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Aluminum rises after US-Iran ceasefire test
Aluminum prices rose on Wednesday as concerns about supply and risk increased after the new tests of the fragile U.S. Iran ceasefire. By 0300 GMT, benchmark three-month aluminum on the London Metal Exchange had increased by 0.61% to $3,156.5 per metric ton. The Shanghai Futures Exchange's most traded aluminium contract was up 0.72% to 23,085 Yuan ($3,396.60). The latest U.S. strike on Iranian targets following projectiles hitting ships in the Strait of Hormuz threatens to generate once again a?supply-risk that had been largely dissipated after last month's truce deal. Around 9% of the world's aluminium smelting is done in the Middle East. After peace talks between countries, participants were able to 'price out war risk premium', aluminium fell 16% in June. This was its biggest monthly drop since the global financial crisis of 2008. ING analysts stated in a report that the market will still be in a 'deficit' this year. Lower prices have also attracted some interest from buyers in China and helped to support the price. Copper prices also fell slightly ahead of Wednesday's publication of the minutes from the U.S. Federal Open Market Committee meeting in June, which will be closely monitored for clues about the Fed's future interest rate policy. Red metals, which benefit from economic growth, have been impacted by fears of interest rates rising for longer. Higher rates impede the economy. The LME copper price fell by 0.16%, while the SHFE price dropped by 0.09%. The world's largest consumer, China, is still a strong market. The Yangshan The copper premium, which measures the buying interest?there, reached a record high of $80 per ton on February 2, a period of 13 months. Other LME metals include zinc, which fell 0.14%. Lead gained 0.98%. Nickel lost 0.57%. Tin lost 0.96%. On the?SHFE, tin was 0.06% higher, while nickel fell 0.79%, and lead rose 1.51%.
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Gold prices drop as investors consider US strike on Iran and await Fed minutes
On Wednesday, gold prices fluctuated between gains and losses as concerns about inflation and higher interest rates rose. Fresh U.S. attacks on Iran also lifted the dollar and oil ahead of the Federal Reserve meeting minutes for June. Gold spot rose 0.5%, to $4,125.59 an ounce, by 0305 GMT. It had fallen to its lowest level since July 2, earlier in the day. ?U.S. Gold futures for August deliveries fell 0.5% to $4136.30. "Over the last 24 hours, inflation was a bit of a concern again. Bonds came in lower, the dollar rose a bit, gold fell, and now it seems like things are stabilizing after this correction," said Ilya Spirak, head of global macro for Tastylive. At this point, "we've been watching gold try to?carve a bottom." The U.S. Military launched a new round of strikes on Iran Tuesday, and revoked the licence that allowed the country to export oil following the projectile attacks against three tankers in the Strait of Hormuz. The dollar held on to its highest levels this week against its major peers, as the strikes against Iran placed pressure on an already fragile ceasefire. The CME FedWatch tool shows that the markets have raised their odds of a Federal Reserve rate hike in September to over 63%, from around 57% Tuesday. Investors are also waiting for the minutes of the Federal Open Market Committee meeting held on June 16-17, which is due later today. These will provide new information about the direction interest rates may take under Fed Chairman Kevin Warsh. Gold is often viewed as a hedge against inflation, but high interest rates can weigh down on the non-yielding investment. (Reporting by Pablo Sinha and Swati Verma in Bengaluru; Editing by Subhranshu Sahu and Harikrishnan Nair) (Reporting from Pablo Sinha and Swati verma in Bengaluru, Editing by Subhranshu Sahu & Harikrishnan Nair).
