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Copper prices rise on the back of dollar weakness but demand is still cloudy
The copper price rose on Thursday due to a weaker US dollar. However, persistent concerns about demand and unresolved tensions in trade continue to cloud the outlook for the market. The price of three-month copper at the London Metal Exchange rose 0.2% to $9,667 per metric tonne by 0925 GMT. Dollars are cheaper for those who use other currencies. The weaker dollar is providing some support. "But more generally, uncertainty surrounding trade negotiations continues pressure cyclical assets such as copper," said Nitesh Sharma, commodities strategist at WisdomTree. U.S. president Donald Trump said Wednesday that he was willing to extend the deadline of July 8 for the completion of trade talks. He added, however, that the U.S. will send letters to dozens of countries in the coming weeks, detailing the terms of the trade agreements, which they can then accept or reject. UBS stated in a report that the most recent manufacturing PMIs in China, Europe and the U.S. remain in contractionary territory, underlining the drag of the ongoing tariff situation. The PMI is indicating that the final demand for copper will be low. The note said that some demand was front-loaded ahead of U.S. Tariffs, which has helped copper consumption. U.S. Imports have also tightened the market in other countries. Washington began an investigation in February into U.S. imports of copper, which pushed COMEX prices up to a significant premium over LME. Trading firms have taken advantage of the situation and redirected copper flow from other regions to the U.S. U.S. COMEX Copper Futures dropped 0.2% to $4.80 a lb. This brings the premium over LME Copper to $920 a tonne. Ivanhoe Mines, a major copper producer in the Democratic Republic of Congo announced Wednesday that underground operations had been resumed at a portion of the mine, which was previously suspended due to seismic activity. The company has lowered its guidance for production this year. "Downgrades in production estimates, particularly from the DRC, are weighing down on the outlook for supply." According to Shah, "the market will be in a deficit of supply by the end of the year." LME aluminium rose 0.2%, to $2,521.5. Zinc fell 0.4%, to $2,642.5. Nickel dropped 0.5%, to $15,100. Tin remained at $32,605. Lead gained 0.2%, to $1,990.5. (Reporting and editing by Jan Harvey in Bengaluru, Ashitha Shivaprasad from Bengaluru)
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Rate-cut bets have pushed gold to a one-week high. Now, the focus is on US PPI data
Gold prices reached a new one-week record on Thursday. This was driven by the softer U.S. data, which increased expectations for Federal Reserve rate reductions this year. Investors were also looking to other inflation data to get further direction. As of 0838 GMT spot gold was up by 0.2%, at $3360.29 per ounce. It had earlier reached its highest level since the 5th of June. U.S. Gold Futures rose 1.1% to $3380.00. The U.S. Dollar Index fell by 0.3%, to a level not seen in two months. The dollar is weaker, making bullion more affordable for buyers who hold other currencies. "Gold is stuck... a break above 3,400 dollars will be needed to change this. "The near-term focus is on Middle East developments and the dollar, as well as speculation regarding the timing of the U.S. next rate cut," Ole Hansen said, head of commodity strategies at Saxo Bank. The Consumer Price Index in the United States increased by 0.1% last week after increasing 0.2% in April. The economists surveyed by predicted that the CPI would increase 2.5% on a year-on-year basis and climb 0.2%. The markets are pricing in a rate cut of at least 50 basis points this year. Gold is a safe haven asset that thrives in uncertain economic times or low interest rate environments. Investors will now be focusing on the U.S. Producer Price Index due at 1230 GMT ahead of the Federal Reserve meeting scheduled for June 17-18. Hansen said that the PPI will be closely watched to determine if it can surprise with a CPI like surprise, or if expectations of rising input prices are confirmed. The geopolitical situation is also a concern. On Wednesday, U.S. president Donald Trump announced that U.S. personnel would be moved out of the Middle East as "it could potentially be a dangerous area". He added that the United States wouldn't allow Iran to possess a nuclear bomb. Palladium fell 1.9% to $1,059.25. Platinum rose 0.3% at $1,260.14. (Reporting from Anushree mukherjee, Bengaluru. Editing by Emelia sithole-matarise.)
