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Copper drops as Middle East conflict renews inflation risk
As tensions escalated between the U.S.A. and Iran, and oil prices rose, fears of inflation and growth were heightened. Benchmark 'copper' on the London Metal Exchange?was down by 0.3% to $13,443 per metric tonne at 1037 GMT. After renewed military strikes by the United States against Iran, concerns about energy shipments via the Strait of Hormuz resurfaced. The focus was also on the falling copper stocks. The copper stocks in LME approved warehouses fell by more than 20 percent since May's end, to a 4-month low of 305,200?tons. The LME system is due to receive another 130,525 tonnes of metal or cancelled warrants. Sources in the industry say that a large amount of this copper will be heading to the United States, where President Donald Trump may impose tariffs on metal used for construction and power plants. Since President Donald Trump's order to launch a national-security probe in February of last year, traders and producers have shipped metals into the United States. Since then, the copper stocks in storage registered by Comex have increased nearly 600%. . Copper stocks are found in warehouses monitored by the Shanghai Futures Exchange Since the middle of March, 100,271 tonnes have fallen by nearly 80%. Alastair Munro is a senior base metals analyst at broker Marex. He said that rapidly falling stocks create a 'higher price floor' across all metals. The markets are watching Kevin Warsh’s first appearance as Federal Reserve chair before Congress and the U.S. Inflation data to get a clue about dollar direction. The expectation of tighter monetary policies in the United States has boosted the U.S. dollar, making metals priced in dollars more expensive for holders of other currencies. This also weighs on demand. Lead fell by 1.1% to 1,876, zinc declined 1.3% to 3,569, tin dropped 0.1% to $53,080, and nickel declined 1.2% to 16,545.
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MORNING BID AMERICAS-Crude up, chips down
Anna Szymanski is the Editor-in Charge of Open Interest. Prices of crude oil rose Monday morning, after the military conflict between the U.S.A. and Iran intensified over the weekend. Memory chip stocks continued to lose ground in Asia, and South Korea's KOSPI index, which is heavily weighted with chips, also fell. Global stocks were'shaky' on Monday morning, as they awaited a week that will include the release of U.S. inflation data for June and second-quarter earnings. Below, I'll get into this and more. Listen to the Morning Bid podcast to hear how the markets have responded to the escalating tensions between Israel and the Middle East. Subscribe to the Morning Bid daily podcast and hear our journalists discuss all of the latest news in finance and markets seven days a weeks. CRUDE UP AND CHIPS DOWN U.S. Forces conducted another round of strikes against Iranian targets on Sunday. On Monday, Iran targeted U.S. installations in Bahrain, Kuwait Oman, and Jordan. Brent crude rose early on Monday, reaching nearly $80 a barrel, before reducing some of these gains and trading around $78/bbl. This response, like the one last week, is fairly restrained. Prices are still below those seen before the fragile interim peace agreement was signed in mid-June. Hormuz is once again a place of chaos and uncertainty due to conflicting claims about the status of shipping. Iran claimed to have closed the Strait of Hormuz, but Donald Trump, President of the United States said that it was still open. The data on tanker traffic so far seems to support Tehran's position. Transits dropped dramatically during the first U.S.-Iran tit for tat attack last week, and have remained low throughout the weekend. According to Kpler ship tracking data, only six vessels transited the waterway Sunday. This is the lowest number of transits in five weeks. The volatility of semiconductor stocks was also expected to continue, as South Korea's KOSPI, which is heavily weighted in chips, closed Monday?down almost 9%, dropping below 7,000 for first time since May. The index also entered bear market territory by falling 25% below the June 22 high. Its decline was partly fueled by a drop of more than 15% in memory chipmaker SK Hynix. This is its largest one-day fall on record. On Monday, bond yields increased and global equities looked cautious. Wall Street futures opened in the red and European shares were lower. Investors' attention will now turn to the second quarter earnings season. This begins in earnest, with Tuesday being a day of bank earnings. Tuesday, the U.S. Consumer Price Inflation data for June will be released. The core measure, which excludes energy prices, is likely to be closely watched for an indication of underlying price pressures. This release comes after a recent shift in the Federal Reserve's stance, where new chair Kevin Warsh last month reaffirmed his commitment to price stabilization. According to Energy Aspects, a consultancy, Europe will have a jet-fuel supply deficit in the third-quarter of 600,000 barrels compared with 116,000 bpd surplus in the U.S. and 425,000 bpd surplus in Asia-Pacific. Energy Aspects reported that inventories in the United States were 99 million barrels, while the European stockpiles stood at 38 millions barrels. Calculations show that Europe has less than 30 day's supply to cover demand - making it the most tight of all the major jet fuel markets. Watch today's events * Feds Michelle Bowman, Christopher Waller and?speak OPEC Monthly Oil Report Want the Morning Bid delivered to your inbox each weekday morning? Subscribe to the newsletter by clicking here. Follow us on LinkedIn, X and ROI. The opinions expressed here are the author's. These opinions do not represent the views of News. News is committed to independence, integrity and neutrality under the Trust Principles. (By Anna Szymanski, Additional writing by Al Reed and Editing by Andrew Heavens).
