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Demand uncertainty limits gains for iron ore companies on China's pre-holiday restocking
The price of iron ore rose on Thursday for a second session, as Chinese steelmakers increased seaborne purchases in anticipation of a national holiday. However, a shrinking margin at the steel mills clouded the demand outlook. As of 0147 GMT, the most traded iron ore contract at China's Dalian Commodity Exchange rose by 0.35% to $711 yuan (US$105.94) per metric ton. As of 0137 GMT the benchmark October 'iron ore at the Singapore Exchange was 0.26% lower at $96.05 per ton. It has been hovering below the important?psychological levels of $100 for six consecutive sessions. A number of steelmakers have booked seaborne cargoes to be delivered during the week-long National Day Holiday break from October 1-7. Data from Mysteel consultancy showed that the daily?volume of seaborne goods increased by 43% on Wednesday compared to the previous day. Analysts said that mills could slow their restocking because sagging margins discouraged them from increasing production, thereby limiting price increases. Coking coal and coke also saw a rise of 1.18% & 1.31% respectively. The Shanghai Futures Exchange has seen a rise in steel benchmarks. Rebar grew by 0.1%, hot-rolled steel coils?upped 0.24% and stainless steel rose 0.78%. In a recent note, analysts at Zhengxin Futures stated that "the?real steel?demand has not shown any clear signs of recovery, despite?earlier expectations. However, supply 'contraction continued as losses increased."
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Dollar jumps as short-term rates increase, shares tick higher after Fed raises rates
Investors bet that the Federal Reserve will finally get ahead of inflation by delivering its 'first rate hike in more than three years, and calm a global bond saleoff which had sent long term yields soaring. The dollar soared to a seven-week high against its major peers, backed by a jump in short-term Treasury yields as markets increased their bets that the Fed may have to raise rates again. A move by December was fully priced in. The dollar reached a seven-week-high against major peers. This was backed by a surge in short-term Treasury rates as markets increased bets that the Fed might have to raise rates again. A move by December is fully priced in. This was a negative for commodities as oil prices fell. All eyes are now on the Bank of England. It is widely expected that it will keep interest rates unchanged later in the afternoon, but everyone is watching for any indications about whether high energy prices might force them to raise in November. Bank of Japan is, on the other hand, almost certain to raise interest rates this Friday. The Nikkei, Japan's stock market index, gained 0.5%. Chinese blue-chips fell by 0.4%, while Hong Kong's Hang?Seng dropped 0.9%. After a small drop on Wall Street, Nasdaq and S&P futures both gained 0.6%. The Fed increased interest rates overnight as expected. However, the unanimous decision was hawkish, and the board indicated that there would be one more rate increase this year. Goldman Sachs expects that the Fed will raise rates again in October. Goldman analysts said in a recent note that "October is the most probable time for the next step because it's most natural to deliver the hikes the FOMC described today as supporting "a timely return" to the 2% goal at successive meetings." Additional hikes may be possible, but they are not the base case. Futures indicate that there is a 50% probability that the Fed will follow up on its first hike by announcing a second one as early as next month in order to curb inflation. Three rate increases have been price in for the tightening?cycle. The Treasury yield curve flattened. Short-term bonds took a hit, but long-term bonds breathed a sigh relief. After spiking by 6 basis points overnight, the yields on two-year Treasury bonds remained at 4,7145%. This?helped boost U.S. Dollar to a 7-week high against major peers like the yen or euro. It was last trading at 100.33 after rising 0.7% overnight. The yield on U.S. benchmark 10-year notes hovered at 4.9917% and was below the 5% key level. Meanwhile, 30-year bond yields were down 2 bps at 5.3328%. This is a further retreat from a 19-year peak of 5.401%. Padhraic GARVEY, regional head for research in the Americas at ING, said that Chair Warsh would be pleased to see the yield breakout on the 10-year note show a moderate drop in inflation expectations. This signals a market approval of the increase as a measure of inflation containment. "It was a still an eloquent show. It won't save the back end. "We?identify the next target of 5.25% for the U.S. 10 year yield." Commodity markets were hit. Brent crude futures fell 0.7% to $105.05 per barrel, after falling 2.7% over night. Saudi Arabia reportedly offered crude cargoes via Oman. This eased some concerns about Middle East disruption in supply. Gold has shown some resilience. It rose 1%, to $4,305 per ounce. This is offsetting the 0.7% drop overnight.
