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Phillips 66 suffers $900 million in losses as Iran crisis raises oil prices
U.S. refiner Philips 66 reported on Monday that its first-quarter earnings were impacted by a sharp rise in commodity prices. This left?it? with nearly $900,000,000 in mark-to market losses before taxes, according to an SEC filing. The U.S. and Israeli war against Iran started in late February. Iran's closure of the Strait of Hormuz - a chokepoint for a fifth of world oil and gas supplies - has caused global energy markets to be roiled and crude prices have soared. Phillips 66’s losses are mainly due to its net short positions in derivatives contracts relating to crude oil and refined petroleum products. The Houston-based refiner reported that its net short position on derivatives contracts related to crude oil and petroleum products was around 50 million barrels at the end of March. The filing revealed that the losses were spread across all business segments. Refining is expected have a $350-$450 million impact, marketing and specialties will take a $300-$400 million hit while renewable fuels could suffer losses of $100 to $200 million. Brent futures reached a monthly record increase of?64% according to LSEG. The benchmark U.S. West Texas Intermediate rose by around 52% during the month. This was its biggest jump since May 2020. Phillips 66 stated that it 'has not yet completed its financial closure procedures for the first three months and actual results may differ from these preliminary estimates. The company declined to comment on anything beyond the SEC filing. Phillips 66 will report its first quarter earnings at the end of this month.
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Vizsla silver confirms death of nine workers at Mexican mine
Vizsla Silver, a Canadian mining company, confirmed on Monday that nine of its ten workers had died after being abducted by a group of armed men in Concordia in the Mexican state Sinaloa in late January. The?Mexican Attorney General's Office announced in February that ten bodies had been found by the municipality. Five of the 10 were identified at the time. Three workers were still missing, but two more workers of the Vancouver-based miner were later confirmed dead. The workers were taken from a mine of silver in an area that the authorities claim was controlled by "Los Chapitos," which is a faction within the Sinaloa cartel led by the sons Joaquin El 'Chapo' Guzman, a former drug lord. Vizsla said that it is continuing to 'cooperate fully' with Mexican authorities in their ongoing investigation. (Reporting by Dharna Bafna in Bengaluru; Editing by Shreya Biswas)
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Oil prices rise as investors pay attention to the US-Iran standoff
U.S. equity indices closed modestly higher on Monday and U.S. crude oil futures settled above $112 per barrel as investors awaited clarity about the prospects for a solution to the conflict in the Middle East. President Donald Trump reiterated his threats to strike Iran until Tehran made a deal by Tuesday night. Iran stated on Monday that it wants to end the war with Israel and the U.S. for good and refused to allow the Strait of Hormuz to be reopened. Trump said that if Iran did not meet the deadline he set for Tuesday night, it could be "taken away". Trump told a press briefing that the U.S. has a willing and active participant on the Iranian side of the negotiations. He also threatened to strike Iranian power plants, as well as other important infrastructure. U.S. defense secretary Pete Hegseth warned that the most strikes since the start of the war would take place on Monday. Iran's joint military commanders described Trump's threat as "delusional." The post was in response to the U.S. President's Easter Sunday tweet, in which he threatened to "target Iranian infrastructure" if it did not reopen the Strait of Hormuz, where a fifth the world's energy travel passes. CRUDE RISES IN CHOPPY SESSION Futures ended higher after losing ground in an erratic session, as the U.S. weighed its next steps and Iran considered theirs. U.S. crude ended up by 0.78% or 87 cents at $112.41 per barrel. Brent finished at $109.77, an increase of 0.68% or 74 cents. Wall Street saw the S&P 500 and Nasdaq register their fourth consecutive advance for the first since late January. However, gains were small and volume of trading was low after the long weekend. The Dow Jones Industrial Average rose 165.21, or 0.36 percent, to 46.669.88. The S&P 500?rose 29.14, or 0.44 percent, to 6,611.83, and the Nasdaq Composite?rose 117.16, or 0.56 percent, to 21.996.34. The stock market was in neutral most of the day. The focus of the day is geopolitics. Traders are watching to see if Trump will follow through with his threat to bomb Iranian energy infrastructure again on Tuesday night," Tim Ghriskey said, senior portfolio analyst at Ingalls & Snyder, New York. MSCI's global stock index rose by 3.47 points or 0.35% to 997.67, despite some financial markets being closed on Easter Monday and Tomb-Sweeping Day. TREASURY WEELDS STAY STEADY In currency, the dollar index fell by 0.21%, to 99.99. The index measures the greenback in relation to a basket of currencies that includes the yen, euro and yen. Liquidity was low on Monday because many Asian and European markets were closed. The dollar gained 0.08% against the Japanese yen to 159.69. Satsuki Katayama, the Japanese Finance Minister, warned currency traders on Friday that the government is ready to take action against speculative movements in foreign exchange markets, as volatility has increased "significantly." The yields on U.S. Treasuries remained essentially unchanged, with investors caught in a tangle of optimism over reports about a ceasefire and anxiety over Trump's threats to escalate attacks on Iran. Markets are beginning to realize that headlines can be misleading. Will Compernolle of FHN Financial, Chicago, said that part of the reason is that both President