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Oil prices rise, bonds fall on Mideast hostilities
On Wednesday, oil prices rose and bonds were sold as U.S. sanctions against Iranian 'oil' threatened to disrupt the ceasefire. Stocks also took a pause as the AI rally that has been a record-breaker?starts to lose momentum. Brent crude futures rose 2% to $75.60 per barrel. This is still a far cry from the wartime peaks above $120, but it's enough to cause a stir in the bond markets by increasing inflation risks. Jason Wong is a senior strategist with BNZ Wellington. He said: "Obviously, the market does not like these attacks... But it's still not in full-blown panic mode." U.S. officials said that the U.S. strikes were the latest challenge to last month's peace agreement and targeted air defences and coastal surveillance, as well as drone launch sites. Iran's military leadership has promised a "crushing reaction". Washington?also moved on to withdraw a concession that allowed Iran to sell its oil on the world market. Iran's Foreign Ministry said this breached a framework agreement to?end war. The yields on ten-year U.S. Treasury bonds, which increase when prices decline, rose about three basis points, reaching a new one-month record of 4.565%. "We were reminded of the fact that this peace agreement is still in its early stages," said David Chao, Asia-Pacific Global Market Strategist at Invesco?in Singapore. "I don't think that the current Brent price is a fair reflection of what has been happening in the Middle East." The U.S. Strategic Petroleum Reserve has seen its crude oil stocks fall to their lowest levels since 1983. This leaves the markets more susceptible to future supply shocks. The dollar was strong on the currency markets, pushing the euro to $1.14, and the yen past 162; this raised the possibility of a Japanese retaliation. The New Zealand Dollar jumped about 0.5% to $0.57, after the Reserve Bank of New Zealand increased interest rates as traders expected. The Asian equity market tries to remain steady on Wednesday. Gains in Hong Kong helped MSCI's broadest index of 'Asian stocks outside Japan' stay flat, while South Korea chip-heavy markets fell 1.5%. The Nasdaq dropped through its 50-day average overnight as the market reacted negatively to the blockbuster Samsung Electronics results. This put the AI rally on notice. Samsung reported a 19-fold rise in profits, but its stock dropped 7% on the day. The jitters spread around the world markets and pulled the Philadelphia semiconductor benchmark lower by 4.6%. Samsung shares are volatile, and the last one was down 3%. Sara Perring is the Head of APAC Cash Equity Sales at J.P. Morgan. According to J.P. Morgan Research we should expect increased volatility and continued selling of foreign equities on the Korean stock market in the near-term. Our fundamentally positive view of the long term would lead us to look for opportunities in AI, AI-adjacent investments, financials and wealth-effect plays. Reporting by Tom Westbrook, Editing by Jamie Freed & Sonali Paul
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US announces that it has finished a new round on strikes against Iran
The?U.S. Central Command announced on Tuesday that it had completed a "new round of strikes" against Iran, and that it had "hit over 80 targets in its latest attacks." Washington has also revoked the license that allowed Iran to sell oil following the 'projectile attack' on three tankers in the Strait of Hormuz. The U.S. military released a statement saying that "U.S. Forces struck Iranian air defense systems, command-and-control networks, coastal radars, antiship missile capabilities, as well as?more 60 Islamic Revolutionary Guard Corps smaller boats near and in the Strait of Hormuz to 'degrade Iran’s ability to continue to attack international commerce flowing through this trade corridor. "CENTCOM forces are ready to hold Iran responsible if the agreement isn't followed or adhered to." Iran's top military command warned that the Iranian armed forces will deliver a "crushing" response, accusing Washington of a "blatant aggression," and warning that Tehran wouldn't allow U.S. intervention in the management of Strait of Hormuz. The ceasefire has been fragile in the?Iran?war. The war started when Israel and the U.S. attacked Iran on February 28. Iran then responded by launching its own strikes on Israel and Gulf States that house U.S. bases. U.S. and Israeli strikes on Iran, as well as?Israeli attacks against Lebanon in the 'war' have caused thousands of deaths?and millions to be displaced. Oil prices have also risen and markets all over the world have been shaken by this war. Reporting by Jasper Ward and Kanishka Singh in Washington, editing by Lincoln Feast.
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BHP iron ore employees vote to strike at Port Hedland on July 18, 2018.
