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MORNING BID AMERICAS-China chip champ
What's important in the U.S. and Global Markets Today By Mike Dolan. Editor-at-Large for Finance and Markets The start of another volatile week for the markets is aided by a pause in the Iran conflict, and the significant decline in crude oil prices from the $100 mark. Calendar is packed with events, including the Federal Reserve meeting, a third?of?the 'S&P 500?reporting earnings - such as Apple, Microsoft, Meta, and Qualcomm?and second-quarter U.S. Gross Domestic Product estimates. Below, I'll go into more detail. Listen to the Morning Bid podcast to get a preview of the coming week and the oil market's latest decline. Subscribe to the Morning Bid daily podcast and hear our journalists break down the week ahead, including oil's latest retreat. CHINA CHIP KING Despite the recent drop in oil prices, there's still a 1 in 4 chance that the Fed will raise rates on Wednesday. This is priced into futures. Bank of England and Bank of Japan will also meet this week. The former is focusing on a recent yen decline, while the latter meets just before a new UK Prime Minister takes office. Oil prices were the first to set the tone this week. Brent crude started falling from triple-digit levels on Friday. The U.S. announced that it would pause its attacks on Iran following 13 days of continuous strikes. Iran said it would respond in kind and now we have to wait?to see if mediation resumes. Many in the market now assume that $100 oil will be a point of pressure - at the very least, in Washington. Brent dropped further on Monday morning to $89/bbl. Before the bell, shares in Asia rose and Wall Street futures jumped sharply. The hyperscalers' earnings will be examined forensically again, after Alphabet’s second-quarter burn caused its stock to fall last week, despite an impressive earnings beat. The Wall Street Journal reported, in other AI news, that Nvidia is in discussions to provide OpenAI with a $250 billion loan as part of its data center project. This is a reflection of the increasing cross-financing and OpenAI's own efforts to develop its infrastructure. The Chinese chipmaker CXMT saw its stock rise nearly 500% on its Shanghai debut in a massive IPO. Chart of the Day: New chip in the market? China's CXMT, which made its Shanghai debut on the market on Monday, soared nearly 500%. It is now China's most valuable stock, surpassing the Industrial and Commercial Bank of China. Asia's largest IPO raised $8.6 billion and has a value of over half a trillion dollar. CXMT’s?enlarged capital share was only 6.73% freely tradeable when it listed, since most shares were locked up. The initial small float magnified the price swings, and led to a high level of turnover. CXMT, a Chinese chip manufacturer, is expected to play a key role in China's own AI and tech ecosystem. This makes it a global strategic firm. Watch today's events * U.S. June ?durable goods (8:30 a.m. EDT) Auctions of U.S. 2-year, 5-year and 10-year notes Want to receive the Morning Bid every morning in your email? Subscribe to the newsletter by clicking here. Follow us on LinkedIn, X and ROI. The opinions expressed by the author are their own. These opinions do not represent the views of News. News is committed to the Trust Principles and upholds integrity, independence, as well as freedom from bias.
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Copper prices increase as US-Iran lull calms fears of oil and economic growth
Prices of copper rose on Monday as oil prices dropped after the U.S. & Iran suspended their 'hostilities', alleviating concerns over price pressures and global growth. Benchmark 'copper' on the London Metal Exchange rose 0.32% to $13,688.5 per metric ton by 0700 GMT. The Pentagon suspended its campaign against Iran on Friday after 13 nights of increasing airstrikes by the United States. Iran has been holding a 'fire' for two days after it had responded to each night’s U.S. airstrikes with its own attacks on countries in the region that house U.S. bases. The oil prices fell as the ceasefire in fighting raised the hopes of a diplomatic solution allowing shipping in the Strait of Hormuz to resume. Tom Price, Panmure Liberum analyst, said that the market was waiting for a resolution. It is pricing peace instead of a war. "Chile was hit by unusually severe storms that put pressure on the electricity distribution grid, and raised questions about the copper production guidelines across the industry," said Panmure Liberum analyst Tom Price. The market is also focusing on the copper stocks stored in LME approved warehouses. With 272,975 tonnes Stocks are down 30% since May's end. Since February of last year, producers and traders have been importing copper into the United States. This is because President Donald Trump had threatened to impose import tariffs. The result was a premium in U.S. Copper over LME Prices. The U.S. Commerce Department was supposed to finish a review on the copper market before June 30, but Trump has yet to announce a decision regarding tariffs. Other metals saw a 0.6% increase in aluminum to $17.385, a 0.8% rise in zinc to $3.621, a 0.3% rise in lead to $1.839, and a 1.3% jump for tin to $54,500. Nickel was unchanged at $17.385.