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De Beers will pause mining in South Africa's Venetia region for two years
De 'Beers announced on Monday that it will pause production at its Venetia Mine in South Africa for a period of two years. This is part of an overall effort to streamline operations and reduce costs in order to cope with the continued weakness in rough diamond trading. Anglo American is the majority owner of the diamond producer. The company said that the move would delay and reduce some expenditures on an underground mine project, but maintain investment in infrastructure for a higher level of production when the market conditions improve. Venetia is South Africa's biggest diamond mine in terms of value. It will employ 4,400 workers and produce 2,23 million?carats. In 2025, it accounted for 10.3% the total group 'rough diamond production of De Beers. After 30 years of open pit mining, Venetia's new underground mine will begin production in July 2023. De Beers plans to reconfigure the global operating model of its business to reduce costs and focus on its core activities. However, it has not provided any further details about these changes. Al Cook, Chief Executive Officer of De?Beers, said in a press release that "our commitment is to focus our efforts on value and improve resilience to position us to compete well as the industry conditions recover." Sale Anglo placed De Beers, one of the world's largest diamond companies, up for sale by May 2024. This was part of an overall restructuring in response to falling diamond prices, and the rise of synthetic diamonds. Cook stated in an interview at the NEXT Europe Conference in London on June 16 that he hoped for the De Beers Sale to happen "in a few weeks, rather than months". Industry forecasts predict that mine closures and production pauses in South Africa and Lesotho, as well as Canada, will lead to a global supply contraction by 2027. Atharva Singh reported from Bengaluru, Nelson Banya from Harare and Janane Venkatraman edited the article.
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White House rallies utilities and data centers to AI power costs
Three people with knowledge of the plan say that 'the White House intends to gather utility companies and developers for a voluntary commitment designed to ensure that rapid growth in demand for electricity from artificial intelligence doesn't drive up bills for homes and businesses. In the next few weeks, an event will be held to announce this initiative. Several companies are expected to participate and pledge to protect existing ratepayers from having to shoulder all of the costs associated with AI expansion. Sources said that the guest list was still being finalized. The White House did not respond when contacted for comment. The soaring demand for power from data centers in many states has led regulators, consumer groups and lawmakers to warn that consumers could be forced to subsidise grid upgrades to service some of the largest technology companies. This raises questions about whether the pledge is going to deliver on concrete commitments or just remain symbolic. The Trump administration hopes to avoid political backlash due to rising electricity costs as it pushes for the expansion of AI infrastructure. Amazon, Google Meta, Microsoft OpenAI, Oracle, and xAI all signed a "Ratepayer Protect Pledge" earlier this year at a White House event, committing themselves to pay for the electricity infrastructure required to support their AI projects, rather than pass those costs onto existing utility customers. The companies have agreed to help pay for grid upgrades, new power generation and other costs associated with their data centers. This includes unused reserved capacity. The White House stated that the commitments are designed to stop 'households subsidizing AI infrastructure growth. People familiar with the plans say that the new event will broaden the?commitments by bringing together electric utilities, companies who build and operate datacenters on behalf of Big Tech and governors from states in the forefront of expanding the power infrastructure required to accommodate the anticipated surge in electricity demand. White House officials have argued that America can only win the AI race by rapidly increasing electricity generation and transmission, but that consumers shouldn't bear the financial burden. The initiative is being marketed by administration officials as a way to assure voters that AI investments and lower energy prices can coexist.
