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Aluminium and copper both hit a four-month low due to fund liquidation
Aluminum prices fell to their lowest level in four months Wednesday, and copper also lost ground as funds liquidated bullish 'positions due to concerns over rising?U.S. Interest rates and uncertainty about negotiations to end the Iran conflict. The benchmark three-month aluminum on the London Metal Exchange fell 0.9%, to $3,058 per metric ton, by 0930 GMT. It had previously reached its lowest level since February 19, at $3,045.50. Tuesday, metals used for transport, packaging, and construction saw their biggest quarterly and month-to-month declines in years. Ole Hansen is the head of commodity strategy for Saxo Bank, a Copenhagen-based bank. The continued strength of the dollar and the yields staying 'firm' adds weight to these markets. After hitting a six month low, the most traded aluminium contract at the Shanghai Futures Exchange closed daytime trading 1% lower, closing the daytime trade at?22.370 yuan (3,292.47) per ton. The dollar reached a record high against the Japanese yen as the yields on U.S. Treasury bonds rose sharply, while the dollar index remained steady. The dollar is stronger, making commodities priced in U.S. dollars more expensive to buyers using other currencies. The news that Iran refused to meet with U.S. top envoys, who had flown to the region following an outbreak of hostilities clouded the prospects for lasting peace between the two countries. LME 'copper' fell 1.6% to $13,165.50 per ton, after U.S. officials missed a June 30 deadline to announce whether or not tariffs would be applied to refined copper. The losses in 'base metals' were however limited after a survey revealed that the manufacturing sector of China, which is a major metal consumer, expanded for a seventh consecutive month in June, finishing its strongest quarter since late 2020. Other LME metals include zinc, which fell 2%, to $3,480 per ton. Lead also dropped 0.2%, to $1,871, Nickel was down 0.4%, to $16,355, and Tin, which was down 2%, to $50,550. ($1 = 6.7943 Chinese Yuan Renminbi)
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Norsk Hydro Slovak Aluminium Smelter to Partially Restart Production
Norsk Hydro announced 'on Wednesday that its Slovalco aluminum joint venture had reached an agreement with Slovak Government?to partly restart production after?a four-year shut down,?and 'the deal included a new long term power supply contract. Hydro stated that the pact will pave the way for a restart of smelting capacities of 75,000 tons per annum. Production is expected to resume by the fourth quarter of 2026. The remaining 100,000 tonnes of capacity would depend on the conditions after 2030 and any additional power contracts. The resumption of primary aluminium production in Ziar nad Hronom, central Slovakia, would be a huge boost for the European Market, which 'has been left short 'of metal due to the closures of the Mozal smelter, in Mozambique and the EU’s new carbon taxes, as well as the war-driven supply restrictions in the Gulf. Slovalco, owned by Norway's Hydro and Central Europe-focused Penta Investments Group (55.3%) was forced to cease primary aluminium production by September 2022 due to high electricity prices. Hydro stated that the deal outlines the "long-term frame conditions" for aluminium production. This includes a power purchasing pact with the state-owned hydropower utility Vodohospodarska Vystavba, and a compensation plan?for indirect costs of carbon under the EU Emissions Trading System (ETS). Slovalco said in a statement released after a signing event in Bratislava, on Wednesday, that it would invest 100 million euro ($14 million) in order to restart operations. This investment will support over 200 jobs. $1 = 0.8877 euros (Reporting and editing by Elaine Hardcastle, Clarence Fernandez, and Jan Lopatka)
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Zelenskiy: Ukraine strikes Russian oil refinery, missile component factory
Ukraine has hit a Russian refinery in Ufa for the second consecutive time, Volodymyr Zelenskiy, the president of Ukraine, said on Wednesday. Kyiv is intensifying its strikes in Russia. "Our plan to impose Ukrainian long-range sanction is being implemented every day," Zelenskiy said, referring the Ukrainian attacks deep within Russian territory. "This is a completely just response to everything Russia does against us." Zelenskiy reported that a strike was also carried out on a Russian military-industrial complex he described as "strategic", located in the Penza area, which he claimed made components for missile weapons used by Moscow to attack Ukraine. He said that the site was located about 600 kilometers from the frontline. The Ukrainian General Staff identified the plant as belonging to Roscosmos, a Russian state-owned space corporation. The company said that it produces sensors for cruise missiles and ballistic rockets, components for aircraft electronics, and equipment to support reconnaissance satellites. General Staff reported that two?bridges were also struck in Russian-occupied