BHP Port Hedland workers in Western Australia announced a work stoppage of eight hours on Wednesday, set for July 16. This is expected to affect daily revenues of A$120,000,000 ($83.16,000,000) of iron ore. After six months of unsuccessful negotiations, the unions called for action. According to a statement from the union, workers in the port operations and maintenance department of the company represented by the Combined Ports Unions are expected to participate in the strike. Adam Woodage, Secretary of the Electrical Trades Union WA, said: "This is not anyone's preferred way forward but if it is the only way to move forward, then we will do it." I hope that this action'sharpens' the minds of BHP managers and shareholders on the importance to negotiate for a fair and safe iron ore industry. The unions have made the most significant push to penetrate Australia's heartland of mining in the past 30 years. This is because the Labor government passed a law that gave them the power to negotiate wage agreements with multiple employers, to ask for flexible arrangements, and to allow strikes across the industry. The agreement signed by the 'South Flank' last week included a 16% guaranteed pay increase over a four-year period, an increase in site-based allowances, and a new payment scheme for delayed flights. Port Hedland - which is used by Fortescue and Hancock - ships iron ore worth around $150 million a day. This highlights the potential for disruption.
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As US strikes against Iran fuel fears of a truce unravelling, oil prices are rising.
The price of oil rose by nearly 2% after the U.S. military conducted?airstrikes on Iran and reimposed crude sales sanctions. This sparked fears that their fragile truce could unravel, and Middle East supplies might be disrupted once again. U.S. Central Command announced on Tuesday that the U.S. airstrikes came in response to Iranian attacks against three commercial vessels transiting through the Strait of Hormuz. The Strait of Hormuz is an important waterway used to transport Middle Eastern oil shipments into wider markets. Brent crude futures rose $1.38 or 1.9% to $75.54 a barrel, while U.S. West Texas intermediate crude climbed $1.37 or 1.9% to $71.81 a barrel at 0128 GMT. The two benchmarks both rose by about 3% after the U.S. withdrew the general license authorizing the sale of Iranian crude oil following the Iranian attacks. Saul Kavonic is the head of research for MST Marquee. He said that this is a counter-indicator to the perception that the market will be oversupplied, and that some may not want to cover their record short positions. If tensions continue, and the traffic on the waterway remains below 50% of the pre-war level, then the supply constraints that result could lead to higher oil prices. Oil prices fell to pre-war levels after the U.S. signed its truce agreement with Iran last month. Traders accumulated large short positions on oil futures or made bets about further price drops. The price drop was caused by the expectation of a surge of Middle East supplies that would be released onto the market. Iran has not claimed responsibility for the attacks on vessels, but Qatar has blamed Iran. One of these was a drone attack that caused an engine room fire aboard a Qatari LNG tanker. According to maritime security sources, a crude oil tanker with a Saudi flag, believed to be Wedyan the supertanker, was also damaged off Oman. It was not immediately known what caused the incident. The attacks renewed concerns about tanker traffic in the Strait of Hormuz. Before the war started, cargoes equivalent to one-fifth of the global energy supply were transported through this route. Iran asserts its control over the Strait. It has ordered ships to take a route that is closer to its coastline rather than one that is nearer?Oman which borders the waterway. The U.S. insists that the waterway should remain open to all, as it was prior to the conflict. Since the start of the war, nations have drained their inventories in order to make up for the shortage. Market sources reported on Tuesday that U.S. crude inventories dropped?again' last week. They cited data from the American Petroleum Institute. The analysts polled had predicted that crude stocks would decline by 2.4 million barrels during the week ending July 3. (Reporting from Yuka Obayashi, Tokyo; Additional reporting from Florence Tan in Singapore; editing by Jamie Freed & Christian Schmollinger).
