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Beijing's plan to control the global iron ore markets
China's iron ore state buyer uses increasingly aggressive tactics against mining giants like BHP in order to tighten their grip on the $132 Billion seaborne market, and to extract better terms from steel?mills. This is happening just as an enormous new supply source is about to strengthen China's hand. China Mineral Resources Group, (CMRG), in November asked their steel mills and traders to refrain from buying spot cargoes for a second BHP-product. This was months after the group blacklisted a product that had raised concerns with Australia's top supplier. Analysts and traders said that the standoff over a supply deal for next years' supply?marked a significant escalation?because CMRG hadn't previously banned multiple products coming from a single provider. This shows how far the buyer, who has been in business for three years, is willing to go in order to get better terms for China’s steel industry. The deal is expected to account for around a fifth (or more) of China's production needs, as well as the majority of BHP's mines located in Australia's north-west. Interviews with over three dozen steel and mine executives, traders, and analysts indicate that CMRG is assertive but has had limited success. Some steelmakers privately complain that CMRG hasn't delivered better contract terms or prices they wanted. RBC analyst Kaan Peek in Sydney said that CMRG's tactic with BHP may set a precedent with Rio Tinto, Fortescue, and Brazil's Vale. China is looking to reduce the 80% margins enjoyed by the 'iron ore' miners. CMRG's strategy has been refined and it has seen some successes, but also some mistakes. Three sources familiar with the matter said that, in a previously unknown move, a Chinese buyer obtained a freight-related discount of $1 per metric tonne on certain large cargo vessels from Rio last. CMRG became the sole Chinese supplier of iron ore to billionaire Gina Rinehart’s Hancock Prospecting after a long-running standoff, during which mills, traders and others claimed they had been pressured by Rinehart to not buy Roy Hill MB on the spot market for more than a full year. In implementing the strategy, CMRG actually made it more difficult for their own steelmakers. The company targeted a product of lower quality that was in demand during times when margins were extremely thin, and forced mills to spend more money to buy from other suppliers. CMRG refined its strategy to select products that would exert maximum force on individual miners while?minimizing market disruption. Several Chinese traders reported that mills who were banned from purchasing BHP's Jimblebar blend fines in September could easily substitute Rio's Pilbara Blend fines. BHP CEO Mike Henry said to CTV Canada in late December that the company is still in negotiations with Chinese clients. Hancock, Rio, Fortescue BHP, and Vale all declined to comment. CMRG - the State-owned Assets Supervision and Administration Commission - which directly supervises CMRG - the state-backed Steel Association and the world's largest steelmaker, China Baowu Steel Group - did not respond when asked for comment. In Search of Leverage China created CMRG 2022 in order to use its position as the largest iron ore purchaser to negotiate better terms with miners whose fat profit margins were a problem when steel mills had paper-thin or negative margins. Wood Mackenzie estimates that CMRG now negotiates on behalf of mills more than half the 1.2 billion metric tons per year of iron ore imported by China. CMRG wants to negotiate better terms on the index-linked price and other conditions, such as shipping and promoting more transactions via a domestic index. Some steelmakers privately complained early on that CMRG’s presence merely increased costs and reduced flexibility with their suppliers. It was bitter to give up negotiation rights, but it was also impossible for state-owned mills to refuse what was effectively a political mission. CMRG has become the dominant player in annual contract negotiations. However, traders and mills have said that it has failed to offer better prices. We have no choice but to pay a commission fee. "No, the company did not negotiate better terms or prices for us. "It's a politically charged task, and you must cooperate," said the manager of a steelmaker who refused to identify himself due to the sensitive nature of the issue. Steel industry sources claim that CMRG commission fees increased procurement costs for mills who were already suffering from low margins due to a downturn in the property sector. There have been many benefits, but especially for smaller mills. CMRG helped those who were unable to access credit lines to import iron ore, by acting as their buyer. CMRG is also aggressively buying spot cargoes via its Shanghai-based trading platform in an attempt to reduce volatility. Three sources confirmed this, and also said that the company has a trading target of 100 million tons by 2025. NEW SUPPLY SOURCE LOOMS Iron ore prices are still above $100 per ton despite China's slowing economic growth. They have been trading at this level since July. Wood Mackenzie predicts that prices will be $98 per tonne in 2026, and $95 per tonne in 2027. The vast Simandou Project in West Africa’s Guinea, however, is slated to provide around 7% global supply by 2028. This will tip the market into a surplus of 65 million tons and give CMRG a stronger bargaining position. Chinese companies are the largest shareholders in Simandou. Guinea is next, with a 22,5% stake, and Rio comes third, with a 22,5% stake. The ramp-up of Simandou has been widely viewed as a sign that the market dynamics are changing structurally. Peker, of RBC, said that it would fragment Australia's dominance when supplying iron ore into China. Peker stated that it is "sensible" for China to be aggressive in negotiating better terms of contract this year. Most mining executives that we spoke with agreed that CMRG will struggle to dominate a market if it doesn't have a dominant supply. The Chinese really want CMRG more effective. Demand and supply fundamentals continue to determine the price, said Gautam Varma founder of commodity consulting firm V2 Ventures who worked previously at Fortescue.