Trump and Iran have changed their opinion about the likelihood that ceasefire negotiations will take place. The yield on the benchmark U.S. 10 year notes dropped 0.5 basis point to 4.341%, from 4.346%. Meanwhile, the 30-year bond rate fell 1.1 basis to 4.8948%. The yield on the 2-year bond, which is usually in line with expectations of interest rates for the Federal Reserve, was unchanged at 3.852%. Data?from the Institute for Supply Management earlier in the day showed that U.S. service sector growth slowed?in March. Prices paid by businesses for inputs rose to near a three-and-a half year high. This was an early indication that the war against Iran is causing inflation pressures. Gold prices fell as investors awaited more information on the U.S./Iran situation before the deadline of Tuesday. Spot gold dropped 0.42%, to $4656.21 per ounce. Spot silver increased 0.01%, to $73.00 per ounce. (Reporting and editing by Lincoln Feast; Shri Navaratnam; Keith Weir; Rod Nickel, and)
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First Quantum authorized by Panama to remove ore of closed copper mine
The country's Trade Minister Julio Molto stated on Monday that the government of Panama aims to complete a resolution by Tuesday authorizing removal of material from the?shuttered copper mine owned by First 'Quantum Minerals,' known as Cobre Panama. Molto stated at an event that "we are ready to make the move." Molto said at an event that between today and tomorrow, the Ministry of Commerce and Industries should be generating a resolution that will allow the company to "start removing" this material in order to be able take it out of?country. First Quantum previously stated that the mine holds approximately?38 millions metric tons stockpiled ore which would produce about 70,000 tonnes of copper. The Canadian miner said that processing could begin about three months after government approval of the removal. It would take approximately a year for the process to be completed. In January, President Jose Raul Mulino said that the government would allow the removal of?ore? at Cobre Panama. First Quantum didn't immediately respond to a question?about Molto’s remarks. After a series of protests by local residents, the Cobre -Panama copper mine was closed in 2023. The protests were over tax contributions and environmental impact. Reporting by Elida Moreno; Additional reporting and editing by Daina Beth Soolo, Divyarajagopal and Brendan O'Boyle
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IMF chief: Middle East war leads to higher prices and slower growth
The head of the International Monetary Fund said on Monday that the war in the Middle East would 'lead to increased inflation and slower growth globally,' ahead of the upcoming?new forecast by the global lender next week. The conflict has caused 'the worst disruption to global energy supply ever', as millions of barrels of production have been shut down due to Iran's effective blocking of the Strait of Hormuz. This is crucial for shipping 1/5th of all oil and gas in the world. Kristalina Georgeieva, IMF managing director, stated that even if the conflict was quickly resolved, the IMF would reduce its economic growth forecasts and increase its inflation outlook. IMF will release a variety of scenarios for its World Economic Outlook, due on April 14. In a blog post on March 30, the IMF hinted at a possible downgrade, citing asymmetric shocks from the war and tighter economic conditions. IMF had expected that without the war its global growth projections would be slightly higher at 3.3% for 2026 and 3.2% for 2027. Georgieva said that "instead, all roads lead now to higher prices and a slower growth." She said that the?war had reduced global oil supplies by 13%. This has impacted oil and gas shipments, as well as supply chains for helium, fertilizer, and helium. She said that even a relatively rapid end to hostilities, and a recovery fairly quick would result in "relatively little" revisions of the growth and inflation forecasts. The inflation and growth effects will be greater if the war is prolonged. IMF Spring Meetings Await Next week, the IMF and World Bank's spring meeting in Washington will be dominated by the war. Finance officials from all over the world are expected to attend. Georgieva also noted that many countries have little fiscal room to support their population as a result of the rising prices caused by war. Georgieva did not mention the countries that had requested funding assistance. She said that the IMF can augment existing lending programs in order to meet country needs. 85 percent of IMF members are energy importers. Even energy exporters, like Qatar, are feeling the effects of Iranian attacks on their production facilities. Georgieva stated that Qatar estimates it will take between three and five years to restore 17% of its natural gas production due to the damage. The International Energy Agency reported 72 energy facilities were damaged during the war, of which one third had suffered significant damage. She said that even if the war ended today, the negative effects would continue to affect the rest of world. After the U.S. & Israel attack on?February 28th, Iran closed the Strait of Hormuz effectively. This sent the price of crude and liquefied gas sharply up. The international Brent crude benchmark was near $110 in the morning on Monday. Cash benchmarks from the Middle East were priced at a significant premium. Last week, the heads of IMF and IEA as well as the World Bank announced that they would work together to assess the 'energy and economic impacts of the war. Georgieva stated that the IMF is also "engaging" with the United Nations World Food Programme and Food and Agriculture Organization regarding food security. In mid-March, the World Food Program warned that millions of people would face acute hunger should the war continue into June. Georgieva stated that the IMF does not yet see a food shortage, but it could occur if fertilizer deliveries are disrupted.
