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Sources: China refiner expands despite sanctions
Two people familiar with the project said that a Chinese refinery operator, whose main business suffered when Washington sanctioned it in May over its purchase of Iranian oil, is pushing ahead with a $3.6billion petrochemicals extension project. Construction at the Xinhai Chemical Site in Cangzhou, north China, shows how independent refiners in the country, Iran's biggest oil customers, maintain their business despite being on the growing Western blacklists aimed to curtail oil revenues for governments such as Tehran and Moscow. State media reported that Hebei Xinhai Holdings Group, the parent company, announced a plan in early last year to convert the refiner into a producer of chemicals. The plan was worth 50 billion yuan. A person with first-hand knowledge of the project said that half of this investment will be used for the first phase, which is scheduled to be completed by the end of 2026. The source declined to identify themselves due to the sensitive nature of the subject. The U.S. Treasury designated Xinhai Chemical (the unit that operates a refinery with a capacity of 120,000 barrels per day) and several Chinese oil terminal operators in May for purchasing hundreds of millions of dollars' worth of Iranian crude oil as part of efforts by President Donald Trump’s administration to press Tehran to curtail its nuclear activities. The initial sanctions caused disruptions to Xinhai Chemical (the main business unit of Xinhai Holdings), including the suspension of state banks' services. According to a source familiar with the expansion, and another person who was also aware of it, the refinery found a way around the restrictions by using entities that were separate from the blacklisted company and continued to import Iranian oil. One of the employees said, "The company recovered from its initial, short disruptions." Xinhai Holdings & Xinhai Chemical have not responded to requests for comment. The U.S. Treasury declined comment. One source said that the expansion was being managed by Hebei Zhixiang Chemical New Materials which is independent of Xinhai Chemical. The company's registration details were not found. Worksheets for TEAPOT Reports have indicated that other independent Chinese refiners, or "teapots", which are subject to sanctions in this year, have also moved their activities to separate firms to maintain business. Tan Albayrak is a Reed Smith sanctions lawyer in London. He said that some teapots sanctioned by the government are renaming themselves and reorganizing their operations. Albayrak, in discussing sanctions generally, said that if the new entity was seen as an 'offshoot' of the sanctioned entity it may deter other parties from doing business with it, depending on their commercial risk appetite. The sanctions may have slowed down or even stopped the Xinhai project, but according to two experts in the industry the project might opt to rely on local know-how and equipment. One source said that the Xinhai facility under construction includes a 3,000,000 metric ton-per-year (MTPA) hydrocracker unit, a 1.2,000,000 tpy aromatics plant, and a 3.5,000,000 tpy TDP (toluene diproportionation) plant. The plant is scheduled to open during the first half 2027. It will produce mixed-xylene for paints and detergents as well as benzene, gasoline additive methyltert-butylether (MTBE), propylene oxide and polyisobutylene. Xinhai Chemical is one of the few plants in China with a quota for oil imports that exceeds 74,000 bpd.