areas of Ukraine's Donetsk, Luhansk and Donetsk regions as well as the logistics crossing in Donetsk. Analysts say that Ukraine's increased?attacks on Russian military supply lines is part of an ongoing campaign to target Moscow’s logistics behind the frontline. This effort has helped slow down its war machine, after more than four years of conflict. Ukraine's Defence Ministry said that Ukraine's troops hit 11 oil refineries as well as fuel logistic facilities, military factories and other targets in the month of June. Ukraine's SBU security service?also said it had struck hangars housing Russian jet fighters on an airfield in Crimea that?Russia annexed in 2014. Zelenskiy announced last week that he approved a campaign of 40 days to "influence" Russia into ending its five-year war with Ukraine. (Reporting and editing by Andrew Heavens, Sharon Singleton, and Anna Pruchnicka)
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Fuel prices in Nepal are reduced as global prices fall
Nepal has lowered fuel prices up to 17 percent, according to an official statement released on Wednesday. The Himalayan nation reacted to the fall in global prices after progress was made?towards a peaceful resolution of the war iin 'Iran. The sole distributor and importer of fuels in Nepal, the state-owned Nepal Oil Corporation, has reduced retail prices for petrol, diesel and cooking gas. It said that jet fuel prices have dropped by 14.8% for domestic flights from Kathmandu and by 14.47% for international flights from Pokhara. Prices have fallen sharply since recent highs, as fears of supply disruptions in the Middle East waned amid hopes that U.S. and Iranian peace talks would help maintain a fragile ceasefire. Brent and U.S. West Texas Intermediate are both close to the levels they reached on February 27, just before the U.S. and Israel war against Iran began. Brent closed that day at $72.48 a bar and WTI at $67.02. NOC stated that the'movement was a result of lower fuel supply prices received by Indian Oil Corp on Tuesday. Indian Oil Corp is?the lone?supplier to Nepal. It said that the improvement in fuel prices on the global market was to blame. New rates are effective as of Wednesday. Nepal raised petrol and diesel prices?in April,?and began rationing cooking gases in?March because of supply disruptions caused by the Iran War. Nepal, wedged between India and China is completely dependent on fuel imports. (Reporting and editing by Aftab Ahmad, Raju Gopalakrishnan and Gopal Sharma)
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Two killed after wildfire ravages house in Northern Greece
The fire brigade reported that two people died after a wildfire destroyed a house in a 'forested settlement' in northern Greece. Local media reported that the fire started in bushland Tuesday afternoon, and was fanned quickly by strong winds. It engulfed a house located near the village of Liti, about 25 kilometers (16 miles) north of Thessaloniki. Fire brigade reported that they found a dead man near the fire as they extinguished it and saw another body inside the home. The same area was also the location of a woman who suffered?burns. Authorities told residents to evacuate their'settlement' and move to a nearby playing area. Scientists consider Greece and other Mediterranean countries to be wildfire hotspots due to the fast-warming climate. Fires are more destructive in the summer months when it is hot and dry. (Reporting and editing by Elefterios papadimas, Angeliki Koutantou)
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Aluminium prices fall to four-month lows as Gulf risk premium declines
Aluminum prices fell to their lowest level in four months on Wednesday as investors unwound risk premiums associated with the Gulf, despite new uncertainty surrounding U.S. diplomacy towards Iran. As of 0715 GMT the benchmark 'aluminium' for three months on the London Metal Exchange was down 0.73% to $3,063 per tonne, after hitting a four-month-low at $3055.50 earlier during the session. On Tuesday, it posted its largest quarterly and monthly drops in years. The Shanghai Futures Exchange's most traded aluminium contract tracked the LME. It closed daytime trade at 22,370 Yuan ($3,292.47) per tonne, down 0.95% from its six-month-low of 22,245 Yuan. The London benchmark fell by almost 16% in the month of June as the risk premiums for metals?light?were reduced amid the Iran War, despite the fact that shipments through the Strait of Hormuz - a region which accounts for 9% of the global aluminium production - remained low. Iran announced on 'Tuesday' that it will not meet with senior U.S. representatives who have travelled to the area, thereby reducing the chances of a lasting peace agreement. Iranian officials said that both sides need to sort out the details of the ceasefire agreement signed two weeks earlier before they can move on to more difficult issues. The most traded SHFE contract fell 0.56%, while the LME three-month copper contract lost 1.10%. U.S. Job Openings reached a 2-year high in May, indicating that labour demand was resilient despite the softer hiring. Investors focused on inflation and the possibility of U.S. rates staying high for longer. This supported the dollar. Copper losses were capped by signs of a?continued growth in China's industrial sector. The RatingDog China General Manufacturing PMI slipped to 51.7 from 51.8 in may, but remained above the 50-mark that separates growth from contraction. The average PMI for the second quarter was the highest since the fourth of 2020. This was due to sustained growth in new orders and improved labor?market conditions. Nickel slid by 0.38%, tin fell by 2.30% and zinc dropped 1.30%. The SHFE saw zinc gain 0.64% while lead fell 1.09%. Nickel also declined 0.63%, and tin was a smidgen higher at 0.07%. ($1 = 6.7943 Chinese Yuan Renminbi)