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The Kremlin has said that Trump and Putin do not support the idea of a temporary ceasefire between Europe and Ukraine.
The Kremlin announced on Sunday that?Russian President Vladimir Putin and the U.S. The Kremlin said on?Sunday that Russian President Vladimir Putin and?U.S. Yuri Ushakov, Kremlin's foreign policy aide, said that a phone call between Putin - and Trump lasted an hour and fifteen minutes - at Trump's request ahead of Trump meeting with Ukrainian President Volodymyr Zelenskiy in Miami. Ushakov stated that "the main thing is that the presidents from Russia and the United States share the same view that the temporary ceasefire option proposed by the Ukrainians or the Europeans, under the pretext of preparation for a referendum (or under any other pretext), only leads to a prolongation in the conflict. It's fraught with renewed hostilities." Ushakov stated that in order for the hostilities to cease, Kyiv would need to take a "bold" decision?in line with Russian and U.S. discussions about Donbas. It would be logical for the Ukrainian regime, given the current situation on the fronts to take this decision about Donbas. (Reporting Anastasia Lyrchikova, Writing by Gleb Stallyarov, Editing by Guy Faulconbridge).
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Brazil's labor court orders Petrobras to keep 80% of its workforce in place
The Brazilian Superior Labor Court has ruled that staffing levels at Petrobras Brazil facilities will remain at 80%, as negotiations between employees at the state-run 'oil 'company drag on during a long strike. The ruling, which was made by the court on Saturday, also prohibits worker unions from preventing the transport of workers and equipment from and to facilities, such as those of Transpetro, Petrobras’ logistics subsidiary. Sylvia dos Anjos is the head of exploration and production. She told Sunday that "we continue to work and ensure production and supply." In a separate statement, the company stated that, after four months of trying to reach an agreement at the negotiation table, '11 unions approved the compensation proposal from the company, ending the strike movement in the vast majority of their bases. Petrobras stated that there are still five groups of dissenters. The Sindipetro-NF union, which represents 25,000 workers within the Brazilian oil industry, has rejected the latest proposal from the state-run company to end the two-week-old strike, which began on December 15. Sindipetro-NF, in a statement on Saturday, said that the court ordered Petrobras also to provide information, including headcount by operating unit, job title and function. They called the decision a "victory." The FNP, another?separate? group on strike, which represents 26,000 Petrobras workers, has said that Petrobras's staffing level of 80% is "unenforceable." The dispute is not over yet, as the salary negotiations also include complex issues relating to Petrobras pension funds and deductions for payments to pensioners. Petrobras has played down the impact of the current labor action on production, and said it had deployed contingency team where necessary to ensure the market remained supplied. (Reporting and writing by Rodrigo Viga Gaier, Ana Mano, Nick Zieminski).
