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Copper prices set to rise this week as demand offsets macro-headwinds
The copper price was set to rise despite the drop on Friday, as tighter supplies and a bullish mood helped counteract wider macroeconomic concerns linked to 'the Iran War' and 'inflation. Benchmark -three-month copper at the London Metal Exchange fell 1.34%, to $13,745 per metric ton as of 0700 GMT. The week-over-week increase was 0.7%. The Shanghai Futures Exchange's most active copper contract fell by 0.46%, to 105150 yuan (15,521.90 dollars) per tonne. Daniel Hynes is a senior commodity analyst at ANZ. He said that copper has been resilient to macroeconomic headwinds. "Structurally driven demand offsets cyclical 'weakness,'" he wrote in a report. ANZ stated?on Friday that it expects the copper price to rise to $14,000 a tonne by year's end, with demand growing from?the AI infrastructure and energy transition in the medium-term. On Thursday, there were large orders placed to remove copper from LME's warehouses. This trend has been continuing for the past few months. LME copper inventories The COMEX Copper stocks in the U.S. fell to their lowest level since April 2 at 379,975 tonnes. The number of short tons (642,709 tons) rose to 642,709 tons. Hynes stated that "non-U.S. copper exchange inventories (LME, SHFE, etc.) have actually been decreasing over the last few months." Investors were also waiting for a possible recommendation by the Department of Commerce of the United States on tariffs that could be imposed on imported refined copper. This is due at the end of this month. Hezbollah, a militia backed by Iran, rejected a ceasefire on 'Thursday in Lebanon, sapping the optimism that had been generated earlier that day when Israel and Lebanon were reported to have agreed to a ceasefire. Aluminium fell by 0.56% on the LME, while zinc dropped by 0.81%. Lead dropped by 0.45% and nickel was down 0.9%. Tin dropped 2.59 %. Aluminium fell 0.33% on the?SHFE. Zinc lost 0.88%. Lead lost 0.42%. Nickel dropped 1.64%. Tin plunged 5.35%.
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Gold to fall by a week's worth on fears of rate hikes and tensions in the Middle East
Gold prices dropped on Friday and were set to?have a weekly loss? as tensions in Middle?East dampened hopes for a U.S. - Iran peace deal amid fears of rising inflation and rate hikes. As of 0718 GMT, spot gold was down by 0.3%, at $4,461.28 an ounce. It has dropped about 1.6% this week. U.S. Gold Futures for August Delivery fell by 0.4% to $4487.90. Israel has said that it will not withdraw its troops from Lebanon, despite the rejection of a ceasefire by Hezbollah's?militia. This undermines President Donald Trump’s efforts to stop fighting in Lebanon to reach a peace agreement with Tehran. Nicholas Frappell is the global head of institutional market at ABC Refinery. He said that some pessimism about the outcome of the Iran conflict was negative for gold. "I believe the trend is for tighter interest rates, which is also weighing down on gold." Kansas City Federal Reserve President Jeffrey Schmid stated on Thursday that U.S. Central Bank's options are to be patient and hold interest rates constant or raise rates in order to curb inflation, which has been higher than target for many years. Mary Daly, the San Francisco Fed president, said that the U.S. interest rate path would depend on how the economy develops. She added that the Fed's monetary policy was "in a great place" and it is ready to respond in "either direction." Gold is often viewed as a hedge to inflation. However, rising interest rates can weigh down on the non-yielding gold. According to CME Group's FedWatch, the markets are pricing in an increase by the Fed before year-end. A 51% chance is that it will happen by December. Investors will now be awaiting the U.S. nonfarm payrolls for May, which is due later today, to gauge the Fed’s monetary policies. India's gold demand this week was relatively low as buyers were on the sidelines because of volatile foreign?prices. Premiums in China also eased. Silver spot fell by 1.8%, to $72.53 an ounce. Platinum dropped 0.8%, to $1.885.83. Palladium also declined 0.8%, to $1.309.91. All metals are headed to a loss for the week. (Reporting by Pablo Sinha in Bengaluru; Editing by Subhranshu Sahu)
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What is the secret to economic success? Stephen Jen: A good baseball team
