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Copper gains corrected as dollar and oil prices rise due to hopes for a US-Iran Peace Deal
The dollar and oil prices fell on Monday, as a result of hopes for a possible peace agreement between the United States and Iran. This eased fears about inflation and an economic slowdown. By 0845 GMT, the most traded copper contract at the Shanghai Futures Exchange had gained 1.1%, to 105.650 yuan (15,548.76 dollars) per ton. We are hearing some good news about the conflict. Soni Kumari, an ANZ analyst, said that the positive market sentiment is a result of this. The Middle East conflict has caused supply disruptions, which have a negative impact on the demand for base metals. According to Kumari, the demand story remains positive. Oil prices fell below $100 per barrel as a result of expectations of a U.S. and Iran deal to reopen Strait of Hormuz. The 'nearly 3-month-long conflict in the Middle East has sparked inflation fears and shifted the global interest rate outlook. Hopes of a peace agreement have helped ease concerns about inflation and global slowdown. This has supported demand for copper which is widely regarded as a bellwether indicator of the health of the global economic system. Donald Trump, the U.S. president, said that he told his representatives to not rush into a deal with Iran because his administration was downplaying expectations of a breakthrough in the war. Trump claimed on Saturday that Washington and Iran "largely" negotiated a memorandum of understanding (MOU) to reopen Strait of Hormuz. The U.S. Dollar Index fell 0.2%. This made commodities priced in greenbacks cheaper for holders of other currencies. LME data revealed that the available copper stocks in London Metal Exchange storage warehouses had fallen to a 10-week low, 275,525 tons, as of Thursday. Other SHFE metals saw a 0.2% decline in aluminum, 0.4% increase in zinc, 0.2% rise for lead, 0.4% gain for nickel, and 1% growth in tin.
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Copper gains corrected as dollar and oil prices rise due to hopes for a US-Iran Peace Deal
The dollar and oil prices fell on Monday, as hopes of a possible peace deal between the United States and Iran grew. This eased fears about inflation and an economic slowdown. By 0552 GMT, the most traded copper contract at the Shanghai Futures Exchange had gained 0.9%, to 105.370 yuan (15,507.56) per ton. "We're getting positive news about the conflict." Soni Kumari, an ANZ analyst, said that this is good news for the industrial metals market. The Middle East conflict has caused supply disruptions, which is why metals demand remains strong, according to Kumari. Oil prices fell below $100 per barrel due to expectations of a U.S. Iran deal to reopen Strait of Hormuz. The Middle East conflict, which has lasted for nearly three months, has sparked inflation fears and changed the outlook on global interest rates. Hopes of a peaceful resolution have helped ease concerns about inflation and global slowdown. Copper is now a popular commodity, widely considered to be a good indicator of global economic health. Donald Trump, the U.S. president, said that he had told his representatives to not rush into any agreement with Iran. His administration has played down expectations for an imminent victory in the war. Trump stated on Saturday that Washington and Iran had "largely" negotiated a memorandum of agreement regarding a?peace deal which would reopen Strait of Hormuz. The U.S. Dollar Index fell 0.2%, making greenback-priced goods cheaper for other currency holders. Other SHFE metals include?aluminum, which fell 0.4%, while zinc rose 0.3%, and lead, 0.1%. Nickel gained 0.2%, and tin, 0.9%.
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Copper gains corrected as dollar and oil prices rise due to hopes for a US-Iran Peace Deal
Copper prices rose on Monday, as the dollar and oil fell in anticipation of a possible 'peace agreement' between Iran and the United States. This eased fears about inflation and an economic slowdown. The Shanghai Futures Exchange's most traded copper contract rose 1.1%, to 105 590 yuan (15,539.93 dollars) per ton. Oil prices fell below $100 per barrel as oil traders awaited the announcement of a U.S. Iran deal to reopen Strait of Hormuz. The Middle East conflict has caused energy prices to rise sharply, raising inflation fears and changing the outlook for global interest rates. Hopes of a peaceful resolution have eased fears of inflation and a global economic slowdown. This has led to a rise in demand for copper which is considered an indicator of global health. Donald Trump, the U.S. president, said that he told his representatives on Sunday not to rush into any agreement with Iran. His administration also played down expectations about an imminent breakthrough in the war. Trump stated on Saturday that he and the Iranian government had "largely" negotiated a Memorandum of Understanding (MOU) for a peace agreement to reopen the Strait of Hormuz. The U.S. Dollar?index fell 0.2%, making commodities priced in greenbacks cheaper for currency holders. Aluminium, among other?SHFE Metals, was down?0.5%. Zinc rose?0.3%. Lead increased 0.1%. Nickel gained 0.2%. Tin added 1.2%.