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IAEA Board Resolution declaring Iran in violation of Non-Proliferation Duty
Here are some key passages of a four-page Iran resolution that the 35-nation Board of Governors of the International Atomic Energy Agency passed on Thursday, according to diplomats. The text was still classified and only seen by. The Board of Governors ,... (d) Referring to the Board of Governors resolutions of 19 juin 2020..., of 8 june 2022..., of 17 november 2022 ..., of 6 june 2024 ...,, and of 21 november 2024 ...,, which called on Iran to cooperate fully with the Agency, and decided it was essential and urgent for Iran to act in accordance with its legal obligations, and to clarify all outstanding issues to take all specified action without delay (e) Regretting the fact that, despite numerous opportunities given by the Director-General since 2019, Iran failed to provide co-operation under its Safeguards Agreement. This included impeding Agency activities, sanitizing sites, and failing to repeatedly provide the Agency with technical credible explanations of the presence of uranium particle of anthropogenic source at several undeclared places in Iran, or information on current locations of nuclear material, or contaminated equipment. Instead, Iran claimed, contrary to the Agency's findings that, The Director General concluded that Iran had not declared nuclear material or nuclear-related activities in three undeclared Iranian locations, specifically Lavisan-Shian and Varamin. Due to the Agency's inability to obtain technically credible answers from Iran, it is unable determine whether nuclear material in these undeclared Iranian locations has been consumed, combined with other declared materials, or remains outside Safeguards. (g) Noting the Agency's conclusion, that these undeclared sites were part of a structured, undeclared programme that Iran carried out until the early 2000s and that some activities involved undeclared nuclear materials, (h) Noting the Agency's conclusion, which is of concern, that Iran retained unidentified nuclear material or heavily contaminated equipment and other assets arising from a former undeclared nuclear programme at Turquzabad from 2009 to 2018, after which the items were removed, but the whereabouts remain unknown. (k) Noting Iran's repeated failure to cooperate in facilitating the implementation of Safeguards while engaging in activities consistent with concealment, including extensive sanitization, and providing inaccurate explanations, is a significant obstacle to the Agency’s ability to verify and clarify Iran’s declarations as well as the exclusive peaceful nature of Iran’s nuclear program. (n) Regretting Iran’s failure to provide technical credible explanations for undeclared nuclear materials. (o) Repeating its concern that Iran still hasn't provided the necessary, full, and unambiguous co-operation with the Agency, and hasn't taken the urgent and essential actions as determined by the Board in June and November 2024 Resolutions... (p) Worried that the Agency has reached a deadlock in resolving this issue, 1. We regret that despite numerous opportunities and repeated requests from the Board, Iran has not fully cooperated with the Agency as required by the Safeguards Agreement. 3. The Agency finds that Iran has failed to comply with its Safeguards Agreement since 2019, by failing to cooperate fully and promptly with the Agency regarding undeclared material and activities in multiple undeclared locations. ...; 4. The Agency's inability to verify the absence of diversion of nuclear materials required to be safeguarded by the Agreement for nuclear weapons or other explosive devices is also consistent with Article 19; 5. It also finds that, in accordance with Article III.B.4 in the Statute of the Agency, the Director General’s inability to... provide assurance that Iran’s nuclear program is exclusively peaceful raises questions that fall within the jurisdiction of the United Nations Security Council as the principal organ responsible for maintaining international peace and safety, and it expresses grave concern at this point. 6. ... The Board will discuss the timing and the content of the report that is required by Article XII.C in the Agency Statute, as well as Article 19 of Iran’s Comprehensive Safeguards Agreement and the notification that is required by Article III.B.4 in the Agency Statute. 7. Reaffirms that in order to verify the nondiversion nuclear material, it is imperative and urgent that Iran fulfill its legal obligations. To clarify all remaining Safeguards questions, the following immediate actions should be taken: Give technical credible explanations as to why uranium of anthropogenic source is present in two undeclared places in Iran. Inform the Agency about the location of nuclear material or contaminated equipment. Please provide all the information, documentation, and answers that are required by the Agency for this purpose. Access to the locations and materials the Agency needs for this purpose as well as the taking of sample as the Agency deems appropriate; 10. Demands that Iran remedy its noncompliance to its Safeguards Agreement as soon as possible by taking any steps necessary to the Agency and Board so that the Director-General can give the assurances necessary regarding the accuracy and completeness in Iran's declarations made pursuant to the Safeguards Agreement. 11. It stresses its support for a solution diplomatic to the problems caused by the Iranian Nuclear Programme, including the talks that took place between the United States of America and Iran. This led to an agreement which addressed all international concerns about Iran's nuclear activities.
