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Copper falls from its peak due to a stronger dollar and a weaker risk appetite
The copper prices fell on Tuesday due to the stronger dollar and a lower risk appetite. Investors also locked in profits after a rally that reached a record-high in the previous session. The benchmark three-month copper price on the London Metal Exchange fell 0.4% by 1015 GMT to $11,202 per metric ton, after hitting a record high of $11,334 Monday. LME copper is up 27% this year so far, mostly due to fears about possible shortages. Ole Hansen is the head of commodity strategy for Saxo Bank, Copenhagen. He said: "We are pausing today as we have seen the dollar recovering and a general decrease in risk appetite." After a decline in cryptocurrency and a global bond saleoff, traders were cautious on Tuesday. After a strong demand for Japanese government bonds, the dollar rose against yen. The dollar's strength makes goods priced in U.S. dollars more expensive for buyers who use other currencies. Hansen stated that "copper is still in a good mood but it needs a correction. As long as we keep $11,000 we are poised to see higher prices, as the outlook for 2019 indicates a tightening market." Investors are reaping profits by arbitraging between the U.S. Comex and the LME, delivering copper to U.S. warehouses. The market is also evaluating the impact of the plan by major Chinese smelters to reduce production by 10% in 2019. Analysts at Chinese broker Jinrui Futures stated in a report that the plan of smelters to reduce output confirmed the view that supply of refined copper would become tight. After reaching a record-high of 89.920 yuan per ton earlier, the most traded copper contract at the Shanghai Futures Exchange ended daytime trading 0.1% higher, closing at 88.920 yuan. Other metals saw a 0.1% increase in LME aluminium to $2.896.50 per ton. Lead also gained 0.1%, to $2.003, while zinc fell 0.4%, to $3.085, Nickel dropped 0.2%, to $14.900, and Tin lost 0.4%, to $39,000.
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Newspaper reports suggest that the EU may delay its auto package due to increasing pressure on the 2035 deadline.
According to a report in Handelsblatt, the European Commission may delay the announcement a package of support for the automotive industry, which could include a possible easing of the 2035 phase-out of combustion engines, as lobbied by Germany and automakers. The German Business Daily reported that EU Transport Commissioner Apostolos Tzitzikostas said the package might be delayed for a few weeks. On December 10, the Commission, the EU executive branch, is expected to announce the date. Tzitzikostas, in a report published late Monday, said that Brussels was working "very hard", but it might not be done until January. We are still working on this. "We want to offer an automotive package which is comprehensive and covers every aspect," he said. The Commissioner signaled openness to Berlin’s calls for greater flexibility regarding the current target which effectively bans the sale of new combustion engine cars from 2035. This includes appeals to allow plug in hybrids and “highly efficient” combustion engines. Tzitzikostas stated that "we are open to any technology". He added that the letter of German Chancellor Friedrich Merz describing proposed changes supported by industry had been "very positively accepted".
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Malaysia tightens its nuclear control under amended law
Malaysia amended its nuclear regulatory structure to require that permits are obtained for all activities involving atomic energy, including the import, export and transshipment radioactive materials. Malaysia is conducting feasibility studies to adopt nuclear energy as part of its efforts to meet energy demands and achieve net-zero emissions by 2050. On Tuesday, the Science, Technology and Innovation Ministry announced that the move was intended to strengthen the legal framework for control and supervision of nuclear energy activities in order to protect workers, public and environment. The document also addresses the safety and security measures for radioactive materials and facilities, as well as making sure that they are implemented. It also clarifies liability in case of nuclear damage. The ministry released a statement that said, "The scope of the control and supervision will be expanded to include safety, security, and safeguards in order to create a comprehensive nuclear law that is aligned with global standards." Importing radioactive material or nuclear materials, items or technology related to nuclear energy, as well as exporting, transshipping or transiting these materials, will require permits. The new requirements include decommissioning systems, nuclear material accounting and control systems and International Atomic Energy Agency reports and inspections. The law imposes severe penalties for sabotage, nuclear weapons violations and terrorism. These crimes are punishable with 30-40 years in prison or even the death penalty.