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Copper record high before Fed rate decision
The copper price opened the week strongly, reaching a new record on Monday. This was boosted by the expectation of a rate cut from the U.S. Federal Reserve, and the prospect of squeezing supply. The Shanghai Futures Exchange's most active copper contract closed the daytime trade 1.54% higher at 92,970 Yuan ($13152.91) a metric ton. Shanghai copper reached a record high of 93,300 Yuan in this session. The benchmark three-month Copper on the London Metal Exchange gained 0.79%, to $11,712 per ton at 0700 GMT. It had previously reached a high of $11,771. The markets are pricing in an interest rate reduction of a quarter point by the U.S. on Wednesday. Only 19 out of 108 economists voted against any change. Copper prices rose in Asia as signs of a lower supply were evident. The weekly stock report of the SHFE showed that the amount of delivered copper in SHFE sheds had declined by 9.22% at the end of the last week. This was the second week of declines. Last week, cancellations were also observed in copper stocks available or on warrant in LME warehouses. Copper inventories at the U.S. Comex Exchange The number of short tons (which is equivalent to 396,306 tons metric) has continued to rise after reaching a record in late November. Analysts at Chinese broker GF stated that the strength of copper is due to a structural mismatch in supply and available stock as a persisting Comex-LME Premium has diverted metal towards the U.S. tightening the supply in the remainder of the world. The disruption of mines in China and the agreement by major smelters to reduce output by 10% have also fueled supply concerns. Citi analysts said in a Friday report that they expect the price of copper to rise into next year. They estimate it will average $13,000 per ton in the second quarter, up from their previous forecast of $12,000. On Monday, the prices of most base metals rose. Aluminium, zinc, lead, and tin all gained in value. Aluminium rose by 0.57% on the LME, while zinc, lead, tin, and tin-copper all gained 0.45%. Nickel, however, posted a loss of 0.17%. $1 = 7.0684 Chinese Yuan Renminbi (Reporting and editing by Dylan Duan, Lewis Jackson)
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Gold prices rise on Dollar weakness as traders look to Fed rate cuts
Gold edged higher on Monday as traders became more confident that the U.S. Federal Reserve would cut interest rates at its meeting this week. Spot gold increased 0.5% at $4,215.69 an ounce as of 0643 GMT. U.S. Gold Futures for December Delivery were unchanged at $4,244.80 an ounce. Gold priced in greenbacks is now cheaper for foreign buyers. Tim Waterer, KCM Trade's Chief Market Analyst, said that the Fed is on track to reduce rates this week. The expectation of looser monetary policy has driven gold prices higher. The anticipated rate cut is keeping the dollar under control, and simultaneously giving the gold a little room to move up. After three months of steady growth, U.S. consumer expenditures rose modestly in September. This suggests that the economy lost momentum at the end third quarter due to a lacklustre job market and rising costs of living. The data was released after the private payroll data showed the largest decline in over two and a half years. The Fed's dovish comments have further fueled expectations for monetary ease. CME's FedWatch shows that markets are pricing in an approximate 88% chance for a rate cut of 25 basis points at the Fed meeting this week. Gold is a non-yielding asset that tends to be favoured by lower interest rates. Silver rose 0.1% to $58.35 an ounce after reaching a record-high of $59.32 per ounce on Friday. The metal's value has more than doubled since the beginning of this year. Waterer stated that silver is still widely viewed as undervalued compared to gold. Its 2025 rally reflects a growing industrial appetite, as well the expectation that demand will continue outpace supply until 2026. Palladium and platinum both rose by 0.7%, to $1,467.25, respectively. (Reporting by Ishaan Arora in Bengaluru; Editing by Sumana Nandy, Subhranshu Sahu and Sherry Jacob-Phillips)
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Gold prices rise on Dollar weakness as traders look to Fed rate cuts
Gold edged higher on Monday as traders became more confident that the U.S. Federal Reserve would cut interest rates at its meeting this week. As of 0530 GMT, spot gold increased 0.3% to $4207.99 an ounce. U.S. Gold Futures for December Delivery fell 0.1% to $4237.0 per ounce. Gold priced in greenbacks is now cheaper for foreign buyers. Tim Waterer, KCM Trade's Chief Market Analyst, said that the Fed is on track to reduce rates this week. The expectation of looser monetary policy has driven gold prices higher. The anticipated rate cut is keeping the dollar under control, and simultaneously giving the gold a little room to move up. After three months of steady growth, U.S. consumer expenditures rose modestly in September. This suggests that the economy lost momentum at the end third quarter due to a lacklustre job market and increasing cost of living. The data was released after the private payroll data showed a sharp decline of more than 2 1/2 years in last month. The Fed's dovish comments have further fueled expectations for monetary ease. CME's FedWatch shows that markets are pricing in an approximate 88% chance for a rate cut of 25 basis points at the Fed meeting this week. Gold is a non-yielding asset that tends to be favoured by lower interest rates. After hitting a new record high of $59,32 per ounce on Friday, silver fell 0.4% to $58.05 an ounce. The metal's price has risen more than 100% in the past year. Waterer stated that silver is still widely viewed as undervalued compared to gold. Its 2025 rally reflects a growing industrial appetite, and the expectation that demand will continue outpace supply until 2026. Palladium increased 0.8%, to $1 468.26, while platinum rose 1.4%, to $1 664.20. (Reporting by Ishaan Arora in Bengaluru; Editing by Sumana Nandy, Subhranshu Sahu and Sherry Jacob-Phillips)