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Gold rises by 1% amid U.S. Iran truce; attention on Fed meeting
Gold prices rose on Monday as a pause between strikes?between U.S. forces and Iranian forces?helped?crude oil?price?fall. This helped ease inflation fears and concerns about the possibility of higher interest rates during a week when policymakers from the Fed will be meeting. Spot gold rose by 0.9% to $4.089.03 an ounce at 0805 GMT. U.S. gold futures for delivery in August also increased by 0.5%, to $4.090.80. "Precious Metals started the week in a positive way, thanks to a pause of hostilities in the Middle East. "Oil has fallen and both the dollar yields and U.S. Treasury yields are down," said Ross Norman, an independent analyst. The U.S. dollar index fell by 0.2% making greenback bullion prices more affordable to buyers abroad. A senior Iranian official said that Iran?will stop its attacks if the United States does?the same?. Washington has halted its bombing campaigns after Donald Trump's advisors informed him that they had run out of targets. They also expressed concern about the depletion of U.S. arsenal. The oil prices fell more than 6% Monday, increasing hopes for a diplomatic solution that would de-escalate conflict in the Strait of Hormuz. Energy prices are rising, which increases inflation fears and expectations for higher interest rates. Gold is often seen as a hedge to inflation. However, its non-yielding nature makes it less attractive in an environment of high interest rates. Investors are now focusing on the Fed's rate decision meeting scheduled for Wednesday. About 66% of participants in the market expect that rates will remain unchanged. "Gold is flashing cautiously positive signs: one eye on Iran and the other on the Fed. Norman said that if Warsh resisted the roughly two hikes embedded in the curve now, it could be quite supportive for the gold. According to the CME FedWatch Tool, traders?price in a?77% probability of a rate hike in September. Spot silver increased by 1.7%, to $59.15 an ounce. Platinum rose 2.7%, to $1.631.20. Palladium rose 3.3%, to $1.284.00. (Reporting by Sukanya Mitra in Bengaluru; Editing by Ronojoy Mazumdar)
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Oil prices fall after Middle East conflict pause, global stocks rise
As tensions in the Middle East eased, oil prices fell sharply and inflation fears were reduced. This was ahead of a busy week of central bank meetings and earnings reports. Iran announced on Sunday that it would cease?its? own attacks if the United States also did so. The U.S. Military was reportedly worried about the dwindling supply of ammunition. Brent crude fell 6.3% to $90.70 a barrel during the lull of fighting in the Strait of Hormuz, while U.S. Crude dropped 5.7% to $74.12. On Monday, stock markets around the world staged a relief rally after fighting in the Middle East pushed oil to over $100 per barrel during the last week. At one point, the STOXX 600 index in Europe climbed by nearly 0.5% and reached its highest level since July 7. Retail and travel stocks, which are sensitive to the economy, rallied by more than 2%. However, a decline in oil stocks hurt the market as a whole. S&P futures increased by 0.9% while Nasdaq Futures rose 1.5%. The MSCI broadest Asia-Pacific share index outside Japan increased by 0.3%. The euro rose 0.23% to $1.1395. The dollar also gained against most major currencies as traders reduced the likelihood of rate hikes by the Federal Reserve in the coming week. Markets indicate that the U.S. Central Bank's decision will be made on Wednesday. The markets suggest a 1 in 3 chance of an increase, but most analysts do not believe Chair Kevin Warsh is likely to support such a move. "A rate increase this week would send a powerful message at the beginning of his term, that he's serious about improving the Fed’s credibility in fighting inflation. We are not convinced that he will back up his tough words on inflation this week with policy actions," Lee Hardman said, a senior forex analyst at MUFG. If inflation risks don't ease over the summer months, it is more likely that a rate hike in September will be necessary. Both the Bank of England and Bank of Japan are expected to remain cautious in their approach, while maintaining their current policy. The dollar dropped 0.2% versus the yen, to 163.53. Earnings from TECH BULLS Chinese blue-chip stocks gained?1.2% after chipmaker CXMT Corp surged almost 500% in Shanghai's trading debut, following its raising of $8.6 billion through Asia's largest initial public offering. According to LSEG data, about a third of S&P500 companies will report earnings this week. Earnings are expected to increase by 26.5% over last year. Even 'blockbuster' results may