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Oil prices continue to fall as concerns about Middle East supply disruptions diminish
Early Thursday morning, oil prices continued to fall, adding to the previous day's losses. This was due to reports that Saudi Arabia offered extra crude cargoes via Oman, which reduced concerns about supply disruptions. Brent crude futures fell $1.24 or 1.2% to $104.59 a barrel at 0049 GMT. U.S. West Texas intermediate futures were down by $1.14 or 1.1% to $101.29. Both contracts dropped about $3 on Wednesday. Hiroyuki Kikukawa is the chief strategist at Nissan Securities Investment. He added that "expectations of progress towards easing tensions in the Middle East before the U.S. China summit next week also cap price increases." People familiar with the situation said that Saudi Arabia offers'more' loadings of crude to Asian refiners through ship-to-ship transfers at Oman's Sohar Port, reducing some 'of the damage to global supply caused by attacks on Saudi Arabia's East West pipeline to the Red Sea. The price of oil rose this week to a four-month high after sources in the shipping industry reported that crude loadings had been suspended at Saudi Arabia's Red Sea Export Hub, Yanbu. Riyadh also cancelled certain cargo deliveries to European clients. The suspension was a result of attacks on the East-West Pipeline, which supplies the Saudi port Yanbu. Yanbu was Saudi Arabia's primary oil export outlet after Iran blocked the?Strait of Hormuz following the U.S.-Israeli attack on the country in February. Hormuz used to be the source of one-fifth the world's oil before the war. Three oil and security sources have reported that two pumping stations servicing the East-West Pipeline were damaged by an attack last week. However, a timeline for repair is not clear. Even though the price of oil fell on Thursday, concerns about a Middle East war that is intensifying remain. Saudi warplanes bombarded Yemen, and Houthi fighters fired drones and missiles at Saudi cities. The Iran-backed movement announced this on Wednesday. This comes after a rapid advance which has increased Tehran's influence in the Middle East?war. Meanwhile, the U.S. Energy Information Administration ?on Wednesday reported a smaller-than-expected draw from U.S. ?crude inventories last week. The EIA data revealed that crude oil inventories in the nation's top producer fell by 640,000 barrels during the week. This was less than the 1.62 million barrels expected according to an energy analyst poll.
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US House passes first bill to address economic impact of data centers boom
The U.S. House of Representatives voted on Wednesday to protect households from a rise in electricity costs due to the expansion of data centres. This is the first time the chamber has passed legislation that directly addresses economic concerns related to the growth of the industry. The Republican majority House voted in favor of Ratepayer Protection Act by 417 votes to three. This act would require state utility regulators consider whether large electricity consumers, such as data centers, should be responsible for the incremental costs associated with power infrastructure built to service them. The vote underscores the complex politics surrounding the U.S. Data center boom. Donald Trump, the U.S. president, strongly supports?data centers as a critical component of artificial intelligence leadership. He said earlier this week that data centers are the "oil" of the next 20 to 25 years, making people and states rich. Both parties are facing growing concerns from their constituents about the rising costs of electricity due to the booming power demand in the industry. House Republican leaders moved this bill before the lawmakers left Washington for the midterm elections on November 3. Robert Garcia, a California Democrat and U.S. representative, stated in advance of the vote that although it was not enough, it would receive significant support from those who hope more reforms will follow. He said that the House Republicans were trying to take a stand on the data center issue. However, "the truth is, they have done absolutely nothing about it." "I believe a lot of their base voters are angry. This is not the protection that people need. According to a recent poll conducted by the University of Massachusetts Amherst, only 11% of Americans would support building an AI data center in their community.
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Bloomberg News reports Holtec Nuclear has suspended its planned US IPO.