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Trump threatens to jail reporter who revealed Iran Airman Rescue
Donald Trump, the U.S. president, said that he would require that the journalist that first reported an 'airman was rescued in Iran to reveal how he derived that information. He threatened jailing if a journalist refused. Trump's remarks during a White House Press Conference marked a significant increase in the administration's attacks against the press. In recent weeks, the president privately complained to his aides that media coverage on the U.S. and Israeli war against Iran was too negative. Trump and some of his allies also publicly criticized certain?news outlets' coverage. After a U.S. jet fighter was shot down on Friday over Iran, several media outlets reported that the U.S. rescue force had successfully recovered one of two airmen aboard. Trump claimed that the 'disclosure' had compromised the ongoing rescue operation for the'second airman. "We didn't discuss the first one for over an hour." We will try to find out who leaked it. Trump said, "We're working very hard to track down that leaker." We'll go to the media outlet that published it and say: "National security, give it up, or go to prison." Trump did not specify which reporter or media outlet he was referring. The New York Times and CBS News were among the media outlets that reported on the rescue of first airman in a relatively short time. When asked which reporter Trump had threatened, the White House didn't immediately reply. Brendan Carr, Chairman of the Federal Communications Commission (FCC), posted?on X?last month that broadcasters airing "fake" news now have a "chance to correct course before their 'license renewals are due." His remarks were accompanied by a screenshot from a 'Truth Social' post made earlier that day, in which Trump claimed "Lowlife 'Papers' and Media want us to win the War."
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Oil prices rise as investors pay attention to the US-Iran standoff
On 'Monday, investors assessed prospects for a Middle East solution. Iran called for an end to war and President Donald Trump repeated a threat of broad attacks against Tehran if it does not reach a deal by Tuesday night. Iran stated on Monday that it wants a lasting end to the war between the U.S., Israel and Iran. It also resisted pressure from the Americans to quickly reopen Strait of Hormuz as they weighed out a framework to end their five-week conflict. Trump stated at a news conference that the U.S. was a willing and active participant in negotiations with Iran. He repeated his threats to destroy Iranian power plants and key infrastructure. U.S. defense secretary Pete Hegseth warned that the most strikes would be carried out on Monday, with more expected on Tuesday. The post was made after the U.S. President's Easter Sunday social media post that threatened to target Iranian energy infrastructure unless the strait is reopened. A fifth of the world's energy travels through the strait. CRUDE RISE IN A 'CHOPPY' SESSION Oil had lost some ground in an earlier choppy session, as the U.S. weighed out a proposal to end their conflict. However, futures ended up higher. U.S. Crude settled at $112.41 per barrel up 0.78 percent or 87 cents while Brent settled at $109.77 per barrel up 0.68% or 74 cents. The stock market was in neutral most of the day. The focus of the day is geopolitics. Traders are watching to see if Trump follows through with his threat to bomb Iranian energy infrastructure again on Tuesday night. Tim Ghriskey said, "Traders are waiting to find out if Trump will follow through on this threat." Wall Street closed at 2:42 pm. The Dow Jones Industrial Average rose 89.56?points, or 0.19% to 46,594.11, while the S&P 500 gained 20.22?points, or 0.31% to 6,602.91; the Nasdaq Composite added 97.17?points, or 0.45% to 21,976.62. MSCI's global stock index rose by 2.65 points or 0.27% to 996.85, despite some financial markets being closed on Easter Monday and Tomb-Sweeping Day. The dollar fell against a basket currency, including the yen, and the euro rose 0.25% to $1.1544. The dollar gained 0.06% against the Japanese yen to 159.66. After Japanese Finance Minister Satsuki Katayama warned currency traders that the government is ready to take action