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Britain and allies support shipping through Strait of Hormuz
'Britain and its allies are working on a variety of options to support commercial shipping in the Strait of Hormuz despite iranian threats. The spokesman for Prime Minister Keir 'Starmer said that Tuesday, as the U.S. - Israel war against Iran is roiling oil prices. Donald Trump, the U.S. president, has said that the war will end "soon." He also stated that the U.S. would escalate its attack if Iran attempted to block tanker traffic in the Strait of Hormuz. Downing Street read out a statement after speaking with the leaders of Germany, Italy and France late on Monday. They agreed that the "vital importance" of "freedom of Navigation" through the Strait was important and they "agreed in the future to work closely in response to 'Iranian Threats. When asked by reporters about the readout, the spokesperson said: "We are working with our allies to develop a variety of options that will support commercial shipping through the Strait. Iran's Revolutionary Guards announced on Tuesday that they will not allow any oil to leave the Middle East unless U.S. attacks and Israeli attacks stop. Starmer's spokesperson stated that Energy Secretary Ed Miliband spoke to oil majors BP & Shell in recent days and added that safety of their vessels is their main concern. He said that Finance Minister Rachel Reeves has liaised directly with Lloyd's of London to ensure operators have "appropriate insurance coverage" which includes cover for war and revolution. Charles Roxburgh, chairman of Lloyd's after meeting Reeves?Monday said that the insurance marketplace would work with Britain and the U.S. on "a comprehensive response to the current situation." In his meeting with Reeves, he reiterated Lloyd's confidence in our marine insurance market. "Our market has remained open during this time of increased risk and continues to support shipping and international trade," he stated. (Reporting and editing by Sarah Young, Sharon Singleton and Catarina demony)
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Sugar prices drop as Trump predicts a de-escalation of the Iran War
As U.S. president Donald Trump predicted that the Iran War could end soon, oil prices dropped around 7%. Dealers stated that the market's focus remained on how high energy prices might affect sugar production in Brazil, where mills can adjust their plants so they make more sugar or ethanol depending on the market?prices. Raw sugar futures were down 2% on the ICE exchange at 14.29 cents a lb. They had earlier fallen?nearly 3%. White sugar futures dropped 1.4% to $414.90 a metric tonne. Petrobras, the state-owned oil company in Brazil that supplies about 80% of gasoline to the country, has not yet increased the local prices. However, the longer the Iran conflict continues, the more likely it is they will. The Brazilian gasoline market has a major impact on the prices of biofuel ethanol. Cocoa futures rose in other commodities soft markets. Prices are expected to show a modest improvement by the end 2026, according to a poll. poll. London cocoa increased by 1.1%, to 2,383 lbs per ton, while New York cocoa grew 1.3%, to $3,335 per ton. Sources at the regulator and exporters said on Tuesday that the Ivory Coast Coffee and Cocoa Council had'sold' more than 400,000 tonnes of cocoa export contracts to local grinders within 10 days after exporters resumed purchasing for the'mid-crop. Arabica coffee dropped 1.1%, to $2.9370 a lb. Robusta coffee declined 1.5%, to $3.710 a ton.
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Germany's Merz sees no plan for bringing Iran war to swift end
German Chancellor Friedrich Merz highlighted growing concern in Europe about the U.S.-Israel war against Iran on Tuesday, saying that a "dangerous escalate" was taking place with "clearly no joint plan" to bring it to a halt. Merz's comments, which echoed those he made last week at the end of the week, followed Donald Trump's statement that the war would end "soon", but that the U.S. might escalate its attack if Iran tried to block tanker traffic through the Strait of Hormuz. Merz stated that Germany shares "many goals" with the U.S.-Israeli operation that killed Iran's Supreme leader Ali Khamanei. However, he added that "questions are arising each day, amid signs that a dangerous escalation is taking place." Merz and Czech Prime Minister Andrej Bábis held a press conference together in Berlin. "We do not want a war that never ends." "We have no interest in dissolving Iran's statehood, territorial integrity or economic viability," added he. He said that the world needed a "stable and viable Iran" as part of regional peace and security, in which Israel or other partners were not threatened. The remarks are a reflection of European concerns about 'the economic damage' that could be caused by a prolonged closure of Strait of Hormuz through which a 'fifth of world oil' passes. They also reflect fears of 'disorder' that might follow a breakdown of Iran's institutions. He said that a scenario like the one we've seen in Libya, Iraq, or other countries in the area would harm us all. This affects our energy supply, security and perhaps also the migration situation. Reporting by James Mackenzie, Friederike Heine, Editing by Miranda Murray and Alexandra Hudson
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Rio Tinto delivers first lithium produced at the Rincon project in Argentina
Rio Tinto announced the first commercial shipment of lithium carbonate from its Rincon project, located in Salta Province in Argentina. This marks the official start of exports. In a late-Monday statement, the company said that a?shipment of?200 tons in 10 containers had left the Port of Buenos Aires for Shanghai, China. It will be received at a warehouse and distributed in Asian markets. The Rincon project will add a production capacity of 53,000 tons per year of battery-grade lithium carbonate starting in 2028. Anglo-Australian Mining Company, a mining company based in the United States, said that Argentina is a key part of its lithium strategy. The statement was released within the context of "Argentina Week", an event in New York that President Javier Milei organized to attract investors. * Lithium, a mineral that is in high demand and viewed as essential for energy transition. BACKGROUND Rio Tinto is a major player in Argentina, with its Fenix project located in Catamarca and the Olaroz project in Jujuy, where it exports lithium. * In February the company applied to the government's RIGI scheme which provides tax and legal advantages, with an investment in the amount of $2.7 billion for a?new plant? to be built in Rincon. The start of lithium projects and the rise in gold prices will boost Argentina's mining exports to $6.037 billion by 2025.