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Kremlin: India's decline in Russian oil imports could be temporary
Dmitry Peskov, Kremlin spokesperson on Tuesday, told Indian journalists that the decline in India's imports of Russian oil may only last for a "brief period", as Moscow intends to increase supplies to New Delhi. India, which is the largest buyer of Russian oil by sea, has reduced its crude imports to Moscow due to Western sanctions. India is the third largest oil consumer and importer in the world. Russia is its top oil supplier. This month, India is expected to reduce its Russian oil imports to a minimum of a three-year high after Washington sanctions Moscow's largest oil producers Rosneft & Lukoil. Peskov, an Indian journalist, told Indian journalists in an online briefing Tuesday, just days before President Vladimir Putin's visit to India to hold summit talks with Prime Minster Narendra Modi. He said that trade mechanisms which could not be affected by a third country were needed. Russia had experience with doing business under sanctions. Indian refiners such as Mangalore Refinery & Petrochemicals Ltd., Hindustan Petroleum Corp., and HPCL-Mittal Energy Ltd. have stopped purchasing Russian oil. Indian Oil Corp, the state-run oil company, has placed orders for non-sanctioned companies to purchase Russian oil. Bharat Petroleum Corp's negotiations with Russia are in a very advanced stage. After British and EU sanctions, the Russian-backed Indian refiner Nayara Energy (partly owned by Rosneft) is processing only Russian oil. Russia wants India continue to support Nayara in order to boost local sales and capacity usage. Reliance Industries Ltd., formerly the largest Indian oil client to Russia, said that it had loaded Russian oil cargoes as "precommitted", starting on October 22. It will also process any parcels arriving after November 20, at its refinery, which is designed to produce fuels specifically for the Indian market.
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Putin wants to increase energy and defence exports during India's visit.
The Russian President Vladimir Putin begins a two-day trip to India on Thursday. He will be promoting more Russian oil sales, missile systems, and fighter jets to restore the energy and defence links that have been damaged by U.S. sanctions against India. Russia has been supplying arms to India since the 1960s. New Delhi is now its largest buyer of oil by sea despite Western sanctions imposed after Moscow invaded Ukraine in February 2022. India's crude oil imports will hit a low of three years this month after Russia was sanctioned for its increasing purchases of U.S. gas and oil. Putin's defence minister Andrei Belousov will accompany him on his first trip to India in four years for a meeting with Prime Minister Narendra Modi. He will also be joined by a large delegation of businesspeople and industrialists. Michael Kugelman, of the Atlantic Council in Washington, said that the visit of Putin offers Delhi the opportunity to reassert its special relationship with Moscow despite recent events and make progress in new weapons deals. He added that new initiatives would be announced even if most of them were low-hanging fruits in the ties. TRUMP FACTOR Indian officials are concerned that any new energy or defence deals with Russia may trigger a response from U.S. president Donald Trump. In August, Trump doubled the tariffs on Indian goods to 50% as punishment for New Delhi’s purchases of Russian oil. Both sides had discussions in advance of Putin's arrival, ranging from shipping to agriculture. In August, both sides agreed to begin negotiations for a free-trade agreement between India and the Russian led Eurasian Economic Union. Indian analysts claim that they are also in discussions to expand their partnership on civilian nuclear energy. A source familiar with the situation said that Putin's delegation included the CEOs of Sberbank, the dominant Russian bank, and Rosoboronexport (the state arms exporter), as well as the leaders of Rosneft and GazpromNeft. Sberbank had stated that it was interested in investing into Indian infrastructure projects using rupees. Rupees are used to settle a large portion of bilateral trade. Ivan Nosov, India's CEO at Sberbank, said the bank was also providing rupee loans to Russian companies and exporters to help boost Indian sales. The industry source and another Indian government source said that Moscow will likely seek India's assistance to obtain technical equipment for its assets in the oil sector, since sanctions have hampered access to suppliers. The speaker spoke under the condition of anonymity, as this is a sensitive matter. The source said that India will likely bid for the restoration of a 20% stake for the state-owned gas explorer ONGC Videsh Ltd, in the Sakhalin-1 Project in Russia's Far East. India hopes to conclude a U.S.