against speculative movements in the foreign exchange market, volatility has increased "significantly," the yen flirted near the 160-dollar level. Investors were caught between optimism about reports of a ceasefire and concern over Trump's threats to escalate attacks on Iran. Markets are beginning to realize that headlines can be misleading. Will Compernolle of FHN Financial, Chicago, said that part of the reason is because President Trump and Iran have changed their opinion about how likely it is for ceasefire negotiations to happen. The yield on the benchmark U.S. 10 year notes dropped 1.5 basis points from 4.346% to 4.331% late on Friday, while 30-year bond yields fell 2 basis points from 4.906% to 4.8856% late on Saturday. The yield on the 2-year note, which is usually in line with interest rate expectations from the Federal Reserve fell by 0.8 basis points, to 3.844% late Friday. U.S. shares briefly lost some of their gains after Institute for Supply Management figures showed that U.S. service sector growth had slowed down in?March. Meanwhile, prices paid by companies for inputs rose to a?near 3-1/2-year peak, a sign that the war with Iran was causing inflationary pressures. Gold futures rose, while silver futures fell as investors awaited more information on the U.S. - Iran war and its effect on global interest rate rates. Spot gold dropped 0.53% to $4.651.37 per ounce. U.S. Gold futures rose by 0.63%, to $4,680.60 per ounce. Spot silver fell by 0.17%, to $72.87, and U.S. Silver futures dropped 1.22%, to $71.85 per ounce. (Reporting and editing by Lincoln Feast; Shri Navaratnam; Keith Weir; Rod Nickel);
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Venezuela's government and opposition may work together to protect US assets
Venezuela's government, its political opposition and the United States are coordinating their legal defenses of Venezuela's oil-rich assets. Washington's recognition of interim president Delcy Rodriquez raised questions regarding who could represent Venezuela in U.S. court. The lawyers for Rodriguez's government, as well as the opposition, asked Manhattan's U.S. Magistrate Sarah Netburn to pause for 45-days a case where creditors seek to seize funds?linked to Petroleos de Venezuela until they decided who would represent Venezuelan interests. The letter "signaled" potential cooperation between the Rodriguez government and the opposition in safeguarding U.S. assets, such as the Houston-based oil refiner Citgo Petroleum, from creditors. These include holders of debt issued to PDVSA by Venezuela's government, companies whose Venezuelan asset were expropriated and victims of alleged terrorist acts. Venezuela's Information Ministry, which deals with media requests for the government, didn't immediately respond to an inquiry. The opposition's relationship with Venezuela's socialist regime has been acrimonious for a long time. Citgo and other U.S. assets have been under the control of the opposition since Washington first imposed sanctions against PDVSA to try to force President Nicolas Maduro, who is now in jail, to step down. Washington recognized Rodriguez in March as Venezuela's leader following the capture by U.S. troops of Maduro. Reports on April 1 cited four sources close to the preparations that she is now preparing to take over the boards for PDVSA's U.S. subsidiary Citgo. Netburn asked the parties in the case to clarify who was authorized to represent Venezuela before the court, after the U.S. recognized Rodriguez's government. Netburn granted the request on 'Monday to pause the case. Netburn is expected to receive an update from lawyers for both the government and the opposition by May 21, regarding the selection of a permanent lawyer to represent Venezuela's interest.
Shanghai frenzy fuels alumina's record-breaking rally: Andy Home
Alumina costs have actually skyrocketed to record highs this week, compressing margins at the world's. aluminium smelters which transform the intermediate product into. metal.
The London Metal Exchange (LME) cash rate, indexed. to Platts benchmark Australian alumina assessment, closed. Wednesday at $633.35 per metric heap, lifting the ratio to the. aluminium cost to almost 25%.
The alumina-aluminium ratio was just 15% at the start of. 2024, when alumina was priced at $350 per heap.