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Local officials confirm three deaths in protests against Alawites on the Syrian coast
Thousands of protesters call for federalism and the release of prisoners After an assailant fires, security forces will shoot into the air One member of the security forces has been killed By Karam al-Masri LATAKIA (Syria) Dec. 28 - According to the media office of the province, three people were killed when protests in Syria’s Alawite?heartland?of Latakia erupted into violence and gunfire. Syria has been racked by sectarian violence since the ouster of long-time leader Bashar Al-Assad last year. He is a Muslim Alawite who was ousted in a rebel assault and replaced by a Sunni led government. On Sunday, thousands of Alawite demonstrators gathered in Azhari Square to call for a decentralized political structure in Syria. A reporter on the scene said that gunshots were heard from an unknown location about two hours into protest. The protest then descended into chaos as security forces fired in the sky. Demonstrators were seen carrying injured people on foot. In a written statement distributed to journalists by the Latakia media office, it was stated that three?people had been killed and over 40 others injured. The statement did not say if all the deaths occurred in Azhari Square or in other towns that were also protesting. UNKNOWN ATACKERS SANA, the Syrian state-run news agency, reported that a member of the security force was killed in Latakia by gunfire fired by "armed remnants" of the former regime. Unknown assailants shot at civilians and security staff near Azhari Square, the report said. Ghazal Ghazal, the head of the Supreme Alawite Islamic Council had called for the rally on Sunday. In November, a similar protest lasted only an hour before it was confronted with a rival demonstration in support of Syria’s new government. Both protests were broken up by Syrian security forces. On Sunday, protesters chanted "We want federalism!" The Syrian people are united! Salman Mansour said, "We came here to demand our dignity and a living. We came here to demand political federalism, just like the big states of America, Germany, and (United Arab) Emirates." He added, "We came to demand our right to?living since we were killed on our land." More than 1,000 Alawites were killed in March after a failed insurrection by ?Assad loyalists sparked revenge killings by government-affiliated forces. Eight people were killed last week when a bomb exploded at an Alawite Mosque in Homs, a nearby city. "We will continue to ask for federalism in order to maintain our dignity. "They say we hate one another - No!" Nisreen Khzem, another protester said. Reporting by Karam Al-Masri, Writing by Maya Gebeily, Editing by Andrew Cawthorne
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Brazil's labor court orders Petrobras to keep 80% of its workforce in place
The Brazilian Superior Labor Court has ruled that staffing levels at all Petrobras sites in Brazil will remain at 80% as negotiations between workers at the state-run company continue to drag out amid a long strike. The ruling of the court on Saturday prohibits worker unions from preventing the transport of workers and equipment into and out of facilities, such as those of Petrobras Logistics subsidiary Transpetro. Sylvia dos Anjos told the press on Sunday that "we?continue to work and ensure production and supply". Petrobras workers began a strike on Dec. 15 The Sindipetro-NF union, which represents 25,000 workers within the Brazilian oil industry, has rejected the latest proposal from the state-owned oil company to end the two-week strike. Sindipetro-NF, in a statement on Saturday, said that the court had also ordered Petrobras, to provide information including headcounts by operating unit, function and job title. They called the decision a "victory." The FNP, another group on strike, representing 26,000 workers, has said that Petrobras' staffing levels at 80% are "unenforceable". The dispute is not over yet, as the salary negotiations also include complex issues relating to Petrobras pension funds and deductions for pension payments. (Reporting and writing by Rodrigo Viga Gaier, Ana Mano, Nick Zieminski).