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Oil rises, stocks mixed as new US strikes dampen peace deal optimism
Investor optimism about a U.S. peace deal with Iran was tempered by the recent U.S. strikes across the Middle East. An official who was briefed about the visit revealed that Iran's top negotiator, as well as its foreign minister, were in Doha to discuss a possible deal with the U.S. for the end of the war. This came after Washington and Tehran had played down expectations for an immediate breakthrough. Separately, The Nikkei reported that the two parties were discussing plans to open up the Strait of Hormuz around 30 days after a ceasefire agreement was reached. Even as the talks continued,?U.S. Forces conducted strikes in southern Iran on Monday against targets such as boats that were attempting to place mines, and missile launch sites in what they called?defensive actions. Brent futures rose more than 1% to $97.32 per barrel in early Asian trading. U.S. West Texas Intermediate Crude was up slightly from Monday's closing price, but down 5.5% since Friday. Due to the U.S. Memorial Day Holiday, there was no settlement Monday. "I'm a little sceptical...?We're told that a deal is near. But what will it look like?" This is what matters most. When will the Strait of Hormuz reopen? Joseph Capurso is a strategist with Commonwealth Bank of Australia. The stock markets were mixed. MSCI's broadest Asia-Pacific index outside Japan gained 0.8% while Japan's Nikkei fell 0.2%. Nasdaq Futures pared earlier gains and traded 0.9% higher. S&P 500 Futures gained 0.68%. The EuroStoxx 50 futures declined by 0.36%. The FTSE futures gained 0.4%, and the DAX futures fell 0.43%. The market wants to think that the war will end soon because it is bad for the global economy. Capurso said that the world economy has had buffers by running down inventory, but it is not possible to keep doing this. DOLLAR STEADIES The dollar was stable on Tuesday, despite renewed demand for safe havens. It is still some distance from the six-week high reached last week. The dollar slipped to $1.3498, while the euro fell 0.06% to $1.1 636. The dollar's value against the yen was unchanged at 158.95. After a week of turmoil, bonds were mostly stable. Investors were concerned that rising energy prices would spark a rise in inflation. This could lead to rate increases across developed and emerging markets. The yield of the two-year U.S. Treasury Note was little changed last week at 4,0612%. Meanwhile, the yield for the 10-year Treasury Note fell to 4.5024%. Standard Chartered's Deputy Chief Strategist and Head of Global Research, Eric Robertsen said: "We will likely see periodic yield retracements when geopolitical risk?falls, but inflation and fiscal risk are likely?"to be more persistent." "Commodity dislocations are expected to take several months to resolve. Fiscal support measures will likely lead to a sustained deterioration of sovereign balance sheets, which will require more borrowing at a time when funding costs are higher." Other than that, spot gold fell 0.5% to $4,545.90 per ounce. (Reporting and editing by Rae Wee)
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Brent increases by nearly 2% after US strikes Iranian missile launchers and boats
Brent crude futures jumped nearly 2% on early Asian trading on Tuesday, after the U.S. military launched strikes in southern Iran. The U.S. described these as defensive actions. This kept markets on edge because a deal that would 'end the war' eluded both sides. Brent?futures rose $1.40 or 1.5% to $97.56 per barrel as of 0006 GMT after falling 7% in the previous session. The price of U.S. West Texas Intermediate Crude was $91.25, slightly higher than Monday's closing price, but lower by $5.30 or 5.5% compared to Friday's closing. Due to the U.S. Memorial Day Holiday, there was no settlement Monday. The U.S. Central Command has confirmed that it conducted strikes in southern Iran, including on boats trying to lay mines as well as missile launch sites. They added that they were intended "to protect our soldiers from threats posed by Iranian forces." Iranian media reported that on Monday, explosions had been heard in Bandar Abbas (Iran) and the nearby coastal areas along the Strait of Hormuz. Since the start of the Gulf War, Tehran has effectively stopped all non-Iranian ships from entering and leaving the Gulf. This has resulted in a stifling of about a fifth global oil and natural gas flows. Prices have risen by as much as 50%. Iran's chief negotiator and its foreign minister met with Qatar's Prime Minister in