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Cubans inside one Havana apartment as it goes dark
Frank Alfonso spends most nights sleeping on his roof in Havana to avoid the oppressive heat and blackouts. On Friday, however, the 'rain' arrived at the same time as Cuba's grid collapsed. This left him without any respite in the island's energy crisis. Alfonso lives in a tenement known as a "solare" in Havana. It is one of the thousands of cramped, old buildings that have been subdivided by residents into tiny living quarters. Despite the U.S. oil embargo, many of these complexes continue to suffer from extended power shortages due to Cuba's aging infrastructure. He said, "We didn't realize that the grid was down this time because we were already experiencing a blackout." Documented how Alfonso, his family, and their neighbors coped with what is now a daily reality for them: living in darkness. Residents go days without water when there is no power Yunaisi Durruti, 51, sat on an armchair in front of Alfonso’s apartment late Friday night. The tip of her cigarette was the only light. Her primary concern: water. Her tap was dry for more than a week, because the pump needed electricity to transport water from her apartment's tank at the second-floor cistern. She said that during the few hours of power each day, the cistern is often empty because of routine water cuts. Durruti studied gastronomy in Havana when she was young. She then worked for 10 years in the kitchen of an exclusive beach resort run by the Spanish hotel chain Melia. Her days of following her passion for cooking are over. She is a security guard who, after working, heads home to her parents' house, in a less-frequently blacked out neighborhood, to wash, shower and cook. She doesn't keep food in her refrigerator because it would spoil. Melia said it was leaving Cuba after the U.S. tightened sanctions in spring. Durruti noted that Cuba's culture of neighborly solidarity, a feeling of community forged through decades of living on the island, helps to mitigate the effects of the severe shortages. But there are limitations. She said, "Everyone is welcome to share a bucket of water." "But more is not possible in this crisis." A PROPHECY CAME TRUE Since years, the island's infrastructure has been deteriorating, including its electric grid. Residents of the tenement said that the energy cuts they experienced in the past became interminable as the U.S. oil blockade took hold. Thalia Castillo (28), a 28-year-old mother, nursed her 3-month old baby, Thayler on Saturday afternoon. A small,'rechargeable' fan kept mosquitoes and hot air off of his back. Castillo, her husband Lazaro Herrera and their children enjoyed power for several hours even after the grid went down, thanks to the power station that Castillo’s grandmother sent them from the United States. This power ran out quickly. Another luxury, funded by relatives in the U.S., was thawing a frozen package of beef. Castillo cleaned up the blood pools that were leaking into the fridge every few hours. Their kitchen was decorated with small statues of Yoruba gods. Herrera is an Afro-Cuban priest, also known as a Babalawo. This religion is widely practiced in the island. Every year, community elders make a series predictions. The prophecy for January warned of turmoil and conflict. He said, "Everything is coming true so far." A MOMENT OF LUMINOUS LIGHT Alfonso ran back to the building shortly?before 9:00 pm on Saturday. Electricity was still not working. Argentina's World Cup Quarter-final against Switzerland was about begin. He and Herrera devised a plan to deal with the blackouts. They mounted Herrera's TV outside on a rack and connected it to a generator located across the street. Before kickoff, several dozen residents of the building and their neighbors had gathered in the street to watch the game. A woman from the second floor of the building sat at the door and scolded the kids who were blocking her view. When Argentina's first goal was scored, cheers erupted. The street was still in darkness all the way up to Havana’s seafront boulevard. Reporting by Ayose Naranjo and Laura Gottesdiener, Havana. Editing by Aurora Ellis.
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South Africa proposes mandatory fuel stock to prevent crises
A?policy paper revealed that South Africa plans to revamp its strategic 'fuel storage capacity,' requiring both the state and private sectors to maintain mandatory reserves in order to reduce supply crises. Energy prices and supplies have been under pressure in recent months because of the ongoing Middle East crisis that has cut off the Strait of Hormuz - a major oil and LNG transit route. According to the proposals, which are outlined in the document of the Department of Mineral and Petroleum Resources (DMP), all licensed oil and fuel wholesalers and importers would be required to keep 21 days worth stock, with 70% being allocated to crude oil, and the rest to refined products like diesel or jet fuel. The state is to maintain strategic stocks of 60 days with the same division. The buffer can be?released during a state of emergency declared in "catastrophic" events. The document stated that "South Africa must have a Strategic Stocks Policy in order to improve its state of preparedness in the event of a major disruption of oil supplies." The draft policy, open for public consultation, if approved, would be the first significant boost in the strategic fuel reserves of the country since the 1970s when the apartheid regime?built underground crude storage facilities at Saldanha, on the 'west coast. However, no specific storage levels have been established to support operations. The new state stock would be managed at the Saldanha & Milnerton storage facility. The Fuels Industry Association of South Africa (which represents oil companies in the country) did not respond immediately to a comment request. According to estimates by the government, South Africa, which has lost around?half its refinery capacities in recent years uses 27 billion litres per year of oil products. (Reporting and editing by Andrei Khalip, Wendell Roelf)
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Copper drops as Middle East conflict renews inflation risk
Prices of copper fell on Monday, as the fighting between the U.S. Benchmark three-month Copper?on the?London Metal Exchange fell 0.64% to $13,398.5 per metric ton at 0701 GMT. The Shanghai Futures Exchange's most traded copper contract fell 0.68%, to 103100 yuan (15,199.54 USD) per ton. U.S. forces and Iranian forces traded heavy drone and missile assaults at the weekend. This dampened risk appetite, and reignited fears that rising energy prices and inflation could lead policymakers to raise interest rates for longer. The pressure on industrial metals is increased by higher interest rates. Gold and silver that do not yield any interest rose in price, but oil prices fell. The U.S. dollar ?strengthened slightly over the weekend, making greenback-denominated commodities like copper more expensive ?for buyers using other ?currencies. Aluminium has largely brushed off any potential disruption in supply, which was expected to return to normal following an interim agreement after the war broke out on February 28. The LME saw a drop of 0.33%, while the SHFE fell by 0.65%. The announcements of several production restarts have put pressure on the price of aluminium. On Friday, major supplier Emirates Global Aluminium announced that it had restarted its UAE alumina refinery. The exchange data showed that visible stocks of aluminium in LME registered warehouses had fallen to their lowest level since 2022. In June, 95% of the?available stock was of Russian origin. Zinc, lead, and nickel all fell in value on the LME. Tin also dropped by 0.23%. On the SHFE, zinc fell 0.84%. Lead dropped 0.66%. Nickel dipped by 0.23%. Tin dropped 1.7%.
