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Oil prices continue to fall as tankers continue to travel through Middle East conflict zones
Oil prices lost some of their gains as oil tankers 'continued their journey out of the Middle East despite the escalating tensions in the region, and the U.S. - Iran war spreading beyond the main fronts. Brent?futures dropped 79 cents or?0.9% to $87.30 per barrel at 0015 GMT. ?U.S. West Texas Intermediate crude (WTI), which is the most widely traded oil in the United States, fell 76 cents or 0.9% to $83.70 per barrel. Brent closed up 7.91% and WTI was up 6.56% during the previous session, in one of most dramatic spikes in the Iran War. This reversed a 5% drop on Tuesday following a pause of hostilities between the U.S. and Iran war. Preliminary shipping data revealed that 39 commodity ships transited the Bab 'el-Mandeb Strait on Tuesday. This was the highest number of vessels since July 19. Only a handful of ships crossed the Strait of Hormuz. While overall volumes have been reduced, oil is still leaking out of the area through multiple channels. Additional workarounds are also being explored. "The longer this situation continues, the more these alternate routes and methods will erode Iran’s leverage over the 'Strait of Hormuz", IG market analyst Tony Sycamore stated in a recent note. Strait of Hormuz is the most important oil shipping route in the world, and around a quarter of all global oil and natural gas flowed through it. The strait has been mostly blocked since the U.S. - Iran war began in February, despite diplomatic efforts to find a solution. A senior Iranian official stated on Wednesday that Iran had rejected an Omani proposal for regional joint management. U.S. and Saudi strikes?hit Iran backed paramilitary in Iraq on Tuesday, marking the first time Saudi publicly joined U.S. aerial strikes in response to drone attacks against Saudi oil targets launched from Iraq. It was the first time since the weekend that President Donald 'Trump called off an air campaign due to dwindling supplies of munitions. Iran said it also fired on U.S. base in Jordan, and hit three tankers that were transiting Strait of Hormuz via an unauthorised route. Saudi Arabia, according to sources on Wednesday, is seeking to form a coalition in order to protect Red Sea shipping against Houthi attacks. The Iran-backed 'group in Yemen' announced on July '20 that they would impose a maritime blockade on Saudi Arabia on the Red Sea. They also said they would expand attacks on oil tankers, opening a new front in Iran War, in a bid to disrupt shipping through the Bab el-Mandeb strait. This is the second-most important oil shipping route. (Reporting and editing by Lincoln Feast.
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US Dollar stocks fall after Fed keeps rates unchanged
The dollar fell on Wednesday, U.S. stock prices extended their losses, and interest-rate-sensitive two-year Treasury yields declined after the Federal Reserve kept interest rates unchanged. Meanwhile, oil?prices soared in response to renewed attacks across Middle East. The ?Fed's decision was largely expected, but three of the 12 members ?of ?the policy-setting Federal Open Market Committee dissented from the move that left the benchmark interest rate in the 3.50%-3.75% range in favor of a quarter-percentage-point hike. After major airstrikes resumed, oil prices rose by about 8%. This raises the possibility of further disruptions in already strained global energy supplies. This rally was boosted by data from the industry showing a decline in U.S. oil inventories. Bill Merz is the head of capital market research and portfolio development at U.S. Bank Wealth Management, Minneapolis. Oil prices rose, and expectations were raised that the U.S. The central bank may raise rates this week despite the fact that inflation in June was lower than expected. JP Powers said that this was expected after the June inflation print showed progress. "But with each meeting, we are creating more uncertainty than ever before." Fed funds futures traders now price in 60% odds that a rate increase will occur in September. The bigger question is how much pressure they will have to exert in order to raise rates in September. The market is expecting the next rate hike in September, as the inflation rate is high and crude oil prices are surging. The Dow Jones Industrial Average dropped 2.2% to 51,594.86, while the S&P 500 fell 1.5% to 7,316.39, and the Nasdaq Composite declined 1.7% to 24,442.94. The MSCI All Country World Price Index dropped by 1.1%, to its lowest level in June 2011. The yield on the benchmark U.S. 10 year notes increased 7.53 basis to 4.679%. This is due to concerns over future inflation. The dollar index (which measures the greenback versus a basket including the yen, the euro and others) fell by 0.45%, while the euro rose by 0.54% to $1.1447. Worries about tech giants The global markets have been volatile in the past month, as investors questioned the sustainability of AI spending. This is due to signs that U.S. major companies continue to invest billions of dollars into AI at the expense free cash flow. Meta missed earnings on Wednesday and lowered its annual capital budget forecast range as the social media giant focuses on building data centers to increase its AI computing power. The focus is now on returns, not spending plans. Investors are looking for evidence that AI capex generates revenues right now and also strengthens the future growth prospects," said Gina Martin Adams. Gina Martin Adams is chief market strategist at HB Wealth. As China's competition intensifies in both the race to develop advanced chip technology and its cheaper AI models, investors are becoming more scrutinizing. Amazon.com and Apple are expected to release earnings this week. Even though SK Hynix reported a six-fold increase in its quarterly profit, it fell short of expectations. Its shares dropped 9.6%. South Korea's KOSPI fell 6% in a single day after falling more than 10% and reaching a new three-month low. South Korea will impose additional restrictions on leveraged single-stock exchange-traded fund (ETFs) in response. This includes a cap on an individual's investments of up to 20%. The pan-European STOXX 600 fell by 0.3% while the FTSEurofirst 300 index in Europe fell by 0.4%.