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Guinea's presidential vote is expected to cement Doumbouya rule
Guinea began voting in the presidential election on Sunday. It is widely expected that Mamady Doumbouya will be given a seven-year term, ending the transition of West African nation back to civil rule. Former Special Forces commander Alpha Conde, who is believed to be in early 40s, will face?eight?other candidates, in a field that has no clear challenger. Former President Alpha Conde, and longtime leader of the opposition Cellou DaleinDiallo are still in exile. In Conakry's capital, the polling stations opened promptly at 7 am (0700 GMT), with some minor delays as people queued outside. Some voters referred to the election as an insignificant formality, and said the result was a given. The most important thing for me is to see the country return to normal. I'm pragmatic. Moussa Kabab, a shopkeeper from Nairobi, said: "I voted for the person who was in office and ensured the continuity of state." Around 6.7 million voters are registered and the polls were scheduled to close at 6:00 p.m. (1600 GMT). Provisional results should be available within 48-72 hours after polls closed. BAUXITE AND IRON ORE RICH Guinea has the largest bauxite deposits in the world and the richest iron ore deposit, Simandou. It was officially launched at the end of last month following years of delays. Doumbouya claims credit for ensuring Guinea gains from the project and its progress. In the wake of a dispute over a refinery, his government revoked this year the license?of Guinea Alumina Corporation's subsidiary Emirates Global Aluminium. The assets were transferred to a state owned firm. His popularity has been boosted by the rise of resource nationalism, which has also been seen in Mali, Burkina Faso, and Niger. It has also helped that he is relatively young, given that the average age for a person living in this country is around 19. Mohamed Kaba is a mechanic from Conakry. He said: "For us, young people, Doumbouya offers the chance to retire the old political class." "There's a lot going on right now in terms of corruption, but I do hope that these things can be resolved." DOUMBOUYA IS EXPECTED ENTRENCH POWER Benedict Manzin is the lead Middle East and Africa Analyst at Sibylline. Manzin said that he was likely to "position his allies and associated to benefit from expected economic boom associated" with the launch at Simandou. After the coup, a transition charter was adopted that prohibited junta leaders from running in elections. In September, Guineans approved a new constitution that removed this clause, extended presidential terms to seven-years, and created a Senate. The official results show that 92% of voters turned out to vote, but opposition figures dispute this. Abdoulaye Barry, an engineer in the civil service, announced on Sunday that he will not vote. He lamented that "the country is allowing a person who swore to not run to do so". ACTIVITIES OF THE OPPOSITION RESTRICTED IN A CAMPAIGN Under Doumbouya, the political debate has been muted. Civil society groups have accused his government of limiting press freedom, preventing protests and limiting opposition activities. Volker Turk, U.N. Rights chief, said that the campaign period "has been severely limited, marked by intimidation against opposition actors, apparent politically motivated enforced disappeared, and restrictions on media freedom". The conditions in place "risk undermining credibility of the electoral process," Turk added. The government has not responded to a comment request. Doumbouya remained low-key during the campaign and left it to his supporters and officials to present his case. He skipped the speech at a Conakry closing rally, but danced with wife to Koffi Omoide's performance. He wore a baseball cap in white and a track jacket with a black and white embroidered name of his group: "Generation for Modernity & Development". Reporting by Guinea Newsroom; Portia Crowe contributed additional reporting; Robbie Corey-Boulet wrote the article; Louise Heavens, Helen Popper and Helen Popper edited it.
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Guinea's presidential vote is expected to cement Doumbouya rule
Guinea will vote on Sunday for a president whose election is widely expected to give Mamady Doumbouya a seven-year mandate. This would complete the transition of West Africa's nation back to civil rule. Former special forces commander, believed to be in early 40s, is up against eight other candidates, in a field fragmented with no clear challenger. Former president Alpha Conde, and longtime opposition leader Cellou Dallein Diallo are still in exile. Guinea has the largest bauxite reserve in the world and the richest iron ore deposit that is still untapped. Simandou was officially opened last month, after many years of delays. Doumbouya claims credit for advancing the project and ensuring Guinea benefits from it. In the wake of a dispute over a refinery, his government revoked Guinea Alumina Corporation’s license and transferred its assets to a firm owned by the state. His youth, in