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Minister says Australia will set a floor price for its critical mineral reserves
Australia will "no doubt", have a floor price in its strategic reserve of critical minerals. Resources Minister,?Madeleine King, said this?on Wednesday. The resource-rich nation is looking to consolidate its role as an important supplier to its allies. "We are building a strategic reserve." "There will also be a price floor," King said to delegates at the Minerals Week summit in Canberra. He added that the government would consult with the industry for the 'right price. It is about a new pricing mechanism that reflects the cost of producing these materials." Australia plans to become the world's leading supplier of rare earth minerals, which are vital to industries ranging from automotive to defense. This will be achieved in part by developing a strategic reserve, with funding of A$1.2billion ($793m). The project is expected to start up in the second half 2026. This will highlight the country's ambitions of becoming a major player on the global mineral market. Australia also supports private investment through entities like the Northern Australia Infrastructure Fund and the Export Finance Agency (EFA), which will contribute an additional A$4 Billion. King said that Australia needs to be financially prepared for such projects in the long term if it wants to establish itself as a reliable supplier of 'critical minerals' as global supply chains are rebuilt. "They're long-term investments" King stated, "I do think we will have to continue doing this for a while." China is the largest producer and refiner of critical minerals for industry. Last year, its restrictions on certain exports shook up the automotive and defense industries and drove a global drive to diversify supply.
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McGeever: It's time to reconsider the asset of a "safe haven"
The Iran War and the 'global energy shock' it unleashed could have put an end to the idea that there is a safe-haven investment for everyone. It's not a novel concept given the poor performance of U.S. Treasuries after Russia invaded Ukraine in 2004. The extraordinary fall in gold prices'since the U.S. and Israeli strike on Iran on 28 February' has brought it into the spotlight. In times of economic, geopolitical or financial instability, investors flock to assets like Treasuries. The dollar, Swiss Franc and especially gold. These are the assets that will most likely serve as a safe haven in times of crisis. Gold has been a safe haven for non-financial assets, especially in times of inflation. Gold has not only performed poorly in the current crisis, but it is also one of the most underperforming assets. It has lag behind high-yielding credit, emerging markets stocks, and frontier market stocks. Silver was the only asset that has performed better than it, and this is because of a speculative boom. Gold has fallen 17% in March so far, and is on course to have its worst month since 1982. This is astonishing in a month marked by the worst Middle East conflict, biggest global energy crisis, accelerating inflation, and $6 trillion worth of global stock value being wiped out. Around the middle of 2012, gold began to be untethered by whatever economic fundamentals were underlying it. Retail investors, momentum traders, and machines chased gold higher as central bank demand cooled. It culminated in a January high of $5 595 per ounce. This "fear of losing out" (FOMO), euphoria soon turned into widespread liquidation and drowned out any "FTQ", or flight to quality, demand sparked by this crisis. PLENTY OF REASONS TO SELL, FEW TO BUY The dollar and U.S. Treasuries are not much better. The dollar has risen but only by less than 2 percent. The Federal Reserve is not the only major central bank that will likely tighten its policy this year. Analysts at Deutsche Bank note that many central banks from Asia and the Middle East will likely look to reduce their FX reserves to cover their increased import costs, to prevent their currencies weakening excessively, and to cushion any inflation shock. This will cap dollar and could be a greater drag on U.S. Treasuries. This may have already begun. The amount of Treasuries that are held by the New York Fed for global central banks fell by around $75 billion over the past four weeks. Analysts at Deutsche Bank estimate that this is equivalent to around $60 billion in sales by the official foreign sector. This would be the second-largest net sale since the COVID-19 Pandemic. It's true that the Treasuries Market is the most liquid market in the world. But it is no longer considered the safest. The Swiss franc, and the Japanese yen are both affected by domestic problems. Both currencies have historically enjoyed current-account deficits and low rates of inflation. The Swiss National Bank has stated that it is more willing to intervene on the foreign exchange markets due to currency appreciation. The yen is already at multi-decade lows and doesn't hold much appeal, given that Japan imports most of its energy. Investors need to be flexible and more creative in the current turmoil. Trading strategies are often more effective than buying safe-haven assets. The response to each crisis depends on its origin, for example, buying energy stocks during an energy crisis, or buying defense stocks during a conflict. Cash is the one asset that seems to always do well during a crisis or even an inflationary supply shock. U.S. Money Market Funds have grown by about $60 billion since the 28th of February to a record $7.86 trillion. You shouldn't bet against the total exceeding $8 trillion within weeks. You like this column? Check out Open Interest, your new essential source for global financial commentary. Follow ROI on LinkedIn 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.