-India trade agreement by the end of the year, since most of its refiners stopped buying Russian crude oil. However, some state refiners are now being attracted by discounts. Sources requested anonymity because they were not authorized to speak with media. INDIA LOOKS TO RUSSIA FOR DEFENSE SPARES Last week, Rajesh Kumar Singh, the Defence Secretary, said that India, unlike crude, does not intend to freeze its defence ties with Moscow any time soon, as it needs support for many Russian systems. According to two Indian officials who are familiar with the issue, Russian Sukhoi-30 fighter jets comprise the majority of India's fighter squadrons. Moscow has also offered the Su-57 fighter, its most advanced model, and this is likely to be discussed in the talks scheduled for this week. The officials who spoke under condition of anonymity said that India hasn't made a final decision about buying the jet. Singh, who spoke last week, said that India will likely discuss the purchase of more S-400 air defense systems. Harsh Pant of India's Observer Research Foundation, who heads the foreign policy studies department, believes that recent U.S.-Russian talks on ending the Ukraine conflict could make it easier for Indian officials and diplomats to communicate with Moscow. He added that "a large part of our trading relationship was based around energy, and now it is losing momentum under the threat from sanctions by the United States." "At the end of it all, defence is what binds the two together." (Reporting and editing by Clarence Fernandez; Nidhi verma, Shivam patel)
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Market keeps focus on risks as copper prices ease from their peak
Investors remained focused on the future risks of supply, after China's planned production cuts and Codelco's increase in premium. After reaching a record-high of 89.920 yuan per ton, the most traded copper contract at the Shanghai Futures Exchange ended daytime trading 0.10% higher, closing at 88.920 yuan (12,574.60). The benchmark three-month copper price on the London Metal Exchange fell 0.39%, to $11,208.50 per ton at 0719 GMT. Investors are assessing the impact of major Chinese Smelters' plans to reduce production by 10% in 2019. Analysts at Chinese broker Jinrui Futures stated in a report that the plan of smelters to reduce output confirmed the view that supply of refined copper would become tight. Codelco, the Chilean copper miner with a large market share, also sought an increase in its premiums for long-term copper supply 2026. These premiums are added to the LME copper price. The new offers are aimed at buyers who can profit from arbitrage between Comex and LME by delivering their copper to U.S. warehouses, which adds to the concern that supply of copper will be limited elsewhere. The U.S. Dollar continued to decline as the Federal Reserve's December rate cut remained a high priority. The dollar's weakness supports the copper markets by making commodities that are traded in greenbacks cheaper for investors who use other currencies. Aluminium gained 0.60% among other SHFE base-metals, while zinc gained 1.00%. Lead gained 0.73%. Nickel added 0.49%. Tin was the only metal to decline, with a 0.24% decrease. Lead gained 0.2%, but aluminium, nickel, zinc and tin saw only minor changes.
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Exxon is in talks with Iraq to buy Lukoil's stake in the West Qurna 2 giant oil field.
Five Iraqi sources who are directly involved in the matter confirmed that Exxon Mobil had approached the Iraqi Oil Ministry to express their interest in purchasing the majority stake of Russian company Lukoil in the West Qurna 2 giant oilfield. Exxon is expanding its presence in Iraq, as the U.S. company returns to the country after sanctions imposed by the U.S. Exxon refused to comment, while Lukoil did not respond to the request for comment. The U.S. Treasury has given potential buyers permission to speak to Lukoil up until December 13 but will require approval for specific transactions. Last month, it was reported that Exxon and Chevron were both considering buying parts of Lukoil. IRAQ'S TOTAL OUTPUT IS ABOUT 9% FIELD Lukoil’s biggest foreign asset, a 75% stake in the West Qurna 2 Iraqi oilfield is one of the largest in terms of production. It produces around 470,000 barrels of oil per day. This field is responsible for 0.5% of the world's oil supply, and 9% of Iraq's total production. Iraq is OPEC’s second largest producer behind Saudi Arabia. Lukoil declared force majeure on the field when Iraq stopped paying cash and crude to the company. Exxon operated the West Qurna 1, a neighbouring project, for many years before ceasing operations last year. It signed a nonbinding agreement in October with Iraq, which will help the country develop its Majnoon giant oilfield and increase oil exports. This marks the return of the U.S. multinational to the nation. Exxon's decision to return to Iraq follows a series of deals made with other oil companies including Chevron CVX.N, BP BP.L, and TotalEnergies TTEF.PA as Iraq seeks