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IAEA Board declares Iran in violation of non-proliferation obligations
The U.N. Nuclear Watchdog's Board of Governors, which consists of 35 nations, declared Iran in violation of its nonproliferation obligations for the first time since almost 20 years on Thursday. This could lead to a report being made to the U.N. Security Council. The major step represents the culmination of several simmering standoffs between Iran and the International Atomic Energy Agency that have arisen ever since President Donald Trump, during his first term in office, pulled the U.S. from a nuclear agreement between Tehran and other major powers. That deal then unraveled. Iran is likely to escalate its nuclear program, as promised, in response to the resolutions that it dislikes. This could complicate current negotiations between Iran and the U.S. to impose new curbs on Iran’s accelerating nuclear activities. The resolution comes at a particularly high-tension time, as the U.S. is pulling its staff out of the Middle East and Trump has warned that the region may become dangerous. He also said Washington will not allow Iran to have nuclear weapons. Diplomats said that the board approved the resolution presented by the United States of America, Britain, France, and Germany, with 19 countries voting in favor, 11 abstentions, and three against - Russia China and Burkina Faso. DAMNING REPORT The text seen by declares Iran to be in breach of its obligation given the damning report that IAEA sent member states on May 31, The text stated that "the Board of Governors... finds Iran's failure to meet its obligations to the Agency regarding undeclared material and activities in multiple undeclared locations within Iran since 2019 constitutes non-compliance of its obligations under its Safeguards Agreement." The IAEA has been investigating the matter for many years, but Iran still refuses to give a credible explanation of how the traces of uranium found at undeclared Iranian sites came to exist. The IAEA's May 31 report, which was a "comprehensive account" of events mandated by the board, revealed that three of the locations were "part of an undeclared, structured nuclear program carried out by Iran up until the early 2000s, and some activities involved undeclared nuclear materials". The U.S. Intelligence Services and the IAEA believed for a long time that Iran had a secret coordinated nuclear weapons program, which it stopped in 2003. However, isolated experiments continued over several years. IAEA Director-General Rafael Grossi stated this week that the findings are broadly in line with what they have previously said. Iran denies having ever pursued nuclear weapons. The resolution made reference to Iran being reported to the U.N. Security Council. However, diplomats say it would require a second resolution in order to do so, just as it did the last time Iran was declared to be in non-compliance, in September 2005. This was followed by a referral in February 2006. Reporting by Francois Murph; Editing and proofreading by Ed Osmond
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London Copper prices rise, but volatility concerns linger
London copper prices rose Thursday despite the fact that the market is expecting volatility due to the uncertainty surrounding the U.S.-China trade agreement. The London Metal Exchange's three-month contract for copper was up 0.4% to $9,683.5 a metric ton at 0706 GMT. Meanwhile, the Shanghai Futures Exchange's most traded copper contract fell 0.7% to $ 10,947.40 a ton. A metals analyst in Hangzhou said that "the LME and SHFE prices are diverging because China's demand for copper is seasonal weakening while the LME could be supported by potential U.S. copper tariffs." She said that copper inventories are increasing in SHFE registered warehouses, but slowly, so as not to put too much pressure on SHFE prices. SHFE copper inventories The week ending June 6 saw a rise to 107.404 tons from the week ending May 23. Tuesday, the U.S. reached an agreement with China that restored a trade truce. Beijing removed its export restrictions on rare earths, and Chinese students were allowed to attend U.S. Universities. However, markets are still cautious about future developments. The dollar fell after the Federal Reserve announced that the U.S. Inflation rate rose less than anticipated in May. This suggests the Federal Reserve may cut rates very soon. The metal price is usually supported by a weaker dollar, which makes it more attractive for buyers who use other currencies. Other LME metals include zinc, which rose 0.5% per ton to $2666, lead, up 0.4% at $1995.5, aluminum, which grew 0.2%, and nickel, down 0.2%, to $15140. Tin, however, fell by 0.1% to $32,630. Aluminium gained 1.1% at 20,395 yuan per ton. Zinc rose 0.3% at 22,085 Yuan. Lead gained 0.3% at 16,890 Yuan. Nickel fell 1.2%, to 120,000 Yuan. Click or to see the latest news in metals, and other related stories. DATA/EVENTS (GMT) US PPI Machine May 1230 US Initial Jobless Clm Weekly
