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MORNING BID - Spotlight on CPI ahead of APEC whirlwind
Rocky Swift gives us a look at what the future holds for European and global markets. The calm before the storm is Friday. Next week, there will be a slew of events including central bank meetings, summits and earnings. Before the weekend, the focus will be on the U.S. consumer prices for September. This is the only economic light that shines through the darkness caused by the second longest U.S. shutdown. So far. Bureau of Labor officials returning from furlough are expected to report that the U.S. consumer price index core remained at 3.1%. This reading is unlikely to have an impact on the Federal Reserve's widely anticipated rate reduction next week. There will be a whirlwind series of meetings between leaders centered around the Asia-Pacific Economic Cooperation CEO Summit. This includes a face-to-face meeting between U.S. president Donald Trump and Chinese president Xi Jinping, which is planned for South Korea. The announcement by the White House of the meeting calmed the markets amid the escalating tensions among the superpowers, and the deadline set for an additional U.S. 100% tariff on Chinese imports. Trump, proving that every good thing has its dark side, took to Twitter to start a new fight with Canada. He declared the trade talks with America's northern neighbor were "TERMINATED." European equity futures indicate a steady market start. After a volatile weekend, oil and gold have settled down. Asian stocks rose following a strong Wall Street closing and an impressive earnings report by Intel. Apple and Microsoft are among the Magnificent Seven companies that will be reporting earnings next week. Sanae Takaichi, the newly elected Japanese prime minister, is scheduled to speak in the later part of this session. Her government is reportedly considering a large stimulus package. She will also be meeting Trump for her first time just a few days from now. Data released on Friday showed that Japan's core consumer price index remained above its 2% target. This has kept alive the expectation of an interest rate increase in the near future ahead of next week's Bank of Japan policy meetings. The following are key developments that may influence the markets on Friday. - U.S. earnings: Procter & Gamble, HCA Healthcare, General Dynamics - Europe Earnings: Saab AB and Sanofi - U.S. Data: Core CPI for September; S&P Global Flash PMIs for Oct.; University of Michigan final print of consumer sentiment for October - Europe data: Retail sales in Britain for September and France consumer confidence for Octember - Flash PMIs Euro Zone, France Germany and Britain
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Amman Mineral, a copper miner in Indonesia, may be allowed to export copper concentrate
After banning copper concentrate exports in 2011, the energy ministry of Indonesia has now said that it may permit Amman Mineral International, a copper miner, to export copper concentrat after all. Indonesia banned the export of copper concentrates and other raw materials from mid-2023 in order to boost its domestic metal processing industry. However, Amman continued to export until December, last year when it was due to commission a brand new smelter. Tri Winarno, an official in the energy ministry, stated that after a fire broke at its smelter located in West Nusa Tengggara in Indonesia this year. He said that the Energy Ministry regulations allow for exemptions from the export ban in force majeure situations. Amman had submitted the necessary police report and the insurance claim to prove force majeure. Winarno stated that "we are currently in the process of granting it (the export license)." Amman announced earlier this year that it had 220,000 metric tonnes of copper cathode ready for export. The smelter was facing a number technical problems. Amman didn't immediately respond to our request for comment. (Reporting and editing by Bernadette Cristina, Ananda Terresia)
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Saudi Arabia is in a financial crunch as the elite descends on Riyadh
Next week, global financial titans will descend on Riyadh for Saudi Arabia's premier investment conference. This is the first time that they have been in the city since Donald Trump's return to the White House, and his taste for extravagant projects fits with the Kingdom's ambitious plans. The Future Investment Initiative conference (FII) is being held against a backdrop that includes a fragile ceasefire in Gaza, simmering tensions in the region and a Kingdom under increasing pressure to prove its massive economic transformation. In the past, the world's biggest oil exporter used the event to show off its ambitious plans and sign deals to attract foreign investors while hosting world leaders. This year, attendees include the Colombian president Gustavo Petro as well as Larry Fink of BlackRock, Jamie Dimon of JPMorgan and Citi's Jane Fraser who became co-chairwoman of the U.S. Saudi Business Council on Tuesday. The event also includes energy and tech heavyweights like Aramco's Amin Nasseer and Intel's Lip Bu Tan. Test to see if investors will confirm their confidence This event, which was held in Miami in February and attended by Trump, will serve as a litmus test for global investors to confirm their confidence in the Saudi economic system. Riyadh promised to invest $600 billion when Trump visited in May. Saudi Arabia also seeks inward capital for Crown Prince Mohammed Bin Salman's economic plans to overcome hydrocarbon dependency. Low oil prices, coupled