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McGeever: The 2007 subprime credit warnings are echoed in the alarms of private lenders.
Each financial market crisis differs, but they all rhyme. Parallels are emerging between the 'tremors' now rippling across private credit and the subprime housing in the U.S. that led to 2007-09 Global Financial Crisis. It's not to say that a replay of the historic crash is imminent. There is a growing danger that the increasing stress in the private credit market - i.e., the lack of liquidity, the opaque pricing and the soaring redemptions – could spill?over into the public markets. BlackRock, with its $14 trillion in assets under management, announced?on? Friday that it had limited withdrawals after an influx of redemption requests. Blackstone, an alternative asset manager, had announced a few days prior that it raised the redemption limit on its BCRED private-credit fund in order to meet record withdrawals. These alarms are a result of a similar incident at Blue Owl, a smaller alternative asset manager, last month. Also, the bankruptcy of U.S. auto parts supplier First Brands, and Tricolor, formerly based in California, prompted Jamie Dimon, CEO at JPMorgan Chase, to say: "When you find one cockroach there will be more." Investors who have a sense for history or were around during the 2000s may find this all a little familiar. BNP Paribas and Bear Stearns blocked withdrawals from U.S. Subprime Funds in 2007 or warned of their problems. This small risk grew into a global financial crisis. The GFC did not?fully explode' until September 2008, when U.S. officials allowed Lehman Brothers go bankrupt. The crisis was building steadily over the past 18 months. Investors were alerted by the tremors in those subprime funds. It is likely that the?reason for not allowing investors to access their money today will be similar to 2007's justifications: the value of the assets has probably dropped significantly and they would have to be sold to make up the required cash; the manager may be afraid to trigger a fire-sale in other assets to raise the needed cash; or the fund might be struggling to sell illiquid assets. It could be all three. It is difficult to know what private credit assets are worth today because the market is opaque and illiquid. Price discovery is often lost, and the bearish assumptions win. A similarity to subprime of 2007 is the belief that private credit, and more generally private markets, do not pose a risk systemic stability. We all know that this was wishful thinking at the time. SUBPREME RHYME, DO NOT REPEAT This time, is it different? If we look at sheer size, probably. According to Investec, the mortgage-backed securities, which were the cause of the GFC in 2007, were worth $7.2 trillion, or 5% of all global securities. Private credit is currently worth $2 trillion. This represents less than 1% all global securities. Unlike subprime credit in 2007, private lending is not as tightly regulated today, at least compared to traditional banks, so its true impact is difficult to determine. Even mom-and-pop investors have become more active. According to Investec, retail investors will hold 16.6% of private credit funds by the end of 2024. This is up from just 5.5% at the beginning of 2020. Fitch Ratings, a credit rating agency, said last week that private credit default rates will reach a new record of 9.2% by 2025. This is up from the previous high of 8.1% set in 2024. Unsettlingly, none of these defaults included software companies. These firms have become major private lenders. Fears of disruption from artificial intelligence have impacted the software sector this year, causing shares in Blackstone, KKR, and Apollo to drop by up to 45%. Private credit appears to have a skewed risk profile. The?U.S. The?U.S. economy is in a precarious position, with a shaky job market, the aftermath of the Middle East war, wild volatility on oil markets, and the threat of "stagflation" in modern times. The consensus is that the fundamentals of the economy are strong and private credit is not large or integrated enough to sabotage GDP growth or asset markets. Barclays strategists note that private credit problems are present, but not large enough to send the U.S. economy into recession. This is how subprime mortgages were viewed in 2007! When the liquidity wave 'goes out', you can see who has been swimming naked. Recent events on the private credit markets suggest that more funds could be exposed soon. 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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UK banks withdraw the most mortgage products they have ever done in three years due to market turmoil about Iran
Moneyfacts, a financial services provider, reported that British banks retracted more home loan products on Monday than any other day since the turmoil of the mini-budget in 2022. The 'Iran crisis' sent energy prices and UK borrowing rates soaring. On March 9, lenders pulled 308 residential mortgages from the market, compared to 935 on September 27, 2022 when a newly formed government led by Prime Minister Liz Truss had announced "huge tax reductions funded by borrowing". The recent turmoil on the British home loan market, which had seen prices edging downwards in recent weeks shows that the conflict in Iran has repercussions far beyond the Middle East. It is pushing up yields on British government bonds and swap markets, on which mortgage prices are based. Moneyfacts reported that Monday marked the largest single-day decline in the market, except for July 23, 2024 when a specialist lender streamlined their products. Adam French, Moneyfacts' head of consumer finance, said that the mortgage market turmoil is a result of "a sudden and sharp adjustment" by many lenders in response to rapidly increasing swap rates. He said that some of these products may return once 'lenders' adjust to higher expectations. However, the borrowers will be hit hard by this development. Rate?rises now depend on the reaction global markets and inflation have to the Iran Crisis. Nicholas Mendes is the mortgage technical manager for broker John Charcol. He said that "we're likely going to see another round of?lenders removing or repricing their deals in the coming days."