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German engineering group urges EU to exert pressure on China regarding rare earths
VDMA, an industry association in Germany, warned that the supply of rare earths is becoming increasingly difficult for German equipment and plant manufacturers. It called on the European Union (EU) to exert more pressure on China. VDMA President Bertram Kawlath said to journalists that "we are already seeing rare earths no longer reaching our members." China, which controls 90% of the global processing capacity for rare Earths, used in everything from cars and fighter jets, to home appliances and other products, imposed export restrictions in early April, requiring exporters obtain licenses from Beijing. The new restrictions came after President Donald Trump introduced tariffs against Chinese imports, triggering a trade conflict between the U.S. Thilo Brodtmann, CEO of the VDMA, said that bottlenecks affect a wide range materials including germanium and nitrocellulose. Brodtmann said that China used the measures as a way to exert pressure. He called on the EU to engage in negotiations to end the blockade, but also stressed the need to find other suppliers over the medium- and long-term. Kawlath stated that if there are no alternative suppliers, then the EU and German government should negotiate at the highest levels with China to lift export restrictions. Kawlath added, "We also compete with the U.S. which is keen to secure exclusive rights to these products." Officials from the United States and China announced on Wednesday that China had agreed to relax its export restrictions for rare earths. (Reporting and writing by Tom Kaeckenhoff; editing by Rachel More, Thomas Seythal, and Miranda Murray)
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The key facilities of Iran's nuclear program
The Omani Foreign Minister said that a sixth round of U.S. - Iran nuclear talks would be held in Muscat on Sunday, following the announcement by U.S. president Donald Trump that Tehran will not be permitted to possess a nuclear device. Trump stated on Wednesday that U.S. military personnel are being removed from the Middle East, because it "could be a dangerous area". Here are some of Iran’s most important nuclear facilities. Where are Iran's nuclear facilities? The Iranian nuclear programme is spread out over many different locations. Despite the fact that Israel has been threatening airstrikes for decades, some sites are only built underground. IRAN HAS A NUCLEAR WEAPONS SYSTEM? The United States, as well as the U.N.'s nuclear watchdog, believe that Iran had a secret and coordinated nuclear weapons program which it stopped in 2003. The Islamic Republic has denied ever possessing or planning one. Iran agreed to limit its nuclear activities as part of a 2015 agreement with world powers. The deal fell apart in 2018, when Trump, then in his first term of office as president, pulled out the United States and Iran began to abandon the restrictions. IS IRAN INCREASING ITS URANIUM ENRICHMENT? Yes. Since the deal fell apart, Iran has expanded its uranium-enrichment programme. The time it takes to reach weapons-grade uranium to build a nuclear weapon is now days or a little over a week instead of a year as was the case under the 2015 agreement. It would take more time to actually make a bomb using that material. The exact time is not known and the debate continues. Iran enriches uranium up to 60% fissile purity, which is close to 90% weapons-grade. It has two sites where it does this. In theory, the country could make six bombs if they enriched the material further. NATANZ Complex at the centre of Iran's nuclear enrichment program, located on a plain bordering mountains south of Tehran in the Shi'ite holy city of Qom. Natanz is home to two enrichment facilities: the massive, underground Fuel Enrichment plant (FEP) as well as the above-ground Pilot Fuel Enrichment Plan (PFEP). In 2002, an exiled Iranian group revealed that Iran was building secretly Natanz. This sparked a diplomatic standoff with the West over Iran's nuclear intentions. The standoff continues to this day. The FEP is a facility designed for commercial enrichment, with a capacity of 50,000 centrifuges. There are approximately 16,000 centrifuges installed, of which 13,000 are operational, and they refine uranium up to 5% purity. The FEP is