Bloomberg News reported on Wednesday that Holtec Nuclear had suspended its planned U.S. Initial Public Offering, citing "people familiar with the matter". A report citing a person said that the IPO had been put on hold due to market conditions. Holtec didn't immediately respond to an inquiry for comment. Could not verify the report immediately. The company's listing was expected to be the most popular during the first week of the autumn window. This is traditionally the busiest time for new listings. Holtec wanted to raise up to $900'millions by selling 50 million shares at between $15 - $18 a piece in its IPO. The price was expected on Thursday. The latest blow to the issuers in the nuclear sector is a postponement. Their stocks have been on a downward trend over the past few months. Standard Nuclear's shares have fallen 20.6% since the IPO price on July 1st. X-Energy is trading at 36.7% less than its IPO price. Holtec was founded in 1986 by Krishna Singh and specializes in a number of areas, including heat transfer, reactor components, spent-fuel storage, and decommissioning nuclear plants. Holtec is also developing small modular reactors, with the first two units to be installed at its Palisades facility.
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US DFC approves EUR85 Million Loan to Ukraine's DTEK
DFC and DTEK announced on Wednesday that the U.S. International Development Finance Corporation approved a EUR85 million (USD 97.5 million) loan for Ukraine's largest energy private?company DTEK to expand their?battery?storage. The DFC has made the largest loan to Ukraine's energy industry since the beginning of the Russian invasion in 2022. Maxim Timchenko is the chief executive officer at DTEK. He said, "This EUR85million loan allows us to release more funds for building more battery storage projects and other projects." "For me, I think the financial aspect is important, but it's more significant that DFC is willing to support Ukraine and DTEK." He said, "They have done an assessment of risk and know how to manage it. They are telling private investors that they should follow." Ben Black, the chief executive of DFC, said in a press release that "U.S. DFC was authorized to invest by President Donald Trump. These projects will secure vital infrastructure and resources across Africa, Central Asia, Ukraine, Jordan and Jordan and help U.S. firms compete in some of the world's most important markets. DTEK belongs to SCM Holdings. Rinat Akhmetov is the sole shareholder of SCM Holdings and its ultimate beneficiary. DTEK opened Ukraine's largest storage facility for batteries last year to "ensure stable" power supplies, as Russia had repeatedly targeted Ukrainian energy infrastructure in missile and drone strikes during the more than four years of war. Six battery storage systems were?connected to the power grid of the capital Kyiv and the Dnipropetrovsk Region in Eastern Ukraine. The 'facilities', built in partnership with Fluence, an American battery storage technology company, can store 400 megawatts of electricity, enough to power 600 000 Ukrainian households for 2 hours.
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US Senators ask for more information about Trump's Saudi nuclear plan, says letter
Democratic and Republican U.S. Senators on Wednesday asked President Donald Trump's administration to declassify?and release?all information regarding a?proposed?agreement?with Saudi Arabia?on civil nuclear energy?, including?two classified?side letters?agreed with Riyadh? The senators wrote to Secretary of Energy Christopher Wright and Secretary of State Marco Rubio, noting that the government had reached dozens such agreements, also known as the 123 Nuclear Agreements, with other countries, without hiding any information. The letter stated that "access to the full text" was required to ensure that the Senate and public had a clear understanding about the commitments made on behalf of the United States and Saudi Arabia. Requests for comments from the Departments of State and Energy were not immediately responded to. The letter was written by Democrats Jeff Merkley and Ed Markey from Oregon and Massachusetts. It also included 13 other Democratic Senators, an independent who caucuses with Democrats and two Republicans: Rand?Paul from Kentucky and John Kennedy from Louisiana. Trump sent a proposed agreement with Saudi Arabia in August to Congress, giving lawmakers 90 days to review it and to consider a resolution disapproving the deal. Since then, lawmakers have been pressing for the declassification and release of documents related to the side letters that were reached in conjunction with the proposed deal. Nuclear agreement also raises questions as to whether Saudi Arabia will get the deal if normalized relations with Israel are not achieved. Trump said that it would only 'go into effect' if Riyadh did so. However, congressional aides said there was nothing in the pact which addressed?that question. The letter sent on Wednesday didn't mention Israel. The 30-year deal includes the construction of AP1000 nuclear reactors. This is a 'project worth tens and tens billions dollars, which would benefit Westinghouse. Democrats and nonproliferation activists have criticised the nuclear pact because it does not prohibit Saudi Arabia from enriching uranium, or reprocessing its nuclear waste. These are two potential ways to make a nuclear bomb. The United Arab Emirates accepted such measures, also known as the "gold standard", in their 2009 civil nuclear agreement with Washington. The Trump Administration says that the deal contains non-proliferation provisions required by law.