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Dengue outbreak in Bangladesh as weather-related aids spread
Health experts have warned that dengue cases could increase sharply in Bangladesh over the next two month due to wet weather conditions and poor mosquito control. In recent weeks the spread of the disease has accelerated, raising concern after the country's deadliest outbreak ever in 2023. According to data from the health ministry, dengue deaths increased from one in May to 18 at the end June. Meanwhile, reported infections increased by more than eightfold from 714 to 5,924. Professor Kabirul bashar, an entomologist from Jahangirnagar University, said that he expects dengue cases to double in 'Dhaka in July compared to June and triple or quadruple by August. "But the biggest challenge will likely be outside of the capital where several districts face a?risk?of a much steeper increase in infections." In 2023, over 321,000 people will have been infected. 1,705 of them will die. In 2024, Bangladesh had 101,214 dengue infections and 575 fatalities. Dengue is a threat to the country as it deals with?its biggest measles outbreak in decades. More than 100,000 suspected cases, and more than 10,000 confirmed infections, have been reported since mid-March. The death toll has exceeded 700. This puts additional pressure on an already fragile healthcare system. Bashar stated that heavy rainfall, high temperatures, and humidity created the ideal conditions for dengue transmission. Mosquito control has not kept up with this growing threat. He called on the government to establish a national 'early warning system' to identify mosquito breeding areas and hotspots that are rising, so authorities could respond quicker and warn communities. He said that the window for containing the outbreak was closing. (Reporting and editing by Kevin Buckland; Ruma Paul)
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Mike Dolan's notes for the week: ROI-Youth, Task Forces and AI Debt
The news flow has been relentless in the week that has passed, reflecting on the madness of the first half of 2026 as well as the 250th Anniversary of the U.S. This week's column is a little different. It's a look at a few issues, some related to the main story and others not. 1)?YOUTH BURDEN OR BOON? Many investment houses have been pondering the reasons why America is now the world's largest economy. Morgan Stanley strategist Andrew Sheets, citing Gordon Wood's book "Empire of Liberty" from 2009, which chronicles the early Republic, argued that chaos and volatility were transformed into an economic catalyst thanks to the country's openness, adaptability, and capacity for renewal following repeated crises. In 1810, approximately 70% of Americans were younger than 25 years old. The population was a fraction and life expectancy far less than today, but this figure captures a youthful vigour and youth that is hard to match. Sub-Saharan African nations such as Uganda and Niger are close behind, with 70% of their population under 25 years old. Although emigration is more prevalent than immigration in these countries and life expectancy is below world averages, can sheer youth lead to better economic prospects? Many economists disagree, arguing the world today is different than the labour-intensive economy of the early nineteenth century and that the youth dividend might not be as it was. The Centre for Economic Policy Research, co-authored by Nobel Laureate Daron Acemoglu, found that lower birthrates in the last few decades were associated with higher GDP per working-age adult growth across countries as well as stronger wage growth within U.S. commuter zones. This had no negative effect on aggregate GDP or earnings. They argue that this is a response by the technology and innovation to a shortage of young workers. They add that countries and regions with lower rates of birth show more patents for labour-saving technologies and a growing high-tech industry. It is not the overall population growth, but the decrease in the younger populations. A brave new world indeed - and another hat tip to the current market obsession. What is the advice? The focus of attention on the new Federal Reserve chair Kevin Warsh is on his reaction to the market expectation that the next move for Fed interest rates will be up. Warsh is more likely to be focusing on the "task forces" that he established last month