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France sends water-bombers to combat wildfires outside Paris
The fire was brought under control by more than 400 French firefighters who worked through the night. Two waterbombing aircraft were sent to the scene on Monday, as western Europe suffered a heatwave. The fire started along a highway near Fontainebleau. This is home to one France's most famous royal palaces. It was once used as a hunting lodge for monarchs and an autumn retreat. The flames scorched over 800 hectares (1.980 acres) by midnight, fanned on by hot winds. The fire, which was only 70 km (43.5 miles), from Paris forced the closure of the A6 highway connecting Paris to Lyon and the South. Other smaller fires also caused disruptions to high-speed train services. The French fire service stated on X that "the fight continues today." Residents have been warned that Canadair planes will scoop water out of the Seine River, which runs through central Paris. European countries are concerned about the increasing frequency of heatwaves, and temperatures that break records. Scientists say that climate change is to blame for the recent fires in Europe. Wildfires have already scorched thousands of hectares in France, Spain and Portugal. A blaze in Spain's Almeria province, located in the south-east of the country, has claimed 13 lives. This includes a British woman aged 93 who died from burns. This summer, Western Europe has been sweltering in temperatures for the third time. The heatwave that occurred in late June is likely to have killed thousands, as countries reported more than 10,000 "excess deaths". In France, Spain, and Britain, power supplies were disrupted and schools closed. Temperature records were broken. This kind of excess is not common at this time of the year. It's?high", said Lasse Vestergaard. Chief physician at Denmark's Statens Serum Institut. EuroMOMO is a Europe-wide mortality monitoring system. Vestergaard said that it was difficult to explain the high mortality rate by anything other than extreme heat.
Gold prices continue to decline as Middle East tensions support a higher-for longer rate view
Gold prices fell for a second session in a row on Monday, as renewed 'hostilities' in the Middle East fueled inflationary fears and raised expectations that the U.S. Federal Reserve would keep interest rates high for longer. Spot gold fell 1.2% at $4,072.49 an ounce as of 0847 GMT. U.S. Gold futures for August were down 0.8% at $4,081.30. U.S. forces and 'Iranian forces have exchanged heavy drone and missile assaults. Tehran has targeted U.S. facilities in states on the other side of the 'Gulf, and hinted at the closing of the Strait of Hormuz. On hearing the news, oil prices rose by nearly 3%. Ole Hansen, a Saxo Bank analyst, said that renewed hostilities in Gulf region rekindle fears about inflation and further Federal Reserve tightening. This creates additional headwinds for gold through higher bond yields as well as a stronger dollar. Hansen stated that the focus on the Middle East, higher oil prices and low liquidity during summer holidays are the key risks which may push gold prices beyond their current range of $3900 to $4200.
The opportunity cost of non-yielding gold increases as interest rates rise. According to CME FedWatch?Tool, traders are now pricing in a?71% probability of a U.S. Fed rate hike in September. This is up from?63% last week.
This week, the U.S. releases a lot of economic data, including the Producer Price Index and Consumer Price Index for June, as well as retail sales and weekly unemployment claims. Kevin Warsh will make his first appearance before Congress on Tuesday and on Wednesday to provide a further insight into the economy, inflation, and monetary policies goals.
COMEX gold traders reduced their net long position by 1,964 contracts to 114.854 during the week ending July 7 after three consecutive weeks of increasing.
(Reporting by Sukanya Mitra in Bengaluru; Editing by Barbara Lewis) (Reporting by Sukanya Mitra in Bengaluru; Editing by Barbara Lewis)
(source: Reuters)