with a budget deficit and the need to prioritize and reduce costs have forced the Kingdom to delay many projects. "Trump's large-than-life personality and the Kingdom's love for big, attention-grabbing statements make a great match," said Alice Gower of London-based consultancy Azure Strategy. The follow-through of headline pledges will likely be slow, especially at a moment when Riyadh faces pressure to complete large projects before hosting global events. Gower stated that investors are still dealing with the reality of a state-dominated economic system, incoherent decision-making processes, skills shortages and heavy commitments to spending. Deadlines for big events The gathering of elites shows that Saudi Arabia is no longer shunned as it was only a few short years ago by many Western governments. MbS was censured by the international community for crackingdown on dissent, and for killing journalist Jamal Khashoggi. Saudi Arabia claims Khashoggi's death was the result of a rogue group. MbS, however, has accepted responsibility for it because it occurred on his watch. Riyadh has made many promises, including hosting the Asian Cup in 2027, World Expo 2030 and both the Asian Games and soccer World Cup in 2034. For these events it must complete 15 stadiums -- 11 of them brand new. Riyadh has made promises to host World Expo 2030 in 2030, the Asian Cup 2027, and both the Asian Games 2034 and soccer World Cup 2034. For these events, 15 stadiums must be completed, 11 of which are brand-new. Some projects related to these events have already been delayed. Most notably Trojena - a ski resort located in the futuristic city NEOM - a desert megacity intended to house nine million people near the Red Sea. Saudi officials are reportedly considering delaying the Asian Winter Games until 2033. The NEOM "The Line", billed as a 170 km-long, 200-metre-wide indoor city, has had its work scaled back in order to complete a 2.4-km stretch that includes the World Cup Stadium. Edward Bell, Chief Economist at Dubai's Emirates NBD, said: "There are a number of challenges associated with compressing everything into a short timeframe, as opposed to prioritising investments and pencilling them in over a long period." Fitch Ratings reported this month that lower oil prices and heavy investments are straining the Kingdom's finances. The Saudi government's 2026 pre-budget statement signalled a shift towards tighter spending after a sharper-than-expected widening of the 2025 deficit, now seen at 5.3% of gross domestic product. Bell predicted that Saudi Arabia will likely run deficits for many years. He praised the government's transparency and realism about their needs. A Saudi Finance Ministry spokesperson was asked for comment about the prioritisation projects. He said: "As previously stated, we continue to see the economy diversifying, powered by strong growth in the non-oil sector through the private sectors, and with a disciplined and strong fiscal position." Citi and Goldman Sachs have expanded their regional offices and teams in Saudi Arabia. The Public Investment Fund of almost $1 trillion, which is spearheading the economic transformation, is far from reaching its target of $100 billion annually in foreign direct investments by 2030. Karen Young, a senior Fellow at the Middle East Institute in Washington, said that it was a difficult target. She noted that the biggest FDI deals were still being made in the energy industry. The kingdom has fallen behind in some projects but it has delivered others, notably those headed by luxury resort developer Red Sea Global. RSG CEO John Pagano who is also a member of the board of NEOM said that changes will be made to ensure delivery deadlines for mega projects. He added, "The PIF and the country are working to ensure that we meet our commitments." Reporting by Federico Maccioni, Rachna uppal and Maha El Dahan Editing by Peter Graff and Maha El Dahan
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Fugro Wraps Up Geotech Survey for Orsted’s OW Project in South Korea
Fugro UST21 has completed offshore geotechnical site investigations for Ørsted’s 1.4 GW Incheon offshore wind project in Incheon, South Korea.The project, located approximately 70 km off the coast, is set to become the largest offshore wind farm in the country and plays a pivotal role in Korea’s transition to net-zero emissions by 2050.Fugro’s Geo-data will support the design of foundations and cable routes across the whole development area of Incheon offshore wind project.The work covers a comprehensive scope of marine geotechnical services, including seabed cone penetration testing, downhole sampling, pressure meter testing, and laboratory analysis.“We are proud to support Ørsted in launching South Korea’s largest offshore wind project. Our work will provide the critical Geo-data needed to inform safe and efficient foundation design, helping Ørsted deliver on its sustainability commitments and local economic development goals,” said Robert Shapcott, General Manager, Fugro UST21.“We would like to extend our sincere thanks to Fugro for their exceptional contribution to the Incheon offshore wind project.“Their technical expertise and dedication to safety and quality, and careful consideration of all stakeholders, have played a vital role in the success of this campaign. We truly value their expertise and the professionalism they brought to the project,” added Kasper Mortensen, Ørsted’s Site Investigation Project Manager.
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As US inflation tests loom, gold is set to end its nine-week winning streak.
