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Gold falls on inflation fears as high oil prices, stronger dollar and concerns about inflation weigh
The gold price?fell? on Thursday as investors attempted to gauge the direction of conflict from the stalled U.S. Iran talks. As of 1007 GMT, spot gold was down by 0.8%, at $4,699.85 an ounce. U.S. Gold Futures for June Delivery fell 0.8% to $4716.20. The dollar grew, increasing the price of greenback-priced gold for holders of other currencies. Meanwhile, benchmark yields on 10-year U.S. Treasury bonds rose to a record high of over a week, increasing?the cost of non-yielding metals. Ole Hansen is the head of commodity strategy for?Saxo Bank. He said that gold continues to be influenced by the oil market. Iran has seized two ships at the Strait of Hormuz to tighten its grip on this strategic waterway. This comes after U.S. president Donald Trump announced that he would cease all attacks indefinitely, and there was no sign of a restart of peace negotiations. The Iranian officials have not confirmed that they agreed to an extension of the ceasefire. They accuse Washington of violating this truce by continuing a sea blockade against Iranian trade. Brent crude oil prices soared above $100 per barrel due to the stagnated peace talks, and the fact that both nations continued to restrict the flow of commerce through the Strait. Increased crude oil prices can increase inflationary pressures and the likelihood of interest rates remaining high. Gold is often viewed as an inflation hedge. However, as rates rise, gold's appeal decreases as it provides no return. A poll of economists revealed that the U.S. Federal Reserve is likely to wait at least six more months before cutting rates this year, as energy shocks from war will reignite inflation. Hansen continued, "The current consolidation seems more like a pause caused by rate uncertainty than a structural change. We?maintain our view that gold will likely reach a new record high in the latter part of this year or early 2027." Spot silver dropped 3% to $75.34 an ounce. Platinum fell 2.9% to $1,013.15, while palladium declined 3.3% to $1,494.26.
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Traxys CEO: New derivatives could be developed for critical minerals that are niche.
Mark Kristoff is the chief executive officer of commodity trader Traxys. He said that derivative contracts for niche-critical?minerals? including rhenium, could be developed over time, as industrial users seek to find better hedging instruments due to supply concerns and volatility in prices. Minerals such as rhenium and halfnium, which are not well-known outside of specialist markets, are essential to the aerospace and defence industries, and the energy industry. Prices of essential minerals have already been pushed up by the growing demand and limited supply. Kristoff says that many so-called minor and strategic metals today are too illiquid to be exchange-traded, but this could change with the growth of demand and maturation of markets. Kristoff said, "Some of these market?are too small at the moment, but in five years, it could be a completely different conversation," on the sidelines of Financial Times Global Commodities Summit, held in Lausanne, Switzerland. "Derivatives tools will become increasingly important." He said that the concern about availability, and how to manage volatility and price in many of these products will be driving this. CRITICAL MASS It is difficult to invest directly in minor or strategic materials because they are typically by-products of commodities with larger volumes. Rhenium is a copper by-product, while gallium comes from the production of alumina (used to make aluminum). Kristoff said, "If you can build critical mass for some of these derivatives and products, then any?investors who want to express their views could," Kristoff cited the London Metal Exchange's nickel contract, launched in 1979. He said that the contract "didn't?really reflect the reality of nickel?market? for a decade because?of small volumes and the market participants acceptance." Kristoff stated that the recent attention on critical metals and mineral availability may accelerate this transition.
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Cemex reports record Q1 earnings and maintains outlook despite weather impact
Cemex reported Thursday record core earnings for the?first quarter and reaffirmed its full-year forecast, as a result of cost-cutting and price discipline by the Mexican cement maker. Operating earnings before taxes, depreciation, and amortization (EBITDA), which are compiled by LSEG, rose 34% to $794 millions from a previous year, exceeding the analysts' expectations of $696. Cemex's 'disciplined pricing' and the cement volume recovery in Mexico boosted net sales by 11%, which was better than expected. In a press release, Chief Executive Jaime Muguiro stated that the results showed a "structurally strengthened" company with an improved earnings profile. Muguiro, who took over the cement company last year, has led a cost-cutting campaign to eliminate non-core assets as well as trim down the workforce. In the first quarter of this year, Cemex sold some of its assets to Colombia for $485 million. It also acquired the stucco and mortar business Omega as part of Muguiro’s shift towards "aggregate materials" in the U.S. Cemex is on track to achieve its high single-digit EBITDA forecast for the year, despite an uncertain global backdrop. This is due to the cost cutting program and strong first quarter results. The quarter's net income fell by 69% compared to the same period a year earlier, when Cemex had sold its operations in the Dominican Republic. Cemex reported that if the one-off impact had been removed, the net income for this quarter would have almost doubled. Sales in Mexico grew by 28%, mainly because the government increased social programs. In the U.S., and in Europe, sales and earnings were flat due to inclement weather. Cemex reported a relatively muted impact in the Middle East from the U.S. and Israeli war against Iran. The firm stated that "while we remain cautious about the future given the war, our operations have been resilient in the region so far." (Reporting and editing by Thomas Derpinghaus; Kylie Madry is reporting.)