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Cuban crisis: International convoy brings tons of aid in the form of a convoy to Cuba
Cuba?received on Tuesday a shipment?of humanitarian aid from Nuestra America Convoy, a global effort organized by activists who are seeking to circumvent the?U.S. Cuba is under sanctions that severely restrict shipments of fuel, food and other goods to the island. A small ship, which left last week for the port of Progreso, Mexico, arrived early Tuesday morning in Havana Harbor, carrying 14 tons of food and medicine, as well as solar panels and bikes, to Cuban authorities. The ship was part of a flotilla that left Progresso with two other ships arriving later. The ship topped up the 6 tons of goods that activists had flown into Cuba over the last week. Last week, Cuban President Miguel Diaz Canel?received the members of the convoy to the presidential palace. This included European politicians like?former British Labour leader Jeremy Corbyn. Nuestra America is a coalition of nearly 300 non-governmental organizations, political parties, unions and legislators from over 30 countries. "This is only the first step." After disembarking, Brazilian activist Thiago Avila, who had sailed from Mexico, promised that much more support would follow. The delivery on Tuesday, which was delayed by several days due to poor sailing conditions in the Caribbean, is largely symbolic in a nation that is facing an economic crisis. This has seriously impacted transportation, healthcare, and electricity generation. The Trump administration cut off fuel to the island nation and threatened to impose tariffs on oil-supplying countries. The Trump administration has cut off fuel supplies to the island nation, and threatened to impose tariffs on countries that deliver oil to Cuba. The crew of the boat, which arrived in Havana, Cuba on Tuesday, renamed it "Granma 2," in honor of the yacht that Fidel Castro, historic leader of Cuba's revolution, landed on in 1956, to start the revolutionary struggle to overthrow Fulgencio Battista. Reporting by Ayose Naranjo in Havana, Editing by Dave Sherwood & Lincoln Feast
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Trump will ease smog regulations on summer gasoline in order to lower prices, sources claim
Two sources with knowledge of the situation say that the Trump administration will announce on Wednesday a temporary lifting of federal smog-cutting restrictions on summer-blend gas to 'curb rising fuel prices due to the war in Iran. This move will make gasoline more affordable by preventing refiners from switching to expensive summer blends. Fuel retailers will also be able to sell gasoline containing 15% ethanol (also known as E15) throughout the summer driving seasons, when more stringent rules would normally limit its use. Analysts believe the change will reduce retail prices by several cents per gallon and help both consumers and refiners who are struggling to meet fuel shortages. According to AAA, the average price of a gallon in the United States has recently risen above $3.97. This is a dramatic increase from less than $3 earlier this season. In order to reduce air pollution, the U.S. switches to summer gasoline to reduce pollution. These blends are less volatile, which can reduce evaporation and smog during warmer weather. The Iran conflict has caused a disruption in global supply. U.S. crude oil?topped $100 per barrel for the first since the Russia-Ukraine crisis of 2022. The U.S. Environment?Protection?Agency, which oversees these regulations, has said that it has worked hard to promote American dominance in energy and "monitors the supply" with federal and industry partners. The White House is expected to make the move as part of a larger effort to limit the political and economic fallout that will result from the rising cost of energy during the summer driving season. (Reporting and editing by Lisa Shumkaer; Jarrett Renshaw)