The gold price eased on the Friday, and was on course for its first weekly decline in 10 years. A stronger dollar weighed on prices as participants rearranged their positions in anticipation of an important U.S. inflation data due later that day. As of 0315 GMT, spot gold was down by 0.2%, at $4,118.68 an ounce. Bullion is down 3% this week and on track to have its largest weekly percentage decline since mid-May. U.S. Gold Futures for December Delivery fell by 0.3%, to $4133.40 an ounce. Dollar index gains for third consecutive session, making gold expensive for holders of other currencies. Tim Waterer, Chief Market Analyst at KCM Trade, said that a meeting between U.S. leaders and Chinese leaders has a good chance of deescalating the trade tensions. This will help the dollar and reduce the demand for gold as a safe haven. The White House announced on Thursday that U.S. president Donald Trump would meet Chinese President Xi Jinping during a trip to Asia next week. The trade tensions between Washington, DC and Beijing are escalating. Both sides have announced retaliatory actions. The U.S. Consumer Price Index report (CPI) is the next focus. It is expected that core inflation remained at 3.1% in September. Due to the shutdown of government, this report is delayed. Investors are almost fully pricing in a rate cut of 25 basis points at the Federal Reserve meeting next week. Waterer stated that a CPI reading below the Fed's target would be welcome, as it would allow them to continue their plan of cutting rates twice by year-end. "But if inflation surprises are positive, the dollar will likely gain more traction and this could hurt gold." When interest rates are low, gold tends to increase in value as the cost of non-yielding metals is reduced. Silver spot fell 0.6%, to $48.62 an ounce, and is on course for its worst weekly performance since March. It has fallen 6% this week. Palladium fell 1.1% on Friday to $1441.04. Platinum rose by 1%, to $1640.98.
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Marathon Petroleum restarts fuel units at Texas refinery sources say
Marathon Petroleum will restart the fluidic catalytic unit that produces gasoline and the Ultracracker hydrocracking units (HCUs) that produce diesel at its 631,000 barrels per day (bpd), Galveston Bay refinery in Texas City. This is according to people familiar with plant operations. The sources say that Marathon will complete the repairs of the 64,000 bpd residual Hydrotreater at the Galveston Bay Refinery, which was damaged by fire, in mid-November. This is a month after the original plan. Marathon spokesperson Jamal Kheiry refused to discuss the operations of the Galveston Refinery which is the second-largest refinery in the United States. Sources said that the 140,000 bpd FCCU, and the 60,000 bpd Ultracracker had been shut down due to a malfunction. This occurred on 16 October. Sources said that Marathon plans to restart both units by the weekend. A fire that occurred on June 14 caused severe damage to the RHU. Sources said that although most sections of the RHU have resumed production the 400-production section – where the fire took place – is still being rebuilt. FCCs convert gas oil into unfinished fuel under high pressure and heat using a fine silica powder catalyst. Hydrogen and high pressure are used in conjunction with heat and pressure to convert gasoline into diesel or other motor fuels. Hydrotreaters remove sulfur from motor oil and feedstocks using hydrogen in accordance with U.S. Environmental Rules. Reporting by Erwin Seba, Editing by Muralikumar Aantharaman and Sherry J. Phillips
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Oil prices drop as Asia shares rise on hopes of US-China trade
Asian shares rose on Friday, as Wall Street earnings boosted investor confidence and signs of a thaw between the United States and China. Oil prices also eased after new U.S. sanctions against Russian suppliers. Intel's results, released after New York closed, exceeded expectations. This is the latest in a string of positive earnings reports from the United States. Nikkei shares in Japan soared before the new Japanese prime minister's speech, where he is expected to discuss stimulus. Crude futures have trimmed their weekly gains spurred by the new U.S. restrictions on Russia's largest oil companies. The U.S. shutdown has largely obscured most economic data. Friday's consumer prices figures will provide important clues about the Federal Reserve's next-week's policy meeting. The mood was boosted after the White House confirmed that U.S. president Donald Trump would meet Chinese President Xi Jinping during a tour of Asia next week as a deadline for tariffs loomed. The White House's statement was interpreted by senior market analyst Kyle Rodda as "an indication that the trade talks between high-level delegates to be held in Malaysia in the next few days will likely yield positive results." It's unlikely that either side would deliberately set up their leader for a failure. MSCI's broadest Asia-Pacific share index outside Japan rose 0.5% at the opening of trading. Japan's Nikkei stock index rose 1.2%. The U.S. Dollar Index, which measures greenbacks against a basket currencies, increased by 0.1% to 99. The euro fell 0.1% to $1.161, while the yen dropped 0.2% to 152.85 against the dollar. US SET TO PUBLISH CPI DATA AMID GOVERNMENT SHUTDOWN Trump will leave for Malaysia on Friday evening. He will also travel to Japan and South Korea where he is scheduled to