described by diplomats who are familiar with Natanz as being three floors underground. It has been a long-running debate as to how much damage Israeli aircraft could cause. Other means of damage have been used to destroy centrifuges in the FEP, including an explosion that occurred and a power outage in April 2021 which Iran claimed was an Israeli attack. The PFEP above ground houses only hundreds centrifuges, but Iran enriches up to 60% purity here. FORDOW Fordow, on the other side of Qom is a site for enrichment dug into the mountain. It's probably better protected against potential bombardment as the FEP. Iran was not allowed to enrich at Fordow under the 2015 agreement with major powers. The centrifuges are mostly advanced IR-6 machines. Up to 350 of these can enrich up to 60%. In 2009, the United States announced that Iran has been building Fordow secretly for years without informing the IAEA. Then, U.S. president Barack Obama stated: "The size of the facility and its configuration are inconsistent with a peace programme." ISFAHAN Iran's second-largest city, Isfahan has a major nuclear technology center on its outskirts. The facility includes the Fuel Plate Fabrication Plant and the Uranium Conversion Facility (UCF), which can convert uranium to uranium hexafluoride, which is then fed into centrifuges. Diplomats claim that Iran stores uranium enriched at Isfahan. There is equipment at Isfahan to make uranium metal, a process that is particularly proliferation-sensitive since it can be used to devise the core of a nuclear bomb. Isfahan will be a new location for 2022, according to the IAEA. It has machines that can make centrifuge components. KHONDAB Iran has a heavy-water reactor that is partially constructed. It was originally named Arak, and it's now called Khondab. Heavy-water reactors are a risk for nuclear proliferation because they produce plutonium easily, which can be used, just like enriched Uranium, to create the core of atom bombs. The 2015 agreement saw construction halted and the core of the reactor removed, then filled with concrete, rendering it useless. The reactor would be redesigned to "minimize the production of Plutonium and not produce weapon-grade Plutonium during normal operation". Iran informed the IAEA it planned to begin operating the reactor by 2026. TEHRAN RESERVE CENTRE The Iranian nuclear research facilities at Tehran include a reactor for research. BUSHEHR The only nuclear power plant in Iran, located on the Gulf Coast, uses Russian fuel, which Russia takes back after it has been used, reducing proliferation risks.
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India's palm oil imports in May surged 84% m/m, reaching a six-month high
An industry group said that India's imports of palm oil rose to a six month high in May. This was due to low inventories, and the price difference between palm oil and rivals soyoil or sunflower oil. India's increased imports of palm oil and soyoil, the world’s largest buyer of vegetable oils could support Malaysian palm prices and U.S. futures for soyoil. The Solvent Extractors' Association of India reported that palm oil imports increased 84% from April, to 592,888 metric tonnes, which is the highest level since November 2024. The SEA reported that India imported more than 750,000 tonnes of palm oil per month on average during the marketing period ending in October 2024. Imports of sunflower oil rose 1.9%, to 183.555 tons. This is the highest level since January. It said that higher imports of soyoil and palm oil lifted India's total imports of vegetable oil in May to 1,19 million tons. This was the highest level since December. SEA data shows that imports below average from January to April resulted in a reduction of domestic vegetable oil stock to 1,33 million tonnes by June 1 - the lowest level since July 2020. Rajesh Patel of GGN Research, a trader in edible oils, says that palm oil imports will likely increase even more in June. The oil is currently trading at a lower price than soyoil. Patel stated that the imports of soyoil in June would remain at around 400,000 tonnes. India imports a large amount of palm oil, primarily from Indonesia and Malaysia. It also imports sunflower oil and soyoil from Argentina, Brazil and Ukraine. A New Delhi-based trader said that vegetable oil imports will increase in the next few months, as this month’s duty reduction is expected to boost demand. India has halved its basic import tax for crude edible oil to 10%, in an effort to lower food prices and support the domestic refinery industry. (Reporting from Rajendra Jadhav in Bengaluru, Anmol Chaubey and Brijesh Patel in Bengaluru. Editing by Christian Schmollinger & Clarence Fernandez.)