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MORNING BID EUROPE - Futures try to achieve a Fed accompli
Wayne Cole gives us a look at what the day will bring for European and global markets. The Fed's decision week has finally arrived and is shaping up to one of the most contentious meetings in recent history. Only 19 of 108 polled analysts favored a hold, with the remainder predicting an easing Wednesday. Futures prices are 88% in favor of a rate reduction, as if to force policymakers into a decision that they would not dare refuse. Official commentary suggests that at least two out of 12 voting Fed members would dissent from a rate cut. More opposition could come from Fed policymakers divided, even though one Trump-appointed Governor argues for a 50 basis point or greater reduction. Since 1990, the Federal Open Market Committee (FOMC) has only had three or more members express dissent at a single meeting nine times. Analysts point out that up to nine of the 19 members can use their "dot-plot" forecasts in order to indicate they are against a reduction for December. The markets will pay close attention to how Powell frames all of this during his press conference and whether he will focus on the risks to employment or inflation. Futures markets assume Powell will be hawkish and give only a 24 percent chance that he'll make a move by January. The future is more uncertain, given that President Trump will announce Powell's replacement at any moment and is likely to favor loyalty over expertise and experience. The Treasury market may not be able to deal with a political appointee in the most powerful position of central banks around the world. But it is unlikely to bode very well for those at the far end of the curve. All three central banks are expected to maintain their current stance. Swiss National Bank would like to ease further to counter the strength of their franc but it is already at zero percent and does not want to go below that. The markets have given up on the Reserve Bank of Australia easing again and are even pricing in a rate increase for late 2026. Wall Street futures are up just a little bit, while European futures are down the same amount. Asian shares are mostly up, with a 1% rise for China, which reported a 5.9% increase in exports in November, exceeding forecasts, and continues to defy U.S. Tariffs. The dollar is broadly weaker, and Treasuries have been hushed up for the Fed's countdown. The JOLTS report will be released tomorrow, and it could cause more noise than usual because the payrolls report won't be due until December 16th. The following are the key developments that may influence markets on Monday. - Euro zone Sentix Index, Germany's Industrial Output for October - Appearances of Bank of England policymakers Alan Taylor, and Clare Lombardelli. Piero Cipollone, ECB board member, also speaks - NY Fed 1 year Inflation expectations
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CNBC Indonesia reported that Indonesia will revise its retention rules for export revenues in the new year.
CNBC Indonesia reported Monday that Indonesia will require all natural resource exporters, starting January 1, to deposit and retain their foreign currency earnings at state-owned banks. The report was based on a government document. According to the new rules, which were introduced in January, exporters are required to keep for a minimum of one year all proceeds from the sale of natural resources such as coal, palm oil, and nickel, within the Indonesian bank system, including private-owned banks. Exporters who are reluctant to convert their proceeds into rupiah can use the money for business purposes if they exchange it. CNBC Indonesia reported that under the new rules, a maximum 50% of the proceeds may be converted to rupiahs for operational purposes, down from the 100% allowed in the old regulations. The news website reported that exporters can place their deposits in government bonds issued on the local market which are denominated in foreign currencies. The Indonesian finance and economic ministry, the President's Office and the Central Bank did not immediately respond when contacted for comment. (Reporting and editing by David Stanway; Stefanno Sulaiman, Gayatri Suroyo)
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UN reduces its aid appeal to 2026 despite rising need