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UK sells green gilt amid turmoil in government bond markets
The UK sold 8.41 billion pounds (6.25 billion pounds) of green government bonds on Tuesday, against the backdrop of the turmoil in 'financial markets caused by the conflict in the Middle East. Bookrunners reported that more than 80 billion pounds of orders were placed for the March 2037 4.625% gilt. However, it was sold at a significant premium to bonds with a similar maturity. The Debt Management Office said the 4.625% March 2020 gilt was priced at 10.75 basis points more than the conventional 4.25% 2036?gilt. This is the tight end of the initial price guidance. On Tuesday, the price of Gilts rose on financial markets. They recovered some of their recent losses on concerns about inflation due to the U.S.-Israeli War on Iran. In 2021, Britain began selling green bonds to meet investor demand. The sale of green gilts on Tuesday was the largest since the launch. This was the first syndication sale of a green gilt in September '2022, after Liz Truss announced her economic agenda. Reporting by Andy Bruce Editing William Schomberg
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EU calls on US to enforce G7 price cap for Russian oil
The European Commission on Tuesday called on the United States to strictly enforce the G7 Price 'Cap on Russian Oil 'after Washington announced on Monday that it was lifting certain oil-related restrictions as a means of ensuring supply and lowering prices. On Monday, oil prices soared to $119 per barrel, their highest level in nearly?four years. This was due to fears that Gulf production would be cut and tanker exports disrupted. The G7 Finance Ministers announced on Monday that they were "ready to release oil" from their strategic reserves to help lower prices if needed. Valdis Dombrovskis, European Economic Commissioner, said at a press conference that it was important to enforce the G7 price difference and possibly move to a full maritime service ban to limit Russia's revenue from war. The opposite would be counterproductive. Dombrovskis stated that "it would'reinforce Russia’s ability to wage war and undermine Ukraine. It would also undermine our support for Ukraine and the goals that Israel and the U.S. are trying to achieve in Iran." (Reporting and editing by Jason Neely; Jan Strupczewski)
Congo State Gold Trader Targets Volumes of 15 Tons of Artisanal Bullion in 2026
The state-owned gold trading house of the Democratic Republic of Congo plans to increase the amount of metal it sells from the artisanal mining industry of the country this year. The central bank could be a major buyer.
Congo, which is the top gold producer in the world and has vast reserves of untapped gold, established DRC Gold Trading as a joint venture between the United Arab Emirates and Congo on December 20, 2022. It has only bought 10 tons of gold in the last three years.
In 2024, the government will take full responsibility for converting artisanal gold into official export routes. This is in line with other clean-up campaigns across Africa.
DRC Gold Trading has signed an agreement in February with the?central bank of Congo giving it priority access for all gold collected to be used in?building national reserves.
As a hedge against uncertainly, central banks around the world are stocking up more and more on gold.
Push to shore up domestic reserves
DRC Gold Trading CEO Joseph Kazibaziba said that the pricing of gold for the central bank will follow international benchmarks as well as national regulations. Delivery volumes will depend on central?bank requests under the February agreements.
Kazibaziba stated that more than 45 foreign buyers had requested gold from DRC Gold Trading. However, domestic reserve accumulation remained the priority.
He said that the company is expanding its operations in eight provinces to meet the soaring demand. The company bought a mere?25 kilograms artisanal gold per year until 2023.
He said: "The amount?to?be delivered will depend (on the central bank's demand)." "We are doing everything to meet our obligations," he said.
The central bank is yet to comment on its gold reserves targets.
The soaring bullion price?has driven a boom of informal?gold mines across Africa. Weak oversight allows for much of the production to be smuggled rather than enter official markets. Reporting by Congo Newsroom; Maxwell Akalaare Adombila, Writing by Robbie Corey Boulet and Jan Harvey.
(source: Reuters)