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Brazil diesel imports are at risk due to a rise in global prices and a widening Petrobras price gap
The gap between international diesel prices and Brazil's state owned oil company Petrobras has reached record levels due to a recent rally in international diesel prices. Industry executives have said that independent importers are delaying purchases because of this. Petrobras diesel prices were $0.79 per liter less than import prices according to Abicom. This was despite the fact that local production had reached its maximum. Sergio Araujo, Abicom's President, said that Brazilian refineries are currently operating at close to capacity. Brazil imports about one-quarter of the diesel it consumes. Petrobras, which is part of Brazil's Luiz Inacio Lula Da Silva, has been working to reduce diesel prices since the beginning of the U.S. - Israel conflict with Iran. They have done this by boosting the domestic supply, and by participating in the Brazilian president's subsidy program to combat inflation before the October election. Lula da Silva wants to run for another term. Petrobras' profitability is hurt when it imports diesel at higher prices abroad than what it charges domestically. This squeeze on margins also reduces the incentive for other importers. In recent weeks, international oil prices have risen. Brent crude reached $108 per barrel on Tuesday. This is up from $93 at the beginning of the month. U.S. Diesel futures also hit a record due to Middle East conflict and Russian export restrictions. LOCALIZED DISRUPTIONS As the planting of the summer crop is underway, the Rio Grande do Sul agriculture federation, Farsul, reported to Brazil's fuel regulator ANP that there were delays and restrictions in diesel deliveries for farmers in the southern states. According to a person who works with fuel distributors, customers from neighboring countries that depend more on imported diesel are seeking it in Rio Grande do Sul, which could be straining the local supply. ANP stated that diesel deliveries were proceeding as usual and that it had not yet identified any risk of a supply shortage in Rio Grande do Sul. Petrobras stated that its deliveries were proceeding "as planned" and that all volumes contracted are being delivered. Localized fuel shortages and bottlenecks in the logistics system are similar to what was seen earlier this year, but widespread shortages of fuel remain unlikely. Bruno Cordeiro is a StoneX market intelligence specialist. He said, "The market is tighter, but there are no concerns about supply disruptions."
Gold prices remain stable as Fed chief Warsh prepares to deliver his Jackson Hole address
Market participants were waiting for the remarks of Federal Reserve chair Kevin Warsh at the Jackson Hole Symposium, hoping to gain insight into the central banks future interest rate policy.
By 0652 GMT, spot gold had not changed much from $4,603,91 per ounce. The price of gold reached a three-month-high of $4,696.18 after the U.S. Treasury announced support measures for bonds with long-term maturities.
U.S. gold futures fell 0.1% to $4 657.10.
Matt Simpson, senior analyst at StoneX, stated that the case for Warsh leaning hawkish was greater than for him to not do so. This could lead to gold falling further from its current cycle highs, in the near term.
He said: "But I think any dip in the market will be welcomed by bulls who missed the first phase of this rally and want to have another go at $5,000."
On Thursday, Fed officials expressed their concerns regarding the U.S. Inflation landscape as central bankers met in Jackson Hole. The Fed officials' comments come a day after the Personal Consumption Expenditures Price Index, the Fed’s main inflation indicator, was found to be 3.7% for the 12-month period ending in July.
Later in the day, Fed Chair Warsh will speak.
According to CME FedWatch, traders see roughly a third chance that the U.S. will raise rates in September. By December, they expect a 74.2% probability.
Gold is less appealing in an environment with high interest rates because it has no yield.
In a recent note, precious metals analyst Christopher Wong stated that the yellow metal is still supported by increased participation in exchange traded funds and futures. He also cited concerns about U.S. fiscal reliability and continued purchases from the official sector. However, there are risks of a consolidation, he said.
In India, gold discounts fell sharply 'this week', on the back of rumours that the government might consider rolling back recent import duties.
Silver spot rose by 1.3%, to $70.13 an ounce. Platinum was up 1.7%, at $1,878.58, and palladium gained by 2.1%, to $1,379.50. (Reporting and editing by Rashmi aich, Subhranshu Sahu, Ronojojo Mazumdar in Bengaluru)
(source: Reuters)