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CEZ to sell non-production assets in part, according to a report
The Czech power utility CEZ plans to sell a?unit that includes non-production assets, such as electricity distribution, gas trading, and?trading?, to investors for up to 49 percent of the?unit, according to irozhlas.cz, a news website. CEZ and Industry minister Karel Havlicek refused to comment on the article, which cited sources who said that the move could raise money for a'share buyback'. This would give the government full control of?the power generation assets?. CEZ shares rose 1.3% to?0926 GMT. CEZ has a capitalisation of around $31 billion. The government owns approximately 70% of CEZ. The government wants to have 'full control' of the firm or at least it's electricity generation business. Havlicek said to reporters at a press conference held on Thursday, that the government would continue to pursue this goal during its current term which runs until 2029. The government said that any buyouts of minority shareholders will be funded by CEZ. CEZ announced its annual general meeting on June 1, which was to be held by the Prime Minister Andrej Babis. Irozhlas.cz stated that the spin-off plan would be discussed during the meeting. Reports stated that the 'new unit', which will be headed by CEZ Deputy chairman Pavel Cyrani could float in a?public initial offering or be offered directly to investors like international infrastructure funds. Reporting by Jan Lopatka. Alicja Surdy contributed additional reporting from Gdansk. Mark Potter (Editing)
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Teck's quarterly profit exceeds expectations on record copper sales and higher prices
Teck Resources beat analyst's expectations for the first-quarter profit, thanks to a rise in copper prices and record sales. Meanwhile, its proposed merger with Anglo American remains on track. The Canadian miner said that it expects Middle East conflict will push up freight costs and explosives through the second quarter. This is especially true for its Chilean operations, which depend on diesel imported from abroad. Teck and its competitors are expected to benefit from a 50% increase in global copper demand between now and 2040, due to?increasing data center power consumption to meet artificial Intelligence and defense growth. Prices and volumes would be supported by a sustained need for copper-intensive infrastructure, such as power grids and electronic equipment. Prices for average copper rose 36.7% from a year ago in the first quarter. They reached their highest levels late in January due to supply constraints, low inventories and strong demand. Teck reported that its copper prices in the March 31 quarter averaged $5.83 a pound, up from $4.24 one year ago. Copper production increased by 32%, to 140,000 tons. The production at the Quebrada Blanca Mine in Chile grew 31.2%, to 55.500 tons. This was due to a ramp up in operations. Copper sales increased by 46% to reach 155,000 tons. The miner reported adjusted earnings of C$1.75 a share for the third quarter. According to LSEG data, analysts on average expected C$1.15 for each share. Teck and Anglo shareholders approved a merger worth $53 billion in December, which could lead to the creation of a major copper producer if regulators approve. Anglo, a London-listed company, said last month that the final regulatory approval is expected between September of this year and March of 2027. (Reporting and editing by Joyjeet Das in Bengaluru, Pranav Mathur)
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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 refining sources predict that Asian refinery throughput will fall in April and may as crude imports reach a decade-low and the Iran war forces refiners into processing lighter grades. This reduces diesel and jet fuel production by at least one million barrels a day. Asia, which is responsible for 37% of global refining and normally sources two thirds of its crude oil from the Middle East, has been the hardest hit by the Strait of Hormuz closure, with refiners cutting back on production, causing fuel prices to rise. 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 mmbpd, and then 28.5 mmbpd, in April and May. 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 "run" 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 supply. 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. Horizon Insight, a Chinese research firm, estimates China's throughput at 13.4 million barrels per day (bpd) in the weeks to April 17 - down from 15.4 millions bpd the week before war began on February 28. Horizon Insight analysts stated that the Chinese run-cuts are mostly at state owned refineries. These refineries have increased their yields of transportation gasolines, at the expense naphtha used for petrochemicals to ensure energy security. Hassan, of FGE, said that the utilisation rate for refineries in South Korea and Japan will drop to 65% by late April or early May from its normal level between 70% and 80%. 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 has fallen below 50%. This is down from 70%, which was normal. Nithin Prakash, an analyst with Rystad Energy, stated that Indian crude production fell by 13% in April to 5.0 million bpd from February. LESS MEDIUM-SOUR CRUDE, MORE LIGHT GRADES COMING According to Vortexa, of the 12 million barrels per day of crude oil that were unable to be shipped to Asia due to the closure of the Strait of Hormuz in March, 8 million of those barrels per day were medium density with high sulphur, also known as medium?sours. Most Asian refineries have been designed to process medium sours to maximize diesel production. As a replacement, Asian refiners bought light West Texas Intermediate, medium-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% for April-loading containers, up from just 11% in Feb. 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% of middle distillates compared to 40% for WTI. Rystad's Prakash stated that a drop of 1% or 2% in yields in Asia's 30 million bpd refinery system 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 runs, could lead to a combined reduction of 1 million bpd diesel and jet in the short term. 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. The majority 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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France looks to accelerate grid connections for data centres