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US stocks continue to fall after Fed maintains rates
?U.S. Stocks remained lower for the day. Interest-rate sensitive yields on 2-year Treasury notes reversed an earlier rise and the dollar fell?on Wednesday, after the Federal Reserve kept interest rates steady. This was a move which economists had expected. The ?decision to leave the benchmark interest rate in the 3.50%-3.75% range drew dissents from three of the 12 members of the policy-setting Federal Open Market Committee that "preferred" a quarter-percentage-point hike at this meeting. The recent rise in oil prices, due to the return of the war against Iran, had some expecting that the U.S. Central Bank would raise rates this week. The U.S. central bank is still raising rates despite the fact that June's inflation data was lower than expected. JP Powers is chief investment officer of TWA Wealth Partners. He said that this was expected after the June inflation print revealed some progress. "But with each meeting, we are now creating more uncertainty than ever before." The Dow Jones Industrial Average fell 1.55% to 51,928.87. The S&P 500 dropped 0.50% to 7391.31 while the Nasdaq Composite declined 0.37% to 24784.10. The yield on the interest rate-sensitive 2-year Treasury note was unchanged at 4.277%. The yield on the benchmark U.S. 10 year notes increased 3.67 basis points, to 4.641%. The dollar index (which measures the greenback in relation to a basket including the yen, the euro and other currencies) fell by?0.25%, falling from 101.17. The oil prices rose by around 7% as major airstrikes resumed across the Middle East. This quelled hopes of an imminent end to the?Iran war. The rally was exacerbated by data from the 'industry showing a decline in U.S. oil inventories. Bill Merz is the head of capital market research and portfolio development at U.S. Bank Wealth Management, Minneapolis. EARNINGS TO SET TONE Investors will also be waiting for a wave key earnings. Microsoft and Meta are due to report their results after the close of markets, followed by Amazon.com, and Apple later in this week. The global markets have been volatile this month, as investors question whether the AI spending boom will last. This is despite signs that U.S. major companies are continuing to invest billions in the technology and continue to drain cash from their free flow. "The focus is shifting away from budgets to return on investment." Investors are looking for evidence that AI capex generates revenues right now and also strengthens 'the future growth prospects,' said Gina Martin Adams, chief strategist at HB Wealth. As China's competition intensifies in both the race to develop advanced chip technology and its cheaper AI models, investors are paying more attention. The expectations have become so inflated that SK Hynix shares fell 9.61% despite a six-fold increase in its quarterly profit. South Korea's KOSPI - which has become emblematic for the wild swings of AI sentiment - fell almost 6% in a single day, after falling more than 10% and reaching a three month low. South Korea's finance ministry announced on Wednesday that it would introduce new restrictions on leveraged exchange-traded products, such as ETFs with single stocks. These will include a cap on individual investors who invest in these products. The pan-European STOXX 600 fell by 0.29% while Europe's FTSEurofirst 300 fell by 0.36%. The MSCI All Country World Price Index was down 0.45% in the last few days and had earlier dropped to its lowest level since 11 June.
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Official Israeli source: Trump and Netanyahu discussed all options, including an attack on Iran.