What are the four most important tech economies in the world - Japan, Taiwan, South Korea, and the U.S. - all sharing? They all love baseball. It's possible that this is more than just a coincidence. This raises questions about the prospects for two other baseball-loving countries: Venezuela and Cuba. The U.S. developed baseball in the mid-19th century, as a combination of rounders and cricket. Baseball is popular among those who have interacted with America for a long time, just as British sports are in Commonwealth countries. Baseball became popular in Japan, Taiwan, and South Korea after World War II, when the U.S. maintained a large military presence. Today, these three economies together with the U.S. account for around 90% of the $40 trillion global tech market capital. The U.S. accounts for most of it, but the three other economies still represent almost 13%. This could not be a mere coincidence. Taiwan, South Korea and Japan all benefitted from the focus they placed on education during the post-war period, which helped to create highly numerate population, as well their lack of natural resource, which forced them to develop industries geared towards export. Their close relationship with America has also played an important role. It was not just the U.S. Military that had an influence on this part of Asia in the decades after World War Two. American companies also played a role. This became especially noticeable in the technology sector over time. Since years, there have been many and deep interactions between Silicon Valley companies and entities in Taiwan, South Korea and Japan (both universities and companies). Over 20% of the U.S.'s 10 million tech workers are Asian. Many Asian students also attend school in the U.S. Since the 1970s, research and idea exchanges have become a norm. China complicates this thesis, as you can imagine. China is a technology giant but it's not a baseball nation. Its rise was due to state-directed policies, its size, and access the U.S. led global economic system. Not because of historical ties with America. This distinction could prove to be the key. Baseball is not a cause of tech success but rather a sign of American influence. This helps to explain why China’s relationship with Silicon Valley differs from that of other Asian tech giants. On Deck? This is an interesting question. What about Venezuela and Cuba, two other baseball loving nations? These two nations are not economic giants. Their shared love of baseball is a sign that they have historical ties to the U.S. It is a question of whether or not these old links can be transformed into a renewed economic, institution, and strategic alignment. Venezuela became the world's leading oil producer after the discovery of oil in the early 20th century. The mid-20th century saw U.S. companies invest heavily in the exploration and extraction oil in Venezuela. This, in turn supplied an enormous amount of crude oil to America. In this period, American oil workers also helped popularize the game of baseball in Venezuela. It quickly became a national sport. The relationship between the United States and Venezuela deteriorated sharply after the rise in inequality and the fall of energy prices, which helped to pave the path for Hugo Chavez’s socialist movement. Baseball remained, even though most U.S. companies had left. Some may remember that, weeks after the U.S. arrested and captured Venezuelan President Nicolas Maduro, in January, Venezuela beat the U.S. baseball team in the World Baseball Classic Final, which was highlighted by U.S. president Donald Trump in a recent press conference. Baseball is not mentioned to suggest that it leads to tech success. Rather, I want to emphasize the long-standing relationship between Venezuela and the U.S. It is not difficult to imagine a similar relationship being rekindled. Before Chavez, Venezuela exported half its oil production to the U.S. A prolonged period of underinvestment has reduced its production to 1.0 million barrels per day. Venezuela's historic ties to the U.S., as well as its vast energy reserves could make it a natural ally again. This is not so unlikely, given the warming relationship between Washington DC and the current Caracas government. Joining the Team Finally, there's Cuba. Cuban students who returned from the United States in the late 1800s taught them how to play baseball. As well as Americans visiting the island nation. The Cubans are now playing in the U.S. Major Leagues. This affinity is also a reflection of a