that despite the fact that short-term fundamentals suggest the move has been overdone, it is still risky to stand against it, especially given the potential for further carry trade unwinding. Data showed that the real Japanese wages increased by 2.4% from a year ago in July, the largest increase since May 2021. Capital Economics analysts in a report said that wage growth is increasing and the Bank of Japan should accelerate the pace of tightening. Copper, a commodity?beyond? oil, hit a record high on Tuesday as global supplies tightened. The metal continued to flow into the U.S. in anticipation of potential tariffs. The price of three-month copper at the London Metal Exchange rose by 1.1% to $14,673 per ton after reaching as high as $14,694. The benchmark 10-year Treasury note yielded 4.8% on the bond market. This was up by 2 basis points for the day, and is not far from its highest level since November 2023.
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HSBC increases Brent crude price forecast for 2026 to $90/bbl
HSBC raised its Brent crude prices forecasts?for the rest of this year and the next. It cited a?prolonged interruption to shipping through the Strait of?Hormuz due to the collapse?of a U.S. - Iran?memorandum of agreement. Kim Fustier is a senior global oil &gas analyst at HSBC. In a?note, she said: "We?think that the market is adjusting towards a disrupted?new normal? in which the strait has not been fully closed or fully opened, but is persistently impaired." The bank increased its Brent forecasts for 2026 to $90/barrel, up from $80. This includes a $95/bbl estimation for the fourth quarter in 2026. The bank raised its?forecast for 2027 to $85/bbl, up from $65. It also increased its long-term assumptions to $75/bbl starting in 2028. Tuesday, oil prices reached a multi-week high after Iran-backed Houthis launched an attack on Saudi energy plants and Tehran warned the United States of "economic war". Brent crude futures rose earlier to $99.46, its highest level since July 24. U.S. West Texas intermediate crude also reached $94.73, the highest level since June 8. Analysts said that flows in the waterway, which is critical to the region's economy, have stabilised at about 30% of the?pre-conflict level since the collapse of the US-Iran agreement in July. However volatility continues day-today. We expect liquids to flow through Hormuz from 6mbd to 8mbd at the end of this year and to 9.5mbd in mid-2027. This is still well below the 19-20mbd pre-conflict transit. The market will remain tighter for longer than previously thought, they said. HSBC does not expect that the market will return to equilibrium until mid-2027. This implies further inventory drawdowns in the coming quarters. The bank has also increased its assumptions about refining margins for 2026-2028, and expects product tightness to continue through 2027 despite crude balances improving.
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Holtec Nuclear's US IPO targets $10.2 billion in valuation as the fall window opens
Holtec, a nuclear technology company, said that it aims to achieve a valuation up to $10,2 billion for its U.S. initial IPO, which will take place as Wall Street begins 'its post Labor -Day dealmaking spree. The Camden-based New Jersey company wants to raise up to $900,000,000 by selling 50 million shares at a price between $15 and $18 each. As markets recover from the summer slowdown, fall is traditionally a busy time for new deals. Holtec's listing is the latest in a series of nuclear IPOs this year, as companies move away from blank-check deals and towards traditional IPOs. X-energy 'and Standard Nuclear have gone public this year through traditional IPOs, while Westinghouse also?confidently filed for a New York listings. The demand for nuclear energy has risen rapidly, as the construction of data centers drives up electricity consumption and renews interest in nuclear reactors. Holtec was founded in 1986 by Krishna Singh and specializes in heat transfer, reactor components, spent-fuel storage, and decommissioning of nuclear plants. According to the filing, the company reported a net profit?of 205.6 million dollars on revenue of 269.9 millions dollars for the six-month period ended June 30. This compares with a net loss of $139.1million dollars?on revenue $286.6million dollars a year ago. The company is developing small modular reactors, with the first two units to be deployed on its Palisades site. Holtec also works on restarting decommissioned 800-megawatt Palisades plant. This would be the U.S.'s first commercial reactor to resume operations after ceasing?operations. J.P. Morgan is the joint book-running manager, along with Guggenheim Securities. Citigroup and BofA Securities. Holtec's stock will be listed on Nasdaq Texas and Nasdaq under the symbol HNUC.
IFX reports that Kazakhstan has suspended proceedings to recover $5 billion from NCOC Oil Consortium
Interfax reported that Kazakhstan's Ministry of Justice suspended enforcement proceedings against the North Caspian Operating Company, which operates the Kashagan Oil Field.
NCOC is a joint-venture between Shell, TotalEnergies,?ExxonMobil, and China's CNPC. It runs Kazakhstan's 'offshore Kashagan' field. It did not respond immediately to a request for comment.
NCOC is embroiled in a long-running?legal dispute with the Kazakh Government, who accuses NCOC of?environmental violation related to sulphur storing, and ordered NCOC pay a large penalty. NCOC and its contractors have rejected the fine, as well as the allegations that led to it. The case is now being heard by international arbitration.
Reports in July stated that Kazakhstan warned the NCOC head of criminal prosecution if he did not pay fine.
Kazakhstan is responsible for 2% of the global oil supply. Critics and international oil giants have accused Kazakhstan that it is attempting to gain more control over its 'oil industry through "resource nationalism", a charge Astana denies.
(source: Reuters)