?U.S. In their meeting on Wednesday, President Donald Trump and Israeli Premier Benjamin Netanyahu discussed all possible ways to stop Iran's nuclear program, including diplomacy, pressure from the economy and force. The official told reporters in a press conference after the two men had met at the White House, on Tuesday that Netanyahu did not inform Trump of Israel's preference for an attack against Iran. The official stated that Trump's decision was final. The official stated that Trump had 'three options, all of which were discussed in detail: a deal, continuing the blockade, economic pressures and a massive strikes. Officials said there was evidence that?Iran’s clerical leaders have been rattled? by rising inflation, but that the impact on the global economy and the oil markets were also taken into consideration. The oil prices soared on Wednesday, one of the biggest spikes since the beginning of the war on February 28. This was due to a joint Israeli and U.S. aerial campaign against Iran. Tehran responded by launching strikes on Israel and Gulf States. Israel did not take part in the two-week U.S. airstrikes this month, which prompted Tehran to respond by firing on U.S. military bases. However, it has warned Tehran that it will strike back if attacked. The United States and Saudi Arabia attacked Iran-backed paramilitary groups on Wednesday. Trump promised to "beat the fucking sh*t" out of Iran after it fired at U.S. soldiers days after he stopped?air strikes. Iran has confirmed that it fired at U.S. bases in Jordan, as well as ships in the Strait of Hormuz. It also rejected an Omani proposal for a joint management of the Strait.
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SAIL and Krakatau Steel to invest $350 Million in a stainless steel plant
Two Indian sources said that India's state run Steel Authority of India and Indonesia's Krakatau Steel are planning to invest up to $350 million in a stainless-steel slab plant in Indonesia. Sources said that the?plant?will have a?capacity of?500,000 metric tonnes and will be operational in the next three to five years. SAIL and Krakatau Steel have signed a preliminary joint venture agreement in Indonesia to produce stainless steel plates. This was done during the visit of Indian Prime Minister Narendra Modi to Indonesia earlier this month. Sources said that SAIL will send a "technical" team to Indonesia in the next month to produce a feasibility study. After this, both companies will finalise details such as the equity structure, timeline for government approvals, and other details. Sources declined to be identified because the discussions aren't public. SAIL didn't respond to an email sent Monday seeking comment. Krakatau Steel?did not respond to an email request for comments made on Tuesday. Sources?said that the proposed plant's capability could be?expanded once it becomes operational. One source said that partnering with Krakatau Steel could help SAIL obtain nickel at a lower price, which is a crucial raw material for stainless steel production. Indonesia produces more than half of the world's nickel. The second source said that SAIL would consume all the output from the planned Indonesian facility, and then bring the stainless steel plates to its Salem plant to be rolled and finished. Salem is located in Tamil Nadu, a southern Indian state. Sources said that the state-run steelmaker would primarily sell the finished product to Indian clients, with a small portion?possibly being exported to Europe and the Middle East. According to commodities consultancy BigMint, SAIL was India’s third largest?steel manufacturer in the fiscal year ending March 2025. It held a 10.1% market share. India, which is the second largest producer of crude steel in the world after China, has identified Indonesia as well as more than a dozen?countries to cooperate with the steel industry. This will boost exports and ensure key raw materials. BigMint data shows that India's finished steel consumption has increased by 55% in the last five years. This is more than double the increase in production of 42%. Indian steelmakers are "pivoting" to the domestic market in order to offset weaker imports from Europe and Britain, but Chinese steel is sabotaging that strategy. (Reporting from New Delhi by Neha Arora; Additional reporting in Jakarta by Fransiska Nanangoy; Editing by Mayank Bhadwaj, Christian Schmollinger).
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Stocks fall as Mideast conflict reignites and Fed decision looms
U.S. stock prices fell, while oil and Treasury yields rose, as the fighting in the Iran war resumed just hours before the highly anticipated 'Federal Reserve interest rate decision due later on Wednesday. Although the Fed is expected to keep rates unchanged, traders have priced in roughly 34% of a rate hike. This is because rising oil prices are reigniting concerns over inflation which remains above the U.S. Central Bank's annual target of 2%. The markets have fully priced in a Fed rate hike for the September meeting. Chris Low, FHN Financial's chief economist, said that if oil prices continue to rise in September, then the Fed will determine that the shock has lasted for long enough to warrant a rate increase, or increases. The market also believes that some participants will make the case for rate hikes today...and there's a good chance they can convince a majority to support them. After major airstrikes resumed, oil prices rose more than 6%. This quelled hopes of an imminent end to Iran's war. This rally was exacerbated by data from the industry showing a decline in U.S. crude inventories. The Fed chairman Kevin Warsh prefers to give less "forward guidance" on the Fed's probable monetary path. The yield on the benchmark U.S. 10 year notes increased 2.45 basis points from late Tuesday to 4.629%. The Dow Jones Industrial Average dropped 1.37% to 52 024.98, the S&P 500 declined 0.62% at 7,382.73 while the Nasdaq Composite was down 0.83% at 24,670.23. EARNINGS TO SET TONE Investors will also be waiting for a wave key earnings. Microsoft and Meta are due to report their results after the close of markets, followed by Amazon.com, and Apple later in this week. Investors have questioned the sustainability of AI spending boom amid signs that U.S. major companies are continuing to invest billions in the technology and continue to drain free cash flow. The focus is now on returns from investment, not spending plans. Investors are looking for evidence that AI capex generates revenues right now and also strengthens future growth prospects, said Gina Martin 'Adams, Chief Market Strategist at HB Wealth. As China's competition intensifies in both the race to develop advanced chip models and Chinese firms rolling out cheaper AI models, there is a growing concern. Even a six-fold increase in SK Hynix’s quarterly profit failed to meet expectations, sending the shares tumbling by 9.61%. South Korea's KOSPI fell almost 6% in a single day, after falling more than 10% and reaching a three-month high. South Korea is responding by introducing additional 'curbs' on leveraged single-stock exchange-traded fund, or ETFs. This includes a cap that would limit an individual investor's investment to 20% of total assets. The pan-European STOXX 600 fell by 0.21% while Europe's FTSEurofirst 300 fell by 0.28%. The MSCI All Country World Price Index dropped by 0.57%, to its lowest level since June 26.