long-standing relationship between the U.S. and Cuba. Following the Spanish-American War in 1898, Cuba came under U.S. protection until 1902 when it achieved independence, although the U.S. maintained the right to intervene in Cuban matters until 1934. The proximity of the two countries, as well as their shared history, has helped to strengthen relations between them. Over the years, corruption, inequity, and poor government culminated with Fidel Castro's rise. He overthrew Batista's government in 1959 aligning Cuba to the USSR during Cold War. Cuba, unlike Venezuela with its oil wealth, does not have a clear path to progress. The current economic situation of Venezuela is dire. It has high inflation, blackouts, and other shortages. This is partly due to the fact that it no longer receives low-cost energy from Caracas. Cuba's proximity to the U.S., which was a major concern during the Cuban Missile Crisis of 1962, makes it in the best interest of the largest economy in the world to support positive changes. History suggests that the U.S. should be looking at countries with a history of establishing strategic alliances and influencing change in other parts of the world. You like this column? Open Interest (ROI) is your new essential source of global financial commentary. Follow ROI on LinkedIn and X. Listen to the Morning Bid podcast daily on Apple, Spotify or the app. Subscribe to the Morning Bid podcast and hear journalists discussing the latest news in finance and markets seven days a weeks. (Writing and editing by Anna Szymanski, Marguerita Choy, and Stephen Jen)
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Japan's Nikkei falls further from its record high as AI euphoria wanes
The?Nikkei?share average in Japan retreated for a second straight session on Friday after closing at an all-time high earlier this week, as momentum slowed down in the?hot technology sector. The Nikkei Index, the benchmark index, fell 1.3% and closed at 66588.12, posting a gain of 0.3% for the week. The Topix index, which is a broader measure of the market, fell 0.07% to 3,599.09. The Nikkei closed at a record high of 68.402.13 on Wednesday, and it has gained 34% this year. The Nasdaq, the tech-heavy stock market in the United States, closed lower. Overnight, Broadcom missed its revenue targets and dampened the euphoria surrounding AI investments. The data that showed real wages in Japan increased?1.9% for the fourth consecutive month in April lent support to broader markets. "While AI and semiconductor-related stocks are down today, we're seeing gains across a broad range of other sectors and stocks," said Wataru Akiyama, an equities ?strategist at Nomura Securities. The 'overall resilience' of Japanese stocks is attributed to wage growth, which leads to an increase in consumption. The Nikkei Index had 129 advancing stocks against 96 declining ones. Sumco, Ibiden, and Tokyo Electron were the biggest losers in this index. Top gainers were Japan Steel Works with a 9% increase, Trend Micro at 7.3% and T&D Holdings at 6.4%.
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Gold to fall by a week's worth on fears of rate hikes and tensions in the Middle East
Gold prices dropped on Friday and were set to?for an overall loss? as tensions in Middle 'East tempered?hopes of a U.S. - Iran peace deal amid fears about rising inflation and rate hikes. As of 0548 GMT, spot gold was down by 0.6%, at $4,445.51 an ounce. The price of gold has dropped about 2% in the last week. U.S. Gold Futures for August Delivery fell by 0.7% to $4471.70. Israel has said that it will not withdraw its troops from Lebanon, despite the rejection of a ceasefire by Hezbollah's?militia. This undermines President Donald Trump’s efforts to stop fighting in Lebanon to reach a peace agreement with Tehran. Nicholas Frappell is the global head of institutional market at ABC Refinery. He said that some pessimism about the outcome of the Iran conflict was negative for gold. "I believe the trend is for tighter interest rates, which is also weighing down on gold." Kansas City Federal Reserve President Jeffrey Schmid stated on Thursday that U.S. Central Bank's options are to be patient and hold interest rates constant or raise rates in order to curb inflation, which has been higher than target for many years. Mary Daly, the San Francisco Fed president, said that the U.S. interest rate path would depend on how the economy develops. She added that the Fed's monetary policy was "in a great place" and