The United Nations appealed on Monday for a budget for aid that was only half of what they had hoped to receive this year. They acknowledged a drop in funding from donors at a moment when the humanitarian crisis is more urgent than ever. The U.N.'s $23 billion appeal is a blatant attempt to shut out the tens and millions of people who are in dire need of assistance. Falling support has made it necessary for the U.N. to prioritize only the most desperate. These funding cuts are on top of the other challenges facing aid agencies, including security threats to staff in conflict zones as well as lack of access. Tom Fletcher, U.N. chief of aid, told reporters that "it's ultimately the cuts that force us to these tough, hard, brutal choices we're forced to make." He said, "We're overstretched and underfunded. We are also under attack." "And we drive our ambulance toward the fire." In your name. We are now also asked to extinguish the fire. There isn't enough water in the tank. And we're being shot at." The U.N. had requested $47 billion in aid for 2025, but this figure was reduced as President Donald Trump and other Western donors like Germany cut back on their funding. The figures for November showed that it has received just $12 billion, the lowest amount in ten years. This is only a little over a quarter. The $23 billion plan for next year identifies 87 millions people as priority cases, whose lives are at risk. It says that a quarter billion people need immediate assistance and will help 135 millions of them for $33 billion, if they have the funds. The occupied Palestinian territory is the recipient of the largest single appeal, $4 billion. Gaza is the main recipient of this money, as it has been devastated by two years of Israel-Hamas violence, leaving nearly all its 2.3m inhabitants homeless and dependent upon aid. Sudan is second, followed by Syria. Fletcher warned that humanitarian groups were facing a grim scenario, with a growing population, disease spreading and violence at record levels. He said: "(The appeal is) laser-focused on preventing deaths where shocks are most severe: wars and climate disasters; earthquakes, epidemics and crop failures." U.N. agencies that provide humanitarian aid are heavily reliant upon voluntary donations from Western donors. The United States is by far the largest donor in history. U.N. statistics showed that despite Trump’s cuts, it still held the top spot in 2025. However, its share of the total had dropped from more than a third to just 15.6%. (Reporting and editing by Aidan Lewis; Emma Farge)
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China's rare Earth exports jumped in November following Xi and Trump meeting
China's exports of rare earth minerals jumped in November. This was the first month that President Xi Jinping, and U.S. president Donald Trump had agreed to accelerate shipment. The General Administration of Customs of China reported that exports jumped by 26.5% in November from October, to reach 5,493.9 tons. The customs office will release a breakdown of countries on December 20, but it is not known if increased shipments into the U.S. and Europe fueled that jump. Since April, the introduction of export controls on 17 minerals that are used in autos and consumer electronics as well as defence has caused disruptions for months. The requirement to obtain a licence for every export led to shortages, which brought the auto supply chain crashing down. This gave China a huge advantage in the trade negotiations with the U.S. Last week, it was reported that China had issued its first 'general licences' - one-year permits aimed to speed up exports after the Xi and Trump meeting. These licences will likely start to impact trade data in 2019. Rare earth exports have totaled 58,193.1 tonnes, an increase of 11.6% annually.
Iron ore prices fall as China's demand falls
Iron ore futures fell on Monday due to a sagging Chinese demand and increased equipment maintenance. However, the lingering bets for stimulus limited losses.
As of 0219 GMT, the most-traded contract for January iron ore on China's Dalian Commodity Exchange fell by 0.7% to $782 yuan (US$110.63) per metric ton. It hit 778 yuan earlier in the session. This was the lowest price since November 17.
As of 2109 GMT, the benchmark January iron ore traded on the Singapore Exchange fell 0.57% to $100.8, after earlier touching $102.35, the lowest price since December 1.
Analysts said that several steelmakers have undertaken equipment maintenance due to the seasonal decline in steel demand around this time. This has resulted in a decrease in demand for steelmaking feedstock.
Data from Mysteel consultancy showed that the average daily hot metal production, which is a measure of iron ore consumption, fell 1% since last week, to 2,32 million tons. This was the lowest level since September 5.
Analysts said that the price of the main steelmaking ingredient was not affected by analysts' expectations that possible stimulus measures would be announced at top-level meetings in late this month.
First Futures analysts said that a wave in restocking by steel mills, prompted by lower prices could also limit the downside.
Coking coal, coke and other ingredients for steelmaking fell by 6.35% and 6.41 %, respectively.
Zhuo Guiqiu said that iron ore prices were also affected by the weakening of coal markets.
The Shanghai Futures Exchange has seen a decline in most steel benchmarks. Hot-rolled coils fell by 0.96% and rebar and wire rod by 1.39%. Stainless steel gained 0.28%. ($1 = 7.0687 Chinese Yuan) (Reporting and editing by Amy Lv, Lewis Jackson)
(source: Reuters)