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Hungary's Paks Nuclear Plant will shut down one reactor due to a drop in the Danube water levels
Operator MVM announced that the Paks nuclear plant in Hungary will shut down one of the 'four reactors' at a time of?1300 GMT on Wednesday due to record low water levels along the Danube River, which provides cooling water for the facility. On Monday, the plant had already cut output by 254 Megawatts at another unit. The plant operates four Russian-built nuclear reactors with a combined 2 gigawatts of capacity. It produces almost?half of Hungary’s electricity. The shutdown on Wednesday will reduce production to?about 60 percent of its capacity. It follows?contingency steps taken in June, during a heatwave record. Authorities exempted this plant from temperature limits for discharged cooling waters. The water levels along the Danube are now at new record lows. This has disrupted cargo and river cruises on one of Europe's most busy?waterways. The Environment Minister Laszlo Gajdos stated earlier on Wednesday that the Hungarian water management authorities are ready to assist in ensuring cooling water supplies for the plant. He said that the authorities had placed four pumping pontoons, and two floating cranes near Paks in preparation for a possible deployment as water levels are expected to continue to drop over the next few days. Reporting by Gergely szakacs and Anita Komuves. Mark Potter edited the article.
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NextEra and Brookfield plan a $100 billion Kentucky datacenter campus
NextEra Energy and Brookfield are building a $100 billion campus of data centers at an 'ex-uranium enrichment site' in Paducah, Kentucky. The soaring demand for electricity in the United States is driving companies to invest heavily into artificial intelligence data centres and other technologies that strain an aging U.S. electric grid. NextEra is the largest U.S. power company and will provide 2.6 GW in battery storage and 2 gigawatts (GW) of natural gas to support the datacenter. Brookfield, on the other hand, will own and operate the 1.8 GW campus. One gigawatt can power approximately 750,000 homes. The campus will be built on the Department of Energy’s Paducah Site. This site was originally constructed in 1952 for the production of enriched uranium, but it was closed down later. NextEra said the project complies with the Trump Administration's "Ratepayer Protection Pledge" which seeks?to ensure that companies building and using data centres?pay over?and above normal rates to avoid costs being passed on to average households. Brookfield CEO Bruce Flatt said in a statement that "the Department of Energy Paducah Site will be the seed of a plan to invest 100 billion dollars?in AI Infrastructure". The project should be completed in 2032. Reporting by Vallari Shrivastava, Bengaluru. Editing by Tasim Zaid
Electric dreams become a problem for battery metals: Andy Home
It's been a ruthless year to be in the battery metals service.
Costs of lithium, nickel and cobalt collapsed in 2023 and have continued grinding steadily lower over the course of 2024.
A sector that was as soon as racing to build new supply has actually been closing mines and delaying jobs as low prices bite into the expense curve.
The roadway to an electrical future has ended up being much bumpier than anticipated with need from the critical electric vehicle (EV) sector not measuring up to expectations.
This is also a story of enormous oversupply with excessive new capability brought online at precisely the incorrect time.
And it will be supply discipline, or the lack of it, that will figure out whether there will be any rate recovery in 2025.
EV NARRATIVE VEERS OFF TRACK
The international EV market is still expanding.
November was another record-breaking month with 1.8 million systems sold, according to consultancy Rho Movement. Global sales growth over the very first 11 months was an impressive 25% relative to 2023.