in order to study the workings of the central bank and the conduct of monetary policies. One story in the Wall Street Journal that many may have missed was that Warsh had appointed veteran Fed staffers Daniel Covitz, and Eric Engstrom to be his key advisors. Everyone wants to know their thoughts and what they have been working on. Perhaps a guidance skeptic, like Warsh, was attracted to Engstrom’s work about the pitfalls in the Fed’s quarterly economic and interest rate projections. The pair's latest joint paper was published in February and dissected the elevated Treasury forward rates. They concluded that this outsized jump in rates for long-dated bonds was more rooted in fiscal concerns rather than inflation or fears about Fed credibility. The Fed website says Covitz is currently researching "Asset bubbles" and "Stability of Short Term Credit Markets". These are timely topics for a central banking institution that wants to keep up with the AI craze in some parts of financial world. Engstrom's work on "Stock-Bond Comovement", "Corporate Profits and Entrepreneurship" and other topics, meanwhile, shows how the big themes of this year may influence policy. 3) BROKEN CYCLE? The stock prices of big AI beneficiaries are soaring. This year, the most obvious ones were chip makers and computing equipment manufacturers. But what looks like a buoyant midyear ?for top-line stock market indexes masks the angst over AI's potential losers, mainly the software-as-a-service sector. Matthew Savino of Carlyle wrote in a recent note that one way to look at this is the rising borrowing premia?for these companies in the leveraged loans market. Software spreads are nearly twice as high as the broad index. Early in the year, they jumped by nearly 300 basis points and haven't returned since. Savino cites two points that stand out. Savino says that two points stand out. About 85% of the debt is B-minus, or below, and debt maturing between 2028 and 29 has a weighted average of 79 cents per dollar. More than half of this debt trades at less than 90. It is obvious that companies and creditors must work together to resolve these debts. This leads us to the second point. Most workouts for rolling or extending debts involve higher spreads or pay-in kind coupons, or other sweeteners in order to keep borrowers whole. These assume that the economy will recover in a cyclical fashion over time. For some firms, AI disruption can be existential. This complicates debt relationships that were previously flexible and increases anxiety among those who are most affected. Savino concluded that "in the context of secular distress, and high uncertainty regarding terminal value, time may be an enemy if financial degradation is rapid in the business at hand." It's about time to get interesting. The opinions here are those expressed by Mike Dolan, columnist at. You like this column? Open Interest (ROI) is your new essential source of global financial commentary. Follow ROI on LinkedIn and X. 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Gold drops as Fed rate hikes and higher Treasury yields weigh
On Wednesday, gold fell for the third session in a row as?U.S. Treasury yields, as well as growing bets on the Federal Reserve raising interest rates, weighed down on gold.
As of 0849 GMT spot gold was down by 0.8% to $3,974.75 an ounce, after reaching its lowest level since November last year at $3942.99 in the previous session. U.S. Gold Futures for August Delivery lost 1.3%, to $3.987.70/oz.
On Tuesday, the yellow metal recorded its first quarterly loss in 2024.
The benchmark 10-year yield rose as high as 9 basis points on Tuesday, before easing off its peak. On Wednesday, yields were up again by 4 basis points at 4.465%. This was higher than the increase in euro zone bonds yields.
Bullion is less affordable to overseas buyers due to a stronger dollar.
The market is pricing in more rate increases for this year because of comments made by Fed's Hammack. Beth Hammack, the president of the Federal Reserve Bank of Cleveland, said Tuesday that she might advocate for higher interest rates if inflation continues to rise. CME FedWatch shows that traders expect a rate increase of 67% by September.
Staunovo said that the expectation of more hikes is not helping investment demand. ETF holdings saw renewed outflows over recent days.
The Fed may change its policy direction based on the June ADP employment report, which is due at 1215 GMT.
The markets will also be watching the annual conference of the European Central 'Bank in Sintra on Wednesday. Fed Chair Kevin Warsh, and ECB -President Christine Lagarde both have speeches scheduled. Geopolitically, there are concerns about the prospects of U.S. diplomacy with Iran after Teheran announced it would not be meeting senior U.S. officials. Envoys travelled to the region following the recent outbreak of violence.
Spot silver dropped 1.4% to $57.75 an ounce.
Palladium fell 1.4% to $1,187.01, down from its lowest level since November. Palladium fell 1.4% to $1187.01. (Reporting and editing by Harikrishnan Nair in Bengaluru, Noel John from Bengaluru)
(source: Reuters)