not satisfy investors, given the high expectations and growing unease about the cost of AI capex. A Wall Street Journal article reported that Nvidia had been in discussions to provide an estimated $250 billion backstop for OpenAI, as part of a project involving data centers. This week, companies reporting include tech darlings Microsoft and Meta Platforms as well as Amazon, Apple, Qualcomm and a number of industrial, healthcare and defence stocks. Highlights of the data include:?U.S. The second quarter GDP is expected to grow at an annualised rate of 1.5%, after a sluggish start to the year. The week's calendar includes the PCE price index for June, personal income, consumption, weekly claims of unemployment, the second quarter employment cost index, and consumer sentiment in July. The Euro Zone's schedule includes the flash Q2 GDP (Gross Domestic Product), July economic sentiment, consumer confidence and flash inflation. According to the Ifo Institute survey conducted on Monday, German business morale increased more than expected in August due to significantly better expectations. The 10-year Treasury yields fell 3.8 basis points, to 4.64%. The drop in yields has helped gold prices to rise by 0.92%, or $4,090.45 per ounce, on commodity markets. (Reporting and editing by Stephen Coates and Sam Holmes; Mrigank Dhaniwala and Wayne Cole)
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Taganrog governor: Ukrainian drones target Taganrog after killing two in Rostov-on Don, Russia
Yuri Slyusar, the regional governor, said that Ukrainian drones allegedly killed a couple of people in Rostov-on-Don, a city in southern Russia. He also noted that apartment blocks, warehouses, and a shelter to house homeless people were damaged. Slyusar stated that the air defence forces shot down about?50 Ukrainian drones in his region, and that Kyiv had targeted the cities Rostov and Taganrog, as well as four districts of the region, Chertkovsky Tarasovsky Sholokhovsky Millerovsky. He said that eight people were injured in 'Rostov. One of them was in critical condition, according to a?statement. He said that in the port city of Taganrog on the Sea of Azov, home to various industrial sites and a grain depot, an unnamed production facility was damaged. Volodymyr Zelenskiy, the Ukrainian president, said on Monday morning that his forces had attacked a Russian oil facility in Yaroslavl as well as a Russian export terminal?in the Rostov?region. In recent weeks, Russia and Ukraine have increased their'military activities in the Black Sea, the Sea of Azov, and surrounding areas. Each side has attacked dozens of ships including cargo and oil tankers. (Reporting from Moscow buro, Jekaterina Glubkova and Andrew Osborn in Tokyo)
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LME Aluminium stocks drop to lowest in the last century due to supply shortage
The 'London Metal Exchange's aluminium stocks have fallen to their lowest level in the past century as consumers draw down their inventories due to supply constraints. The bourse reported total aluminum stocks in LME storage warehouses On July 24, the total had fallen to 271,275 tons. This is the lowest total since records began in January 1998. It's equivalent to less than one day of global aluminum consumption. Duncan Hobbs is the research director for Concord Resources. He said: "The LME stock relative to market size are very, very small today." The LME's on-warrant aluminium stock, which is the amount of aluminum that has not been earmarked for delivery outside the system, was 245,350 tonnes as of July 24,?the lowest level since April 2025. According to recent LME stock origin reports, the vast majority of the little available inventory is Russian aluminum. Some traders are reluctant to trade Russian metal, even though it was produced before April 13th 2024. The Gulf accounts for 9% of the primary aluminium capacity but its two largest smelters have been targeted by Iranians in late March. The market may be "too complacent" about the risks of supply, Hobbs stated, pointing out that the Strait of?Hormuz is causing continued disruptions, making it hard for Gulf smelters and their raw materials to enter and export metal. In August 2022, the LME's?alluminium?inventory was at a low of 271,450 tonnes. This was after?Russia invaded Ukraine on a full scale. The LME then began to restrict deliveries of Russian aluminum into its warehouses. In ?top metals consumer China, Shanghai ?Futures Exchange aluminium stocks Since mid-June, the number of tons has been decreasing but is still a healthy 455,092 tonnes. By 0830 GMT, the benchmark three-month aluminum on the LME had traded 0.3% higher at $3170 per ton. (Reporting and Additional Reporting by Pratima Dasai, Editing by David Goodman.)