Doha to discuss a possible deal with the U.S. Washington and Tehran both said that they had made progress in negotiating a memorandum-of-understanding to end the war. The document would give negotiators a 60 day window to come up with a final agreement. Nikkei, citing an Middle East diplomatic source, reported earlier that Iran would remove mines within a 30 day window, under the agreement. After this, vessels from all nations could navigate safely and freely, with Tehran also ceasing to collect transit fees. Tim Waterer is the chief market analyst for KCM Trade. He said that traders are heavily betting on a breakthrough to finally free up the tankers that have been paralyzed in the Strait of Hormuz. Three liquefied natural gas tankers headed to Pakistan, China and India passed through the Strait in recent days. A supertanker transporting Iraqi crude oil to China, after being stuck for almost three months, also made it across. Donald Trump, the U.S. president, reiterated his call on Monday that Iran should hand over its enriched uranium for destruction to the U.S. Tony Sycamore is a market analyst for IG. He said, "It's a stark reminder that the deal can still fall apart at the last minute, just like five other attempts before." (Reporting and editing by Cynthia Osterman in Bengaluru & Shri Navaratnam.)
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The mining hub in Chile is shaken by a strong earthquake, but the damage is minimal
Authorities said that a'strong earthquake' struck Chile’s mining region?Antofagasta?on Monday afternoon, disrupting operations at?some mines, but ultimately saving lives and critical infrastructure. Major miners have reported minimal damage from the magnitude 6.9 quake that struck the heart of the largest copper producing country in the world. The U.S. Geological Survey measured the depth of the earthquake at 109 kilometers (68 miles). A spokesperson for Chilean copper miner Codelco said that some activities were halted due to a?lack of visibility or disruption of electricity in certain?areas. BHP and Antofagasta, both mining companies, said that their operations were not affected by earthquake. Ricardo Munizaga is the regional director of Chile's disaster agency SENAPRED. He told the local news channel 24 Horas there were no injuries or major emergencies reported despite the fact that the earthquake triggered landslides. Munizaga stated that residents in the city of 'Calama', which is home to many miner families, lost power, and saw some water cuts, but other key infrastructures were not affected. He added that mining companies had activated their emergency protocols and temporarily stopped some operations in order to inspect the facilities. The Antofagasta region is responsible for a large part of Chile's production. Reporting by Fabian Cambero, Rishabh Jaiswal, Brendan O'Boyle, and Cynthia Osterman in Mexico City.
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Australia's MinRes Jiangxi Ganfeng invests $351 million at Mt Marion Lithium project
Mineral Resources, Australia, announced on Tuesday that it had reached a 'final investment decision' with its joint venture partner Jiangxi Ganfeng Lithium to invest approximately A$490 million ($351.38 millions) into developing the Mt Marion lithium exploitation in Western Australia. The investment is a major step towards expanding the project. It will boost the supply of lithium in response to the growing global demand for electric vehicles and battery storage. MinRes stated that the 'investment, which will be spent between 2027-2028, includes A$240,000,000?for an underground pre-production facility, A$220,000,000 for underground development, and A$30,000,000?for infrastructure. Upgrades would extend mine life, and increase plant recovery by 70% by accessing deeper resources. The miner announced that it would be tendering for an underground mining contractor. Central underground development is expected to start in the first quarter 2027. Mt Marion will transition from a combined underground and open-pit operation by 2028. The flotation circuit construction is expected to start in the first quarter of 2027. It will be managed by MinRes Mining Services. The plant will be commissioned and ramped up in the second half of 2028. MinRes attempted to sell stakes at Mt Marion and Wodgina in 2025 but lost momentum when prospective buyers from India or Japan balked at a price of more than $2 billion. MinRes website stated that 'the company operates Mount?Marion via a joint venture of 50-50 with Jiangxi Ganfeng Lithium', one the world's biggest lithium producers.