it is ready to respond in "either direction." Gold is often viewed as a hedge to inflation. However, rising interest rates can weigh down on the non-yielding gold. According to CME Group's FedWatch, the markets are pricing in an increase by the Fed before year-end. A 51% chance is that it will happen by December. Investors will now be awaiting the U.S. nonfarm payrolls for May, which is due later today, to gauge the Fed’s monetary policies. India's gold demand remained subdued despite the volatile foreign?prices. Premiums in China also eased. Silver spot fell 2%, to $72.36 an ounce. Platinum dropped 1%, to $1.880.40. Palladium slid 1.7 %, to $1.298.49. All metals are headed for a loss this week. (Reporting by Pablo Sinha in Bengaluru; Editing by Subhranshu Sahu)
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IAEA broker local ceasefire for repair of power line at Zaporizhzhia Nuclear Plant
The International Atomic Energy Agency announced on Friday that it had negotiated a temporary local ceasefire between Ukraine and Russia, the sixth such agreement since late last summer, to allow repairs to be made to an electrical supply line for Ukraine's Zaporizhzhia Nuclear Power Plant. The IAEA announced in a 'X' post that a localized ceasefire, brokered by the IAEA, took effect today on the frontline of the Zaporizhzhya Nuclear Power Plant. This will allow for the repair of power lines to avoid the risk of a nuclear accident. After extensive demining, both sides' technicians will repair the war-related damages to the Dniprovska 750-kilovolt power line in the next few days. The power line had been disconnected for more than two month, and now 'Europe's biggest nuclear power plant is dependent on a single 330 kV power line to provide the electricity required to cool its six shut down reactors. IAEA reported that the ZNPP lost access to its line "several" times over recent weeks. This forced it to use emergency diesel generators. (Reporting and editing by Himani sarkar and Thomas Seythal.
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ASIA GOLD - India's gold demand is subdued due to buyer caution and volatile prices
Gold demand in India was subdued as buyers were on the sidelines because of?volatile overseas prices. Premiums?in China also eased slightly. On Friday, the price of domestic gold was around 158.400 rupees for 10 grams. Dealers quoted discounts This week you can save up to $87 per ounce on official domestic prices, including 15% import duty and 3% sales tax. Last week, you could save up to $106 per ounce. The wedding season is coming to an end. The retail demand is continuing to moderate and jewellery stores are reporting lower footfall in the country, said a Mumbai bullion dealer from a private banking institution. In India, weddings are the main driver of gold sales. Bullion in the form jewellery is a key part of brides' attire and is a popular present from guests and family. The market is currently trading at a discount as the demand has been subdued over the last few weeks. "Older gold stocks are being sold at a 'deeper discount,'" said Nitin Sunderavanshi. Last month, the South Asian nation raised import duties on gold and sterling from 6% to 15% as part of its efforts to reduce overseas purchases and to ease pressure on foreign currency reserves due to higher oil prices. India's physical gold ETFs (exchange-traded funds) saw their first monthly net outflow since a year, in May. Investors?booked profit following a sharp increase in prices caused by higher import duty. Bullion was traded at a premium in China, the top consumer. The premiums are between $7 and $10 per ounce above the global benchmark price. Last week, they were $9 to $12. "Physical Demand in China has been somewhat subdued lately, partially?as the result of anxiety about potential interest rate increases and the impact on rising bond yields. These factors appear to be weighing on the appetite of investors for gold," Bernard Sin, Regional Director of Greater China at MKS PAMP. "However there is optimism that a resolution to the conflict may ease inflationary fears and reduce expectations for higher rates indefinitely, which could help stabilize demand moving forward." In Hong Kong, ?gold In Japan, premiums of $2 are traded on par with the price. Gold was sold for $0.25 off. In Singapore Gold was sold for a discounted price of $0.50 or a premium of $ 3. (Reporting from Pablo Sinha, Bengaluru; Rajendra Jadhav, Mumbai; editing by Ronojojo Mazumdar.)