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US oil prices drop on prospects of Middle East ceasefire alleviating supply disruption
U.S. crude oil futures dropped about 4% in early trading on 'Wednesday,' on the prospect that a possible ceasefire would ease?disruption of a global?oil supply. This was after reports that Washington sent Tehran a fifteen-point plan for ending the Middle East war. U.S. West Texas Intermediate crude (WTI),?futures, dropped as low as $87.80 per barrel at the?open and were down $3.49 or 3.8% at $88.86 per barrel by 2305 GMT. WTI gained 4.8% on the Tuesday before paring its gains in volatile trading after settlement. U.S. President Donald Trump said on Tuesday that the U.S. is making progress in its negotiations to end war with Iran. This includes winning an important concession by Tehran. A?source confirmed Washington sent Iran a settlement proposal of 15 points. Israel's Channel 12, which reported the plan first, stated that a ceasefire of one month would be announced by a mechanism developed by the U.S. Steve?Witkoff, Jared Kushner and other Middle East envoys are currently working on the plan. Tehran denies that direct talks have taken place. Mohammad Baqer Qalibaf, the powerful speaker of Iran's parliament, dismissed these reports on Monday as "fake". (Reporting and editing by Christopher Cushing; reporting by Yuka Obaashi)
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Brazil is the leader in beef production, which accounts for 40% of all agriculture-related forest destruction.
According to a new study, beef production accounts for 40% of the?all clearing of forest done to 'open up?spaces for food production. The study found that Brazil, which is the largest exporter in the world of beef and soya beans, topped the list of nations who have cleared the greatest amount of forest to expand agriculture. Researchers at Chalmers University of Technion in Sweden used satellite data and agricultural statistics combined with a model to study 184 agricultural products across 179 countries between 2001-2022. They produced what they call the most comprehensive global assessment of agriculture-linked?deforestation?todate. The data shows that palm oil accounts for 9% global deforestation. Soybeans are at 5%. Maize and rice each account for 4%. Cassava is at 3%. Cocoa and coffee each make up 2%. Brazil was responsible for nearly a third of the global deforestation (32%) during this period. Indonesia, China, the Democratic Republic of Congo, the U.S., and Ivory Coast were all in the top five. Between 2001 and 2022 121 million hectares (or 299 million acres), of forest was lost, leading to emissions of 41.2 gigatons CO2e. The study found that staple crops, such as maize, rice, and?cassava, together account for more than 11% of agriculture driven deforestation. This is more than export products, such as cocoa, coffee, and rubber, combined. Their impact is also spread around the world, rather than concentrated on specific regions. Martin Persson is one of the researchers who worked on the project. He said that the problem "extends" beyond the trade. This means that there are also actions needed in the producer countries where the domestic agricultural markets cause significant forest loss. The study found that although deforestation is a major source of greenhouse gases, it only accounts for 5% of global carbon dioxide emissions. Researchers plan to extend the model to the mining and energy sectors.