Analysts' reactions to the US-China Trade Agreement
U.S. commerce secretary Howard Lutnick stated that restrictions on magnets and rare earths should be resolved as a result of a framework for trade and implementation plan reached with China in London.
Li Chenggang, Vice Minister of Commerce in China, said that the two teams agreed to implement their Geneva consensus. They would then take the framework agreed upon back to their respective leaders.
QUOTES:
CHRIS WESTON HEAD OF RESEARCH PEPPERSTONE MELBOURNE
The devil is in the detail, but the lack reaction indicates that this outcome was fully expected.
The Geneva agreement is a good thing, but the fact that there was no reaction on S&P500 Futures and only small movements in CNH and AUD suggests the outcome was expected. Details matter, particularly the amount of rare earths going to the US and the freedom of US chips to go East. But for now, as long as headlines about the talks between the parties are positive, risk assets will be supported.
The reaction of Chinese equity markets could be telling, and I suspect US equity Futures will closely track the developments today.
CAROL KONG CURRENCY STRATEGIST, COMMONWEALTH BBANK OF AUSTRALIAN, SYDNEY
"I believe in this climate...any hints of progress on a possible trade agreement will be beneficial for the markets. Although details are scarce, as long the two parties are in communication, I believe markets will be happy.
"It's going to be hard for both sides and take a very long time before they can reach a comprehensive agreement." This type of comprehensive agreement usually takes years to reach, so I am skeptical that the framework agreed upon at the London meeting will be comprehensive. "Tensions may have de-escalated temporarily, but will escalate in the coming months."
RAY ATTRILL HEAD OF FOREX STRATEGY, NATIONAL AUSTRALIA BANK SYDNEY
"The devil will be in the detail of what I call a handshake deal and, more importantly, if this can help to reestablish the trust between President Xi, and President Trump which was clearly broken since the Geneva Agreement has been published. It's too early to declare that a new US-China trading agreement is imminent.
"The entire year was littered by positive omens of reaching agreements, but we haven't seen any real progress. Or we've seen a backsliding in things that seemed to be agreed.
"Our view remains that, whatever is agreed upon in the next few weeks and months, we will end up with an international tariff situation that is much worse than it was before Trump became president. We'll still have a tariff climate that we believe is detrimental to global growth."
TONY SYCAMORE MARKET ANALYST IG SYDNEY
If we maintain the terms of the Geneva Agreement we will see US tariffs for Chinese goods remaining at 30% for some time, and Chinese tariffs for US goods remaining at 10%. This is a reduction from 145% and 125%, respectively. This would be amazing.
"Now, that was for me probably the consensus of the market...and now, people are just trying to figure out whether or not they're going to buy or sell US dollars and I think that reflects a little bit of this indecision.
I thought that Geneva would be extended and it appears we are getting what I expected. This is why the U.S. equity market has held up at this time. They still seem overheated and need to take a step back. We've had a great run, and now we're pushing up against our February record highs. For me, I think it's a good idea for them to take some time off. It hasn't been above or below expectations. It's exactly where I expected we would land, and that's the reason I think there's now a bit of uncertainty in US equity futures."
(source: Reuters)