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Impala Platinum suspends Rustenburg mining after injuries and fatalities
Impala Platinum announced on Monday that it had'suspended the mining operations at its Rustenburg operation in South Africa as it conducted a comprehensive safety reset following recent injuries and deaths. Impala didn't provide any details about the incidents but the Association of Mineworkers and Construction Union stated that seven workers have died at Impala Rustenburg since the beginning of the year. In a press release, Impala Rustenburg said that the 'temporary suspension' will affect PGM production for eight days. Impala, with an annual production of 3.5 million ounces of PGMs, is one of the world's largest PGM producers. Impala, Valterra Platinum, and Norilsk in Russia are all major players in the global supply chain of metals such as platinum, palladium, and rhodium used to make autocatalysts, which reduce vehicle emissions. Impala said it would carry out comprehensive workplace audits, as well as targeted?training?for its rail-bound and underground locomotive operators. The Impala Rustenburg operation employs about 51,500 people across mining and processing operations. It is forecast that the group will produce between 1,67?million ounces and 1,76 million ounces PGMs by June 2027. This is roughly half of what was projected. The company stated that the?actual impact of the suspension on production would be assessed. Reporting by Nelson Banya Editing and Joe Bavier by David Goodman
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The US and Iran pause their strikes as oil prices drop, allowing copper to benefit.
Prices of copper rose on Monday as oil prices fell following the U.S.-Iran pause in their two-week long conflict, which eased concerns about inflationary risks for?global growth. The benchmark three-month 'copper' on the London Metal Exchange gained 0.32% to $13,688.5 per metric tonne by 0700 GMT. The Shanghai Futures Exchange's most traded copper contract was up 0.31% to 105,050 Yuan ($15.523.64) per metric ton. The U.S. announced that it was halting its airstrikes against Iran after 13 nights of attacks. Tehran also said it would cease its attacks. Brent crude dropped more than 6% on Monday, after reaching $100 per barrel for the first since last Friday. Energy costs are a major factor in raising inflation and causing bets for higher interest rates. This could have a negative impact on commodities that depend on economic growth, such as copper. Markets will be closely monitoring the Federal Reserve's meeting on Wednesday for their interest rate decision. According to CME's FedWatch, interest-rate traders have priced in a 63.7% probability that there won't be a rate change during the meeting. Gold that does not yield a return gained and the dollar index dipped. The dollar is cheaper, making greenback-traded commodity like copper more affordable for buyers who use other currencies. The waning stock of copper outside the U.S. has also helped to support its price. Metal has been'shipped in at large scales ahead of possible tariffs on'refined copper. The SHFE monitors a warehouse in?China, the top consumer. Last week, copper stocks dropped 12.9% to their lowest levels since February 2024. They now stand at?69.610 tons. Overall LME Copper Stocks On Friday, they were at their lowest level since March. Aluminium was down by 0.03% on the LME, while zinc rose 0.6%. Lead ticked up 0.11%, and nickel fell?0.31%. Tin gained 1.16 %. On the?SHFE, aluminium fell 0.11%; zinc gained 0.46%; lead dropped 0.79%; nickel rose 0.09% and tin grew 2.17%.
Smelter charges collapse as zinc mine supply falters: Andy Home
Standard zinc smelter treatment charges have fallen sharply this year, vouching for a. tightening up of the mine supply chain.
Canadian miner Teck Resources has consented to pay. Korea Zinc $165 per metric heap to transform its zinc. concentrate into refined metal, down from the $274 covering last. year's shipments.
The yearly terms worked out by the 2 business have in. recent years been the benchmark for the remainder of the market.
Treatment charges increase during times of basic material surplus. and slide during periods of shortfall.
Last year's numbers were high since of a smelter. bottleneck and resulting glut of mined concentrate in 2022. This. year's low result states much about how zinc's supply dynamics. have actually altered in the intervening 12 months.
A string of mine closures, a lot of them due to the weak. rate environment, has actually tightened concentrate accessibility with. considerable implications for the fine-tuned metal market.
FALLING MINE PRODUCTION
London Metal Exchange (LME) zinc went from boom to bust over. the course of 2022 and early 2023, the three-month cost. collapsing from an all-time high of $4,896 per ton in March 2022. to a three-year low of $2,215 in May 2023.