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Goldman raises Q2 aluminium forecast to $3.200 due to supply disruptions
Goldman Sachs has raised its LME aluminum average price forecast for the second quarter to $3,200 per tonne, up from $3,100. They cited a loss of supply due to 'Middle East disruptions' and the'shutdown of Mozal Smelter in Mozambique. LME Aluminium traded at $3.260.50 as of 2215 GMT. Goldman has removed approximately 850,000 tonnes of its supply forecast for 2026. This is due to the reduced production at Qatalum, in Qatar, which operates at 60% following a controlled shutdown. The bank also assumed a 30 percent drop in Iranian production due to damage to the energy infrastructure?and reduced Mozal’s 560,000-tonne capability after it was placed into?care and maintainance. Goldman has cut its outlook for 2026 by 600,000 tons due to higher energy prices weighing on the global GDP growth. It also reduced its forecast of aluminium demand growth from 0.9% to 0.1%. It now anticipates a 550,000-tonne excess in 2026. This is a smaller surplus than the 800,000.00-tonnes previously predicted. And it forecasts a sharp 900,000.00-tonnes deficit in Q2 due to inventories falling to 'historical lows. Goldman warned that the risks of price increases remain higher. They also said that disruptions in Strait of?Hormuz flow could lead to Middle East curtailments, and push up prices to $3,400 by 2026. The'speculative' positioning, the potential upside of 'Chinese supply, and the reduced demand for copper could limit gains. Reporting by Anmol Chaubey, Bengaluru. Editing by Mark Porter & Cynthia Osterman
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Oil prices rise as the war uncertainty increases, causing stocks to fall
Wall Street indexes dipped on Tuesday, and oil prices continued their recent gains. Worries persist over the?length of time that the U.S./Israeli war against Iran will continue. The U.S. was in contact with "the right people" to achieve an agreement that would end hostilities. Washington sent Iran a 15 point proposal aimed at ending war in the Middle East. Other media in the U.S., Israel and elsewhere reported this on Tuesday evening after the markets closed. Two people with knowledge of the matter said that the Pentagon was expected to send thousands more soldiers from the U.S. Army’s elite 82nd Airborne Division, to the Middle East. This would add to a large U.S. Military buildup. There's still confusion and lack clarity regarding Iran, how long military operations will last, and the implications for oil and the global trade. Oliver Pursche is the senior vice president at Wealthspire Advisors and he said that this was the main driver. He said: "Today, we're seeing more negative sentiment creep back into the markets." The Dow Jones Industrial Average dropped 84.41?points or 0.18% to 46,124.06; the S&P 500 declined 24.63??points or 0.37% to 6,556.37; and the Nasdaq Composite was down 184.86?points or 0.84% to 21,761.89. U.S. Treasury rates increased?after an auction of 2-year Treasury Notes that was weak,? and the dollar recovered lost ground. Monday, stocks rose after Trump announced that he had told the military to delay strikes against Iranian nuclear power plants due to "productive discussions" with Tehran. Iran has denied any talks with the United States. Brent futures closed higher at $104,49 per barrel. U.S. West Texas Intermediate rose 4.79% to $92.35. Oil prices are expected to remain high as the Strait of Hormuz is closed and only a fifth of the world’s oil and gas shipments pass through. The S&P 500's communication services and technology sectors were among the worst performing sectors on the day. The MSCI index of global stocks rose by 0.91 points or 0.09% to 985.82. The pan-European STOXX 600 Index rose by 0.43%. Data earlier showed that euro zone private sector growth almost stalled in this month, as inflation expectations rose and delivery times increased. This is adding to the mounting evidence that the bloc has already suffered a tangible drag from the U.S.-Israeli war on Iran. He said that the risk of inflation from the war in Iran was so great, it convinced him to support keeping interest rates at current levels rather than cutting them. The yield on the benchmark 10-year U.S. notes increased 2 basis points from?4.336% at close of business on Monday. The dollar index (which measures the greenback against a basket including the yen, the euro and the yen) rose by 0.06% at 99.24. Meanwhile, the euro fell by 0.09% to $1.1602. The dollar gained 0.18% against the Japanese yen to reach 158.72. Spot gold increased 1.34%, to $4464.66 per ounce.
China imports record quantity of lead after Shanghai squeeze: Andy Home
China's imports of improved lead rose in August with the nation set to be a net importer of the battery metal for the very first time considering that 2020.
The abrupt shift in trade patterns arises from a squeeze on the Shanghai Futures Exchange (ShFE) lead agreement in July.
A lack of deliverable metal in the mainland market led to a scramble for Western lead and simultaneously opened up an import arbitrage window with the London Metal Exchange (LME).