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Oil prices rise and bonds fall as US strikes Iran
Bond futures fell and oil prices rose after the U.S. imposed trade sanctions on Iran following the attacks on tankers at the Strait of Hormuz. Stocks wobbled, as the momentum from the record-breaking AI rally waned. U.S. crude oil futures rose 2.7% to $72.40 per barrel, while 10-year Treasury futures fell seven ticks. Traders priced in the rising risk of inflation and interest rate increases. Jason Wong is a senior strategist with BNZ Wellington. He said that the market does not like these attacks, but it's still not in full panic mode. He said that the past few months have shown the oil market's ability to handle a large supply shock. However, the current vulnerability is the low global reserves. The U.S. Strategic Petroleum Reserve's crude oil stocks fell to their lowest levels since 1983, according to data released this week. Nikkei Futures indicated a?fall in Japanese stocks and S&P500 futures were down about 0.1%. Wall Street indexes fell overnight, after a sharp drop in Samsung Electronics' shares. Despite blockbuster earnings from the company, investors were wary about extending an upswing that had lifted South Korea’s chipmaker-heavy stock market by 82% so far this year. U.S. officials said that the U.S. strikes are the latest in a series of challenges to last month's ceasefire. They targeted coastal surveillance, anti-ship and aerial launch sites as well as air defences. Washington has also pulled out of a deal that allowed?Iran's oil to be sold on the world market. Iran's Foreign Ministry said this was a breach of the framework agreement to end the war. The dollar was strong on the currency markets, pushing the euro to $1.14 and the Australian dollar down to $0.6925. The Reserve Bank of New Zealand will set interest rates later on Wednesday. Markets are pricing in an 85% probability of a rate hike, and most economists predict a similar rise. (Reporting and editing by Jamie Freed; Tom Westbrook)
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US oil prices rise after US military strikes against Iran
U.S. Oil Prices jumped by?nearly 3 percent in early trade Wednesday, continuing the previous session’s gains. This was after a series of strikes launched by the U.S. Military against Iran. The U.S. military's actions raised concerns about a fragile ceasefire. U.S. Central Command said on Tuesday that the strikes against Iran were a response to Iranian attacks on commercial vessels that were?transiting the Strait of Hormuz?. As of 2215 GMT, U.S. West Texas Intermediate Crude was up $1.95 or 2.8% at $72.39 per barrel. WTI closed 2.8% higher on Tuesday, before continuing to rise?in the post-settlement trading after the U.S. revoked its general licence authorizing the sale of Iranian oil following the Iranian attack on commercial ships. Qatar accused Iran of attacking the vessels. This included the massive 'Qatari LNG tanker Al Rekayyat which reported that it was struck by a drone, causing a fire to start in its engine room. The crew was safe and being evacuated. Maritime security sources confirmed that a Saudi-flagged crude?tanker was also damaged near Oman. It is believed to be the supertanker Wedyan. The cause of the incident was not immediately clear. The recent developments have re-ignited concerns about disruptions in tanker traffic along the Strait of Hormuz. Reporting by Yuka Obaashi; editing by Jamie Freed
Japan Q3 aluminium prices soar highest since 2015 due to Mideast supply squeeze
Five sources said that Japanese aluminium buyers paid a premium of $395 per ton between July and September. This was the highest price since 2015. The U.S./Israeli war against Iran has squeezed the supply.
Japan is the largest Asian importer and benchmark for the region. Its premiums on primary metals are set at a level that exceeds the London Metal Exchange cash price each quarter.
The premiums agreed to are up from $350-$353 per ton in April-June, the third consecutive increase. This is the highest since $425 between January and March 2015.
As tensions ease, producers cut their offers
Sources said that global producers sought to sell shipments from July to September for $460 to $480 per ton in late May. This was an increase of 30% to 37% over the previous quarter. However, they gradually reduced their offer to $395 before finally settling on this price.
Sources at a Japanese rolling-mill said that the deals were made after producers reduced their offers, as Middle East tensions eased. "The terms were accepted by buyers once the offers dropped below the psychologically significant $400 mark."
Sources at a Japanese Trading House said that the agreements were reached this week, after producers made concessions in order to lower offers below $400.
Sources declined to identify themselves because the discussions were private.
The war-related closure of the Strait of Hormuz has affected?supplies of aluminium from the Middle East. This region accounts for 9% of the global smelting capacities of aluminum. It also curbed the shipments of raw material needed to make the metal. In 2025, Japan imported?nearly 30 percent of its aluminum ingots, including alloy and primary metal, from this region.
Two Gulf smelters were directly hit by missile strikes during the conflict.
A series of announcements made last week regarding the restarting of supply has put pressure on metal prices. A'more durable ceasefire, and the return of shipping in the Strait have largely eliminated the war-related premium.
Even so, there are still concerns about the fragility and the risk of a new supply disruption after the U.S.'s latest strikes on Iran.
Aluminum stocks at Japan's three main ports
(source: Reuters)