The French energy ministry announced on Thursday that it would allow large data center?projects temporarily to connect to underground cable systems, as part of a revamp of its 'grid connection system', in an effort to reduce 'development times and attract investment. France has, along with much of Europe, struggled to cope in recent years, as data centres race to connect to the grid and reach market. Bottlenecks have led to the creation of "ghost projects", in which?companies purchase grid slots for development that may not be built. This crowds out rivals, and allows slots to be traded on a first come, first served basis. The government's electrification plan stated that as a?short-term fix?, it is looking at allowing some large projects to be connected to the underground cable system. A government official told journalists that "having more data centres" in the country would also mean moving towards digital sovereignty, and the decarbonisation (decarbonisation) of the economy. The official stated that the temporary underground connection could be available as early as the end of the month. It would allow power to be provided for several large projects and help them meet their tight deadlines. The grid queue will take longer to be reorganized. The ministry said that the energy regulator CRE has been conducting a consultation and a decision is expected to be made by the end the year. The regulator wants to increase 'France's appeal for investors by cutting connection costs and delays. In some European countries, these can last up to a decade due to long queues. Reporting by Forrest Créllin. Mark Potter (Editing)
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Lee's visit to Hanoi will see South Korea and Vietnam sign dozens of deals
South Korean and Vietnamese companies will reportedly'sign dozens of deals on Thursday, according to two sources in the Korean media. These non-binding corporate deals and contracts will follow the previous day's signing of 12 co-operation pacts between Lee and Vietnam’s top leader To Lam, which included one about Korean investment in a nuclear plant in southern Vietnam. Lee, after the meeting, said that "our two countries will enhance cooperation in joint research and talent-development in semiconductors and secondary batteries as well as biotechnology." He added that among the deals set to be announced on Thursday is a contract for supplying?rolling stocks to Ho Chi Minh City’s urban rail system. Hyundai Rotem announced that it had won orders for about $332 Million for a three-phase rail system in the city. South Korean media reported that the pact was one of more than 70 in various?industries,?ranging from consumer goods, advanced technology, infrastructure, and energy to finance. Two people familiar with plans confirm that dozens of business agreements are expected to be signed during the visit. The information they provided was not publicly available, so the people who spoke to them requested anonymity. SAMSUNG IS ONE OF THE DELEGATES ATTENDING THIS EVENT After a trip to India, Lee is accompanied by more than 100 Korean firms with operations in Vietnam, according to officials and the media. They added that these include Samsung Electronics as well as SK, LG, Lotte and POSCO Holdings. Samsung is the most prominent company in Southeast Asia after investing more than $20 billion over the past decades. Sources familiar with the talks have reported that it has made recent progress in years-long discussions?with Vietnamese officials for a potential back-end semiconductor plant. The central bank of Vietnam announced on Wednesday that it had granted a license to Industrial Bank of Korea for the opening of a fully-owned subsidiary in Vietnam. State media reported that Lee had asked Le Minh Hung to assist in resolving issues faced by Korean businesses in Vietnam, and 'open the door for their participation in strategic infrastructure projects. Korean companies raise issues such as tax refunds, access to incentives for investment and the rising wages of Vietnamese workers, which have been pushed by an influx of Chinese factories. $1 = 1,481.5000 won (Reporting and editing by Clarence Fernandez, Joyce Lee and Francesco Guarascio in Hanoi; Khanh Vu at Seoul)
Bangladesh's Top LNG states FSRU operations paused due to cyclone damage
Bangladesh's Summit LNG has stopped briefly operations at its drifting storage and regasification unit ( FSRU) in Moheshkhali after it was struck by a roaming pontoon during a cyclone on May 27, the company stated in a statement to on Friday.
There was damage to the ballast water tank of the FSRU, the declaration said, including a specialist property surveyor was on the way to board the FSRU to assess the damage.
Due to the delicate and explosive nature of handling melted gas (LNG) and nationwide value of FSRU in terms of gas supply to the national grid, Summit and the FSRU operator are taking full preventative measure in remedying the matter before resuming normal operations, it included.
Cyclone Remal brought windstorms and heavy rain to the coastlines of India and Bangladesh previously today, killing at least 16 individuals and cutting power to millions. It is the first of the frequent storms expected to pound the low-lying coasts of South Asia this year, as environment change drives up surface temperatures at sea.
Summit's FSRU is among Bangladesh's 2 floating LNG import terminals, with a regasification capacity of 500 million cubic feet per day that products gas to the national grid. It started commercial operations in April 2019.
Summit included its declaration that it was in close interactions with Bangladesh's state-owned Petrobangla and Rupantarita Prakritik Gas Company Ltd (RPGCL).
It did not state when operations of the FSRU would resume.
With a population of over 170 million people, Bangladesh relies on LNG to meet power demand. It has seen annual imports increase, and last year delivered in 5.2 million metric tons of the fuel, according to information from analytics firm Kpler.
(source: Reuters)