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Indonesia introduces a regulation to centrally control strategic commodity exports
Indonesia released a highly anticipated?regulation? on Friday, which brought exports of strategic commodities under the control of the central government. The move was intended to boost state earnings and stabilize its rupiah. On May 20, President Prabowo announced that Indonesia will 'bring?exports?of all its strategic commodities?under the control of a?new state company. This move has scared investors. Prabowo signed the 11-page regulation on the State Secretariat Ministry's website on May 20, and it outlines the schedule of implementation for the new controls. The regulation stated that only state-owned enterprises can export palm oil, coal and ferroalloys, either in the capacity of "owner or sole intermediary". The state-owned enterprise that exports strategic natural resources commodities will determine the selling price, and can set margins. Later, the relevant ministers will decide whether to extend this regulation to other?strategic products. Business entities with a contract, agreement, or other document from the Indonesian government that contains "provisions relating at least to investments, divestment and domestic processing or refining" could be exempted from the new centralised export rules. According to the regulation, exemptions would be decided in a meeting of ministers involved. The regulation didn't specify which state-run company would be the sole exporter of commodities for the country, but in a Friday fact sheet the government's 'communication agency' said that "the government had appointed Danantara Sumberdaya Indonesia as the designated export SOE." In a press release, the parent company of DSI, Danantara Indonesia, said that it was a priority to maintain the trust of international 'trading partners' and investors. It added that existing export contracts could be continued. After the June?1 regulation, commodity exporters can begin to channel shipments through DSI. Danantara stated in a statement that DSI will serve as an "intermediary", overseeing exports, "while allowing commercial relationships between?producers' and their trading partners continue." According to the regulations, after December 31, 2026, commodities exports can only be "performed" by state entities. The Ministry of Trade is expected to issue detailed guidelines for the implementation of this policy. (Reporting and editing by Ananda Terresia)
Top iron ore miners seek Canberra's assistance in price war with China
Senior government officials revealed on Friday that major miners and their representatives have asked Canberra to help them push back against China's attempts to get better terms for their iron ore. They also raised the possibility of a single selling desk, Australia's largest commodity export.
China Mineral Resources Group, the state-owned iron ore buyer in China, has used increasingly aggressive tactics to gain better deals for its steel mills and to consolidate its position on the $132 billion market by sea.
CMRG had blacklisted BHP's Iron Ore for 7 months during protracted contract negotiations. CMRG also warned some steelmakers to avoid discussions with Fortescue regarding a new iron ore 'product.
Australia is China's largest supplier of iron ore, with more than half of its imports.
According to estimates, Canberra closely monitors this market as China is the biggest trading partner of Australia and iron ore is the most profitable commodity export.
A senate panel asked officials from the Department of Foreign Affairs and Trade on Friday if they had received a demand for government support or intervention in relation to CMRG and Iron Ore Pricing.
Steven Yates confirmed that they have.
Yates declined to provide more details out of concern for commercial confidentiality.
He said: "We have regular contact with Australian miners and I do my best to help them continue to export iron ore at the best possible price."
The Senate panel asked for a reply "to the proposal raised in industry circles, that Australia needs some kind of export-side coordination to cover a single state buyer."
George Mina, Deputy Secretary of Agriculture, said that earlier plans to coordinate supply in the agricultural sector had not been well received by trading partners. But this case is different because "there's already an established buyer".
Mina said: "There's no doubt that these questions are important for a long-term strategic plan."
BHP, Rio Tinto and Fortescue & Hancock declined comment.
An investor said that an executive of a leading iron ore miner had told him they had raised the issue with the government, but Canberra had been trying to repair their relationship with China and might not want to fight this battle right now.
BHP and CMRG reached a deal in April that included some sales denominated in yuan.
China is currently in contract negotiations with Fortescue, and will begin annual contract discussions with Rio Tinto at the end of this year.
(source: Reuters)