The cost implosion caused a number of higher-cost mines to. close, most notably Boliden's Tara mine in Ireland,. Nyrstar's Middle Tennessee operations and Toho Zinc's. Rasp mine in Australia.
The lengthening tally of casualties caused worldwide mined. output of zinc to contract by 1.4% year-on-year in 2023,. according to the International Lead and Zinc Study Group. ( ILZSG). It was the second consecutive year of decrease after a. 2.6% drop in 2022.
This year might not end up much better.
A November fire at the Ozernoy mine in Russia has actually postponed. commissioning of what was expected to among the greatest. additions to global production this year.
Ozernoy, efficient in producing 350,000 lots of consisted of zinc. every year, now seems not likely to reboot processing ore into. focuses up until the fourth quarter of this year.
When ILZSG last met in October for its biannual conference, the. Group anticipated a robust 3.9% year-on-year increase in mined. output this year. That's starting to look positive and may be. based on modification when the Group holds its spring 2024. meeting.
SMELTER RECOVERY
While mine supply has actually continued sliding, worldwide smelter. production has bounced back highly because 2022.
The main chauffeur of higher smelter output has actually been China,. where manufacturers cranked up refined metal production to 6.6. million tons in 2023, a year-on-year boost of 10.9%,. according to regional information service provider Shanghai Metal Market.
That collective efficiency helped global output recover by. 3.8% last year after a similar-sized dip in 2022.
True, there are still Western smelters having problem with high. energy rates, such as Nyrstar's Budel plant in the Netherlands. which closed in January.
However on the other hand, the Nordenham smelter in Germany has actually been. ramping up after a year of being on care and upkeep.
It's the space in between weak global mine performance and. resurgent smelter need for concentrates that explains the. sharp drop in the annual criteria treatment charge.
Area terms have fallen even more as smelters rush for. product. Price reporting company Fastmarkets evaluates those for. concentrate delivered to Chinese ports at $50-80 per heap.
METAL GLUT
The establishing tightness in the zinc basic materials part of. the production chain isn't yet having any noticeable effect on. the refined metal balance.
Zinc remains the laggard of the LME pack even as enhancing. macroeconomic belief raises the base metals complex. Presently. trading around $2,700 per heap, LME three-month metal is up by. simply 3.0% on the start of the year, compared with copper's 10%. gains.
The metal's usage in the kind of galvanised steel indicates it. is heavily exposed to the building sector, a particularly. weak part of the economy in both China and the rest of the. world.
With smelting activity increasing over the last 12 months, there. is no scarcity of refined zinc.
LME stocks recuperated from a depleted 27,750 loads to 223,225. heaps over the course of 2023. They have risen by another 37,000. heaps up until now this year thanks to sporadic bursts of warranting. activity.
LME time-spreads suggest there might be more surplus metal. hovering over the market.
The benchmark cash-to-three-months period << CMZN0-3 > has. moved into super-contango area, broadening to over $50 per. ton last month. The contango contracted to $38 at the Monday. close however is still broader than anything seen since 2012-2013.
TWIST IN THE ZINC PLOT
The analyst consensus entering this year was that zinc. was on course to sign up a second year of substantial supply. surplus.
ILZSG forecast a huge 367,000-ton international glut when it fulfilled. in October. The typical expectation in the January poll. of base metal experts was for a 300,000-ton surplus. Not one of. the 11 experts using a supply-demand balance projection. anticipated anything other than excessive metal.
Such is the tightening up in the zinc concentrates section of. the market, however, that expectations are being changed.
Analysts at Macquarie Bank, for instance, are now forecasting. a small 61,000-ton supply deficit throughout the years.
Provided the very tight focuses market, we have minimized. our global refined production projection to -0.4% this year, the. bank stated in its March quarterly Commodities Compendium.
Western production is expected to remain challenged and. Chinese production growth is most likely to brake sharply to just. 0.5% due to a lack of feed.
A number of Chinese smelters have already advanced. maintenance or cut run-rates in reaction to the margin. compression triggered by low treatment charges, which account for. around 40% of a common smelter's earnings, according to. Macquarie.
The bank anticipates a go back to surplus next year but it could. be a rough rate trip given that this year's zinc narrative has. already taken an extremely unanticipated turn.
The opinions expressed here are those of the author, a. writer .
(source: Reuters)