meet Xi the following Thursday. The trade tensions between Washington and Beijing have been increasing, and a summit between the two leaders will come before an Nov. 1 deadline when the U.S. is expected to impose a 100% additional tariff on Chinese imports. The U.S. Calendar expects the core consumer price index to remain at 3.1% on Friday. This is a key input into Fed policy. The U.S. Bureau of Labor Statistics announced last week that it would release the report, despite the 23rd-day government shutdown. This was to help the Social Security Administration adjust its annual cost of living. Data released on Friday showed that core consumer prices in Japan rose 2.9% over the past year, exceeding the central bank's target of 2% and maintaining market expectations for a rate hike soon. Sanae Takaichi, the new Japanese Prime Minister, will give a speech that is highly anticipated in the afternoon. Her government is reportedly considering a large spending package. OIL PRICES SOAR AFTER SANCTIONS Against Russian Suppliers Intel's shares soared in after-hours trade after the company exceeded expectations for its September-quarter profits. Early European trades saw the Euro Stoxx 50 futures up 0.16% to 5,689; German DAX futures up 0.14% to 24,345, and FTSE futures up 0.04% to 9,623.5. The S&P 500 E-minis futures rose by 0.12% to 6,783. Bitcoin rose 0.8%, to $110,512.30. Ether rose 1.2%, to $3,878.01. Spot gold rose 0.3% to $4,138.52 an ounce but is still on course for its worst weekly performance since May. The oil prices soared after Washington announced new sanctions late Wednesday on major Russian suppliers Rosneft, and Lukoil. This increased pressure on the Kremlin for it to end its war in Ukraine. U.S. crude fell 0.7% to $61.38 per barrel while Brent dropped to $65.55 a barrel, down by 0.7% for the day.
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Iron ore prices fall as China's demand falls
The price of iron ore futures fell on Friday after a three-session streak of gains, as the demand for steel in China, the world's largest consumer, slowed. The most traded January iron ore contract at China's Dalian Commodity Exchange has fallen 0.26%, to 773.5 Yuan ($108.59), a metric tonne, after a 0.3% rise so far this week. The benchmark iron ore for November on the Singapore Exchange is 0.57% lower, at $104,05 per ton. This represents a 0.1% increase so far this week. Ying Cao is an analyst based in Beijing at SDIC Futures. She said that lower hot metal production, a measure of iron ore consumption, dragged prices down for the main steelmaking ingredient. The average daily hot metal production has declined for four weeks in a row by 0.4% compared to the previous week, and is now at its lowest level since September 5, with 2.4 million tonnes of output per week on October 23. Cao said that he expects hot metal production to continue to decline in the next few weeks, as higher coal prices have forced some mills into reducing output. Analysts at GF Futures reported that coke and other steelmaking components, such as coking coal, continued to gain, with gains of 1.83% and 2.31% respectively. This was boosted by a falling supply due to the halting of mining operations in certain coal production hubs. The price decline was limited by the hope that tensions between traders in the two world's largest economies would ease. Next week, U.S. president Donald Trump will visit Asia and meet Chinese president Xi Jinping. He Lifeng, Vice-Premier of China, will be holding trade talks with U.S. officials in Malaysia between October 24 and 27. The benchmarks for steel on the Shanghai Futures Exchange have been moving sideways. Hot-rolled coils gained 0.31%, while rebar and wire rod fell 0.46%. Stainless steel also rose 0.86%. ($1 = 7.1230 Chinese yuan). (Reporting and editing by Rashmi aich; Amy Lv, Colleen Howe)
Sources: Japan Q4 aluminum talks drag on in an effort to bridge the gap
Three sources involved directly in the discussions said that quarterly pricing talks between Japanese aluminum buyers and global producers took an unusually long time as both sides struggled to close a large gap on primary metal shipment for October toDecember.
Japan is one of the largest Asian importers of metals and the premiums that it pays each quarter above the London Metal Exchange cash price (LME) set a benchmark for the region. However, it is rare to have talks continue weeks after the start date.
Early September saw the beginning of talks between Japanese buyers, global suppliers such as Rio Tinto and South32.
In the initial offer, producers offered Japanese buyers premiums ranging from $98 to $100 per ton, a drop of 5% to 10% over the previous level for July-September, due to low demand.
Sources said that one producer cut its price to $97, from $103, and buyers refused, citing premiums of $70 or more, and wanting levels in the 80s.
Source at a Japanese fabricator said, "The $97 offer has expired and we've asked the producer for a new offer." She added that low demand and high inventory keep bids in $80s.
Three major Japanese ports have large stocks of aluminium
Sources at a producer say that sellers are holding out for a higher price as the rising prices in Europe and the United States are expected to cause a shortage of supplies in Asia. They also said that discussions could continue until the end this month.
Sources declined to identify themselves as this is a sensitive issue. (Reporting and editing by Clarence Fernandez; Yuka Obayashi)
(source: Reuters)