a country with a median age of 19 years, and the turn towards resource nationalism, which is echoed by Mali, Burkina Faso, and Niger, have boosted his popularity. Mohamed Kaba, an auto mechanic from Conakry, said: "For us, young people, Doumbouya is a chance to retire the old political class." "There's a lot going on in terms of corruption, but I do hope that these things will be resolved." DOUMBOUYA IS EXPECTED TO ENTRENCH THE POWER Benedict Manzin is the lead Middle East and Africa Analyst at Sibylline. Manzin said that "he will likely position his friends and associates so they can benefit from the economic boom expected to accompany the start of production at Simandou". The transition charter, adopted after the coup, prohibited junta-members from running in?elections. In September, Guineans approved a new constitution that removed this clause, extended presidential terms to seven-years, and created a Senate. The preliminary results show that 86.42% of voters turned out, but opposition figures dispute this. OPPOSITION - ACTIVITY RESTRAINED DURING CAMPAIGN Doumbouya's government has tamed the political debate. Civil society groups claim that his government has banned protests and restricted opposition activity. Volker Turk, chief of the U.N. Rights Department, said on Friday that the campaign period was "severely restricted". The conditions in which the elections are being conducted "risks undermining their credibility," said Turk. The?government didn't respond to a comment request. Doumbouya stayed low-profile during the campaign and left surrogates to present his case. He skipped the speech at a closing rally in Conakry on Thursday, but danced with wife to Koffi Omoide's performance. He wore a baseball cap and track suit in white, emblazoned "Generation for Modernity and Development." Around 6.7 million voters are registered, and provisional results should be available within 48-72 hours after the polls close. Reporting by Guinea Newsroom; Writing and editing by Robbie Corey Boulet
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In Guatemala bus crash, at least 15 people are dead and 19 others injured
Authorities said that at least 15 people were killed and 19 others injured when a passenger van plunged into a ravine along the Inter-American Highway, in western Guatemala. Leandro Amado, a local firefighter spokesperson, told reporters that 15 people had died. This included 11 men, 3 women, and a child. He also said that 19 people had been injured. The accident occurred between km 172 and174 in the Solola Department, an area known for its dense fog which reduces visibility. The images shared on social media by the fire department early Saturday morning showed the bus wreckage?in the ravine while firefighters worked to save victims. Reporting by Sofia Menchu. (Editing by Joe Bavier, Mark Potter and Mark Potter.)
Investors show caution as gold prices drop ahead of FOMC meeting
Gold prices fell slightly on Monday as investors were cautious in advance of the U.S. Federal Reserve’s two-day meeting to discuss policy and Chairman Jerome Powell’s remarks. Investors are looking for clues about future monetary policies.
By 01:50 pm, spot gold had fallen 0.2% to $4,189.49 an ounce. ET (1850 GMT). U.S. Gold Futures for February Delivery settled 0.6% lower, at $4,217.7 an ounce.
Peter Grant, senior metals analyst at Zaner Metals and vice president of the company, said that "the market is waiting on the Fed's decision and more policy guidance."
Grant stated that gold remains attractive, as fundamentals are strong and central banks continue to buy. He added that a move towards $5,000 per ounce is achievable in the first quarter 2026.
The markets are expecting a rate cut of 25 basis points, and traders see a 90% chance, up from 66% in November.
Powell will hold a presser after the Fed's Open Market Committee concludes its meeting Wednesday. The FOMC will announce its final policy of the year.
Gold that doesn't yield is more attractive when interest rates are lower.
The leaders of France and Germany, as well as the British Prime Minister, showed their support in London for Ukrainian President Volodymyr Zelenskiy, at what they called a "crucial moment" for Kyiv. This was due to U.S. demands that Kyiv agree a peace agreement with Russia.
Gold is a safe haven asset that tends to perform well in times of economic and geopolitical instability.
Morgan Stanley believes that gold will continue to rise, due to a declining U.S. Dollar, the strong ETF purchases, central bank purchases and demand for safe havens.
Silver fell 0.5%, to 57.98 dollars per ounce after reaching a record-high of $59.32 an ounce on Friday.
Jim Wyckoff said that silver is normally a close follower to gold. However, in the last few weeks, the price of silver has outpaced gold. He added that the prices would rise above $60 per ounce, and might even reach $70 by the end of the year.
Palladium rose 0.2% to 1,460.75, while platinum fell by 0.1%. (Reporting by Sarah Qureshi in Bengaluru; Additional reporting by Arunima Kumar; Editing by Joe Bavier, Shailesh Kuber and Krishna Chandra Eluri)
(source: Reuters)