China's resurgent import appetite has actually halted a long-running integrate in LME inventory.
A redistribution of international lead stocks is clearly underway. The concern is whether this is a flash occasion or the start of a. more structural modification in east-west trade circulations.
SHANGHAI SHORTS
China imported simply 540 metric tons of lead in the very first. half of 2024 however volumes leapt to 14,000 lots in July and an. unmatched 53,000 lots in August.
It's possible that the record inflows in August consisted of. some Chinese metal that had actually been sitting in bonded warehouses. and re-directed to the domestic market. That in itself would be. a highly unusual phenomenon.
The trigger for the change in Chinese trade flows was a July. squeeze on the ShFE lead contract which was the climax of a. long-running fight in between Shanghai bulls and bears.
Tightness in the front part of the forward curve was. exacerbated by exceptionally low exchange stocks as on-warrant ShFE. stock fell listed below 10,000 loads in August. Additionally, short-sellers seeking to provide physical metal. against their positions struggled to discover the ideal lead after. the ShFE tightened its bismuth impurity limit in April. Numerous shipments were declined by exchange authorities, requiring. shorts to look overseas.
Fortunately for them, there is no lack of lead outside. of China.
LME stocks of registered and off-warrant lead rose every. month in between February 2023 and July 2024, when they peaked at a. integrated 350,000 heaps.
The uptrend reversed in August, when integrated stock fell. by 57,000 loads as metal was diverted to China.
SQUEEZE OVER?
The time-spread tightness on the ShFE lead market has. dissipated, the significant front-month premium changing to a. discount in the middle of September.
That has actually made imports less appealing, which must cause. a tail-off in inbound volumes after pre-booked shipments appear. in the next couple of months' customs figures.
Nevertheless, there has been no continual reconstruct in Shanghai. exchange inventory. On-warrant stocks rose to 54,500 loads. mid-September however have considering that relapsed to 34,760 loads.
Overall ShFE deliverable stocks closed recently at 44,566. loads, still much lower than LME registered stocks of 194,300. loads.
The continued east-west stocks imbalance leaves the Shanghai. market susceptible to restored tightness, particularly if there is. a resumption of bull-bear hostilities.
BATTERY SCRAP SHORTAGE
Although China's shift from net exporter to net importer has. been activated by a squeeze on the futures market, it is rooted. in physical market characteristics.
The world's biggest manufacturer of refined lead has seen output. decline this year with both primary and secondary operators. experiencing tight accessibility of feed.
Imports of lead concentrates were down by 9.2% over the. first 8 months of 2024 and primary smelter output fell by. 4.5% over the January-September period, according to local data. service provider Shanghai Metal Market (SMM).
The secondary sector, which processes refined lead from. battery scrap, has fared even worse with output down by 34.4%. year-on-year in September, according to SMM.
The problem is an absence of battery scrap due both to a moderate. 2023-2024 winter, meaning less battery failure, and changes to. local government reward schemes, according to experts at. Macquarie.
Prices for battery scrap are higher than for main metal. in parts of the Chinese market, compressing margins for numerous. smelters, SMM reports.
China doesn't allow imports of scrap lead, suggesting the. supply tension has transferred to the primary metal segment of the. supply chain.
WORLDWIDE SURPLUS
Falling Chinese production is the main reason the. International Lead and Zinc Study hall anticipated international output. of refined result in fall by 0.2% this year at the organisation's. biennial meeting in September.
The group still anticipates an international supply surplus of 63,000. heaps this year following on a 106,000-ton surplus in 2023.
However, that's a limited number in a 13-million ton market. and a forecast that is highly depending on whether Chinese lead. production can recover over the balance of the year.
Additionally, the international picture is presently masking a strong. divergence between China and the rest of the world. The burst of. imports over July and August hasn't totally resolved that space.
The viewpoints revealed here are those of the author, a. columnist
(source: Reuters)