more generous terms to increase oil and gas production. EXXON A PREFERRED ENTITY WILL TAKE OVER FROM LUKOIL – SOURCE "Exxon would be our first choice to replace Lukoil." "Exxon has the experience and capacity to manage a large field like West Qurna 2," a senior Iraqi official in charge of foreign company operations in the southern region said. Senior officials from the oil ministry echoed this statement. Iraq's Oil Ministry said Monday that it has invited several U.S. companies to negotiate about acquiring West Qurna 2 in negotiations. The ministry stated that it intended to transfer the field's operation to one of these firms via a competitive bid process. (Reporting and writing by Ahmed Rasheed, Aref Mohammed and Shadia Nasralla; editing by Maha El-Dahan and Bernadettebaum)
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Iron ore prices rise as steel demand and infra demand counteract weak China data
Iron ore futures rose Tuesday as steady steel consumption and infrastructure demand offset weak China economic data. The January contract for iron ore on China's Dalian Commodity Exchange was 0.5% higher, at 800.5 Yuan ($113.20). As of 0727 GMT, the benchmark January iron ore traded on Singapore Exchange rose 0.17% to $103.75 per ton. According to Chinese broker Galaxy Futures, recent infrastructure demand is up and steel demand has been consistent with seasonal norms. This has allowed prices to rise in the near term. According to CreditSights, the global iron ore production is set to increase between 2025 and 2029. Production in Guinea will be a major growth driver once the Simandou Project goes live. CreditSights said that the sector will be affected by development delays resulting from social and political instability, as well a resource nationalism. According to Mysteel, the consultancy, shipments from Australia, the top producer, totaled 18.205 million tonnes, down 191,000 tonnes month-on-month. Iron ore prices were impacted by weak economic data in China, as a PMI survey showed that China's manufacturing activity declined for the eighth consecutive month in November. A global slowdown, an ongoing property crisis, and the strain of local government debt are all preventing policymakers from re-launching their activities. Coking coal and coke, which are used to make steel, also gained in price, rising by 1.86% and 2.45% respectively. Everbright Futures, a Chinese broker, reported that coking plants have increased their output and the first round price cuts for coking coal has been implemented. This has led to a slight improvement in steel mill profits. The benchmarks for steel on the Shanghai Futures Exchange have advanced. The price of rebar increased by 0.35%. Hot-rolled coils rose 0.3%. Wire rods strengthened 0.44%. Stainless steel firmed up 0.56%. ($1 = 7.0714 Chinese yuan). (Reporting and editing by Lucas Liew, Sumana Nandy, and Ronojoy Mazumdar).
Gold prices fall as investors take profits and Treasury yields increase
The gold price fell on Tuesday due to rising U.S. Treasury rates and profit booking after a six-week-high was reached in the previous session. Silver also retreated from its previous record high.
By 0917 GMT, spot gold had fallen 0.7% to $4203.55 an ounce.
U.S. Gold Futures for February Delivery were down 0.9%, at $4,234.40 an ounce.
Carlo Alberto De Casa is an external analyst with Swissquote. He said that some traders are taking profits after the price has risen from $4,000 to $3,250 over the past two weeks.
The benchmark yields for 10-year U.S. Treasury bonds remained near a 2-week high following the weakness of Japanese and European government debt, which reduced the appeal of bullion that does not pay a return.
The data released on Monday revealed that U.S. Manufacturing contracted for the ninth consecutive month in November. Investors will now be watching the November ADP Employment Report and Friday's PCE Index for clues about a Fed rate cut next week.
In a late-night address to Stanford University, Fed Chair Jerome Powell made no comments on the economy or on monetary policy.
CME's FedWatch tool shows that traders are pricing in a 87% chance for a Fed rate cut in December.
Gold that does not yield is usually favored by lower interest rates.
The markets are also awaiting President Donald Trump to announce the new Federal Reserve Chairman. White House Economic Advisor Kevin Hassett is reportedly the frontrunner. Hassett favors lower rates of interest, just like Trump.
De Casa stated that "I expect the gold price to consolidate laterally between $4,000 and $3,400 over the next few months," adding that a Fed interest rate cut may open up space for more rallies.
Silver eased 1.6% from its record high of $58,83 per ounce on Monday, to $57.01 an ounce. Spot silver has risen 97% this year due to a growing industrial and safe-haven demand.
Palladium rose 0.8% to $1,435.44 and platinum fell 0.9% at $1,642.56. (Reporting by Pablo Sinha in Bengaluru; Editing by Harikrishnan Nair)
(source: Reuters)