But the favorable headings mask two undesirable realities for the battery metals sector.
China is still the main motorist of the EV transformation with Western markets struggling to develop momentum.
While Chinese sales set a new monthly record in November, those in the United States and Canada were up by just 10%. year-on-year in November and those in Europe were really. lower.
Western consumers still need an incentive to make the switch. from internal combustion engine to electric motor. German. new-energy lorry sales have actually plunged this year after aids. were abruptly gotten rid of at the end of 2023.
U.S. aids might go next year if Donald Trump makes good. on his risk to roll back the Biden administration's EV policy.
The second reality check is that lots of EV purchasers,. especially those in the vital Chinese market, are opting. for hybrids or plug-in-hybrids over battery electric vehicles.
These have batteries about a 3rd of the size of those used. in pure battery designs, meaning a similar-sized decrease in all. the metal cathode inputs.
CHEMISTRY EXPERIMENT
Some balanced out for lithium need originates from the increasing market. share of lithium-iron-phosphate (LFP) batteries, which accounted. for two-thirds of all EV sales in China in 2015, according to. the International Energy Agency.
LFP batteries are cheaper than nickel-rich chemistries and. Chinese battery-makers have enhanced their performance to the. point that CATL's latest Shenxing Plus design boasts a. single-charge driving series of over 1,000 kilometers.
They are, nevertheless, bad news for nickel, cobalt and manganese. markets.
The quantity of lithium released on the road in new EV sales. was practically 48,000 metric heaps in October, up 28% year-on-year,. according to consultancy Adamas Intelligence.
Nevertheless, the implementation of nickel, manganese and cobalt was. up by just 10%, 4% and 2% respectively, showing both the. shift to hybrids and the changing battery chemistry mix.
SUPPLY FLOOD
Lower-than-expected need from the EV sector, particularly. beyond China, has actually accompanied supply surges throughout the. battery metals spectrum.
BHP's Nickel West was expected to be the miner's. display green metals center. It was closed down in October due to. low rates caused by enormous overproduction in Indonesia.
Chinese nickel producers have actually made the technical leap of. processing Indonesia's reasonably low-grade ore into high-purity. Class I metal. Integrated Sino-Indonesian production will grow by. 30% this year, according to Macquarie Bank.
At least the Indonesian authorities have revealed signs of. supply discipline, limiting mining quotas and placing a. moratorium on approvals for new processing plants.
China's CMOC Group, the world's biggest cobalt. manufacturer, appears unconcerned to the cost implosion. It reported. output of 84,700 loads in January-September, up from 37,000 heaps. in the year-ago duration.
Such is the scale of oversupply in the cobalt market that. Chinese stockpile managers have actually had the ability to scoop up. significant tonnages with no obvious market effect.
Chinese lithium manufacturers are likewise withstanding production. cuts. Numerous are vertically incorporated, implying losses in the. ground can be balanced out versus gains even more down the processing. chain.
Even permitting the many price casualties amongst Western. operators, lithium supply is still expected to go beyond need for. the third year running in 2025, according to consultancy. Criteria Mineral Intelligence.
The supply overhang must shrink to less than 1% of need. from near to 10% last year, which might restrict more cost. weakness.
Supply surplus in the nickel and cobalt markets, by. contrast, dangers ending up being structural until production is more. carefully aligned with need.
TRADE TENSIONS
Given such negative supply-demand characteristics, it's not tough to. see why the analyst consensus is for more manufacturer rate discomfort in. the coming months.
China is a dominant gamer in all 3 markets and shows no. signs of quiting on its own electrical dreams.
This, however, is a point of increasing stress with the United. States.
The last report of the Crucial Minerals Policy Group, part. of a Select Committee on U.S.-Chinese relations, implicated Chinese. lithium producers of driving rates lower through a mix of. discarding and overproduction.
China, the report stated, uses rate controls, vertical. integration, and significant barriers to entry to prevent. competition.
Joe Biden and Donald Trump may disagree on electrical lorries. but there is exceptional bipartisan agreement on the requirement to. build domestic battery metal capability and loosen up China's grip on. the global supply chain.
Trump 2.0 is most likely to crank up the Biden administration's. mix of federal spending and tariffs on Chinese metals.
U.S. trade policy will include yet another moving part to an. currently intricate battery metals market dynamic.
Indeed, if the U.S. tariff walls are constructed high enough,. there's a danger the global market will begin fracturing into. Chinese and U.S. prices spheres.
The opinions expressed here are those of the author, a. writer .
(source: Reuters)