A series of supply interruptions have driven the alumina price. higher this year. The trigger for the current cost jump was news. of export problems in Guinea, the major import source of bauxite. for China's alumina refineries.
The physical alumina market is undoubtedly tight however the. explosive nature of the price action also indicates a speculative. craze on the Shanghai Futures Exchange (ShFE).
SHANGHAI BOOM
Nearly 25 million heaps were negotiated on the ShFE alumina. agreement on Wednesday, a record daily high and comparable to. nearly a fifth of worldwide annual production.
Open interest has likewise skyrocketed to life-of-contract highs as. financiers have actually purchased into a gradually increasing market.
The exchange changed both trading limitations and margins on. Thursday, imposing a percentage point premium on speculative. positions relative to industrial hedge positions.
This is standard operating procedure for China's exchanges. in the face of speculative surges such as that currently washing. into the Shanghai alumina market.
This sort of futures price volatility is a new phenomenon. for the alumina market.
Both the LME and its U.S. peer CME Group deal alumina. contracts but neither is liquid. The explosive growth in the. Shanghai contract, by contrast, has changed the dynamic in between. paper and physical markets because trading began in June last. year.
This is the second bout of turbulence on the Shanghai market. after a huge price spike in January, likewise due to concerns. about Guinean bauxite supply.
ALL EYES ON GUINEA
The cost sensitivity to occasions in Guinea highlights how. dependent China's alumina refineries have become on West African. bauxite.
China's bauxite mining sector has been struck by multiple waves. of environmental examinations, limiting domestic supply and. motivating more alumina refineries to look overseas for their. basic material.
Imports of Indonesian bauxite stopped early 2023 after the. Indonesian government prohibited exports in a drive to force its. miners downstream into refining and smelting.
Guinea has quickly emerged as China's primary bauxite provider. Imports doubled in between 2000 and 2023 to nearly 100 million loads. and were up by another 13% in the first 8 months of this. year.
The January alumina panic was down to an explosion at an oil. terminal in the Guinean port of Conakry. This time around it's. news that a regional subsidiary of Emirates Global Aluminium has. had its bauxite exports suspended by customs.
Although extremely overstated, the cost response in Shanghai. is sensible, given the absence of alternative bauxite supply and. tighter conditions in the alumina market itself.
SUPPLY HITS
Alumina supply has taken multiple hits this year.
U.S. manufacturer Alcoa revealed in January the. permanent closure of its Kwinana refinery in Australia. The. ramp-down was set up to be finished by the third quarter.
In May Rio Tinto stated force majeure on. shipments from its refineries in Queensland due to restricted. gas capacity levels.
Century Aluminum's operations in Jamaica were. briefly disrupted by Cyclone Beryl in September and South32. has flagged issues about its Australian operations. due to conditions on its operating licence required by. ecological regulators.
Meanwhile, Chinese demand for alumina has actually been growing. strongly as the country's smelters have gained from enhanced. power supply, particularly in the hydro-rich province of Yunnan.
National aluminium output increased by 4.4% year-on-year in the. initially eight months of 2024 with annualised run-rates increasing. by almost 1.5 million tons because December.
That said, China at a nationwide level doesn't appear to be. physically short of alumina considering that it continues to export. significant quantities to Russia.
Indeed, exports to Russia rose by 41% year-on-year to 1.0. million loads in January-April, turning China from net importer. to net exporter of the intermediate item.
FUTURE( S) DISRUPTION
However physical availability is not the same as exchange. accessibility.
ShFE alumina stocks have come by over half because. June to 103,416 loads. The result is time-spread tightness with. the premium for cash relative to forward agreements flaring larger. today.
Short-position holders' ability to provide physical product. will depend on just how much alumina is located at ShFE's four. delivery points in the provinces of Shandong, Henan, Gansu and. Xinjiang.
Much also hangs on how major the danger of interruption to. Guinean bauxite deliveries is. The January scare rapidly went away. and there's no sign the current incident is the precursor. of a national change of policy around exports.
What has actually changed, however, is the response time to such. events.
Before the arrival of the Shanghai futures contract, area. alumina was priced by physical freight deals, which can be. scarce in a market controlled by yearly supply. contracts.
Now a heading from Guinea can move the futures rate in. seconds, producing a detach in between paper and physical. markets.
This added volatility is going to make the formerly. relaxing alumina market a much more unstable place.
It's also going to make smelter costs a lot more. unforeseeable with a potential knock-on impact on the cost of. aluminium itself.
(source: Reuters)