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Britain bakes on the hottest May day ever recorded
The national weather service of Britain reported that the temperature in Britain reached a record high for May, averaging?nearly 35 degrees Celsius (95 degrees Fahrenheit). Met Office reported that the temperature in west London's?Kew?Gardens reached 34.8 C (94.64 F), surpassing Britain's 32.8 C (91.1 F) May record, set both in 1922 and 1944. Met Office stated that a study conducted 'last year showed that human greenhouse gas emissions were responsible for three times as many 'changes in climate. It said that "this heat would be extraordinary in the UK, even mid-summer. Let alone in May." Monday was the hottest day since 1884 when Met Office UK began keeping records. It exceeded the previous high of 33.3 C recorded in August 2019. Swimming pools were crowded with swimmers and fountains were crowded with pedestrians. Near Brockworth, in the south-west of England, cheese-rolling competitions took place in spite of the heat. (Reporting and editing by Alexander Smith, Isabel Infantes added additional reporting).
China's recent coal mine closures in context
Analysts expect that the worst mining disaster in China's history will have a negative impact on the coal supply during the summer, when demand is usually high.
Gas explosions at Liushenyu Mine in Northern?Shanxi Province killed 82 people late Friday night. Officials called for better safety oversight. President?Xi _Jinping has ordered an investigation.
How much coal mining has been halted due to safety checks?
According to an analysis by Mysteel analysts, as of Monday, 319,000 tons of coal per day were halted in 109 mines across Shanxi for safety inspections. This is typical after a fatal accident.
Mysteel stated that most mines would be closed for two to seven day.
Mysteel reported that a small amount of capacity in Shaanxi and Henan provinces, as well as other provinces, also suspended production. Mysteel said that 16.85 million tonnes of production capacity would be suspended for three to five days.
How do the closures compare to overall production?
Shanxi produces about a quarter the total output of China. The 319,000 tons of mine closures per day equals about 10% the 3.08 million tonnes in daily average output by 2026.
This includes coal used for electricity generation, coking coal and steelmaking.
What is the outlook for the coal market?
Some analysts warned about possible shortages of supplies and the impact on international prices. Others said it was still too early to determine what effect this would have.
In a recent note, Liu Xiaomin said that the thermal coal market may see high prices and shortages similar to those seen in 2022-23.
The high coal prices coincided with the summer heatwaves, which increased cooling demand. This led to coal shortages, and disruptions in electricity supply.
Galaxy Futures analysts stated in a report that safety inspections for coking coal could result in Shanxi's output being reduced by 10 to 15 percent?in May and June, and the national supply of coal by 7 to 10%.
The impact on production should ease by late summer. Analysts predict that the output of coking coal could drop?3%-5% between July and August compared to a year ago.
Simon Wu, senior advisor for'metallurgical coal markets' at Wood?Mackenzie said that, while inspections would weigh on production levels, it is unlikely that further shutdowns will occur unless inspections show that mines are exceeding their capacity.
Wu said that most mines in Shanxi were?state-owned and are unlikely to violate their production allocations.
Will global prices be affected?
Wu said that it is too early to tell if the increase in coking coal shipments from Mongolia to China will have an impact on international prices. However, Mongolia's neighbouring country could gain by increasing shipments. This would help ease pressure on China's internal prices.
Liu predicted an increase in China's imports of coal, which would boost international seaborne prices.
What could happen next?
Longer term, this disaster may lead to better safety oversight and higher coal prices.
S&P's Liu stated that "the industry will have to adjust to a new norm: increased costs due to safety improvements and a possible drop in productivity."
(source: Reuters)