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Japan finds a large amount of rare earths in the mud from deep sea off a remote island
The Japanese government announced on Friday that an analysis of rare-earth-rich mud recovered from the deep seabed of a remote Pacific Island in early 'this year revealed that medium and heavy rare elements made up about 54% of the total rare earth content. The company did not reveal the exact size or deposit of the sand, claiming that the sampling was too limited and geographically restricted to provide sufficient data. Chikyu is a Japanese scientific drilling ship that completed a one-month mission near Minamitori Island in February, located about 1,900 kilometers (1,200 miles), southeast of Tokyo. This was the first successful attempt to continuously lift seabed mud containing rare earths from depths as deep as 6 km (4miles). The project comes at a time when Japan is looking to diversify its mineral supply amid tightening Chinese controls on exports of heavy rare earths and related magnets that are vital for the automotive and defence industries. About 50 metric tonnes of mud was recovered. According to the Cabinet Office’s National Platform for Innovative Ocean Development, the analysis revealed yttrium used in aerospace, energy, and semiconductor applications, gadolinium used in magnetic resonance images and other high-tech uses, and dysprosium used in high performance magnets for electric cars. Japan is planning a large-scale mining trial that will last a month in the same waters starting February 2027. The goal is to drill 350 tons of mud per day. The material will be?dewatered on Minamitori Island, and then processed on the mainland to test separation, refining, and smelting technology. Kazushige K. Kikuchi, Project Manager at the Japan Agency for Marine-Earth Science and Technology (which operates the Chikyu), said that the trial would be used to test the feasibility of domestic production of rare earths. Beijing has tightened export restrictions to Japan, targeting large conglomerates, in January 2025. (Reporting and editing by Christian Schmollinger; Additional reporting by Chang Ran Kim; Additional reporting by Yuka Obayashi)
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Neste Core Profit Misses Market Expectations in Q2, Shares Fall
Neste, a Finnish oil refiner and biofuel producer, said on Friday that its core profit had risen?in the second quarter due to the Middle East Crisis driving up prices. However it failed to meet market expectations. Neste's adjusted quarterly earnings, before interest, tax, depreciation, and amortization, more than tripled compared to a year earlier, reaching EUR1.20 billion ($1.37 billion). Analysts had forecasted EUR1.23 billion. At 0750 GMT, the shares were down 8%. Petri Gostowski, an analyst at the Finnish research firm Indires, said that investors were waiting for "clear results beats". Gostowski said in an email that he believed the market expectations had recently exceeded consensus estimates, and there was speculative buying. Demand for renewable oil is up sharply following the start of the Iran war, but the uncertainty surrounding the Strait of Hormuz closure has kept fossil fuels prices volatile. In a press release, CEO Heikki Malinen said that the conflict in the Middle East had dominated the global oil and products markets for most of the time period. This created an exceptional market climate for Neste. The group's sales margin for renewable products rose to $1.223 per metric ton during the period April-June, easily beating analysts' expectations of $1.059 per ton. This was largely due to a combination of biofuel regulations and supply constraints. This led to a quarterly?comparable EBITDA in the renewables sector of EUR859 millions, but a core loss of EUR334millions?in oil products missed the consensus of EUR401millions. Neste's full-year forecast for 2026 sales of renewables is expected to be similar to last year.
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ECB survey shows that euro zone firms are struggling to increase consumer prices following the Iran shock
A European Central Bank survey released on Friday showed that companies in the euro zone are finding it difficult to increase prices for consumers who are already facing a 'rise in fuel costs. The ECB held interest rates at a 'hold' level a day earlier. It said it was unable to see any evidence that the higher fuel prices were affecting consumer prices, wages, or long-term expectations. The ECB left the door open for another rise in September. The quarterly exchange between 76 large companies in the euro zone outside of the financial sector confirmed the absence of these second-round effects, which is in line with recent management commentary. The main exchanges took place between June 22 and 1 July, shortly after the U.S. - Iran Memorandum of Understanding on ending the conflict. This MoU was broken in early July as a result of renewed hostilities. The survey revealed that companies had increased prices less than they expected in the three months leading up to June, and were anticipating a slight moderate in the current quarter. Approximately 40% of companies contacted reported that prices had increased in their industry, particularly in transport and intermediate goods, which are directly affected the price oil and its derivatives. The ECB reported that prices for petrochemicals had risen by 20-30%. There has been little adjustment for the businesses that are closer to consumers, as households remain "price sensitive". ECB: The ECB noted that the price of certain consumer electronics products had even fallen due to lower imports from Asia. Around?40% saw their margins eroded, as rising costs weren't?compensated? by an increase in retail prices. The ECB reported that "food retailers stated that higher fuel prices during the second quarter reduced the amount of money they could spend on 'other items' and reinforced consumers' tendency to switch from branded products to private label." The general market conditions are tough ,... with Chinese manufacturers offering innovative products at low price. Companies said that artificial intelligence boom was driving investment and spending, despite concerns about competitiveness. The ECB stated that "this was causing European manufacturers to focus their investments more on Asia or Eastern Europe than the Euro area". (Reporting and editing by Toby Chopra; Francesco Canepa)
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Take Five: A $100 question
Next week, it's all central banks. Interest rate-setters in Tokyo, Washington and London are growing more nervous due to the Middle East war escalate. Oil prices have returned to $100. Tariffs from the United States are now back on the list of worries for markets that worry about inflation and growth risks due to war. Rae Wee, Dhara Ranasinghe and Samuel "Indyk" and Alun John are in London. Lewis Krauskopf is in New York. DOUBLE TROUBLE Investors are now watching two chokepoints for energy shipping to see how much oil and natural gas comes out of the Middle East. Houthi attacks may make the Bab el-Mandeb strait inaccessible, which connects the Indian Ocean with the Red Sea. This could also affect the already-squeezed Strait of Hormuz. Brent crude surpassed $100 per barrel for the first since May on Thursday. The European gas price just reached its highest level since March. Investors will not only be interested in Gulf news when they update Truth Social, but also a U.S. Iran peace deal. The U.S. imposed new tariffs on Friday of 10% and 12,5% on goods imported from 60 trading partners including the European Union, China and Canada, increasing market uncertainty. Earnings Tests 2/ FED The U.S. market is in for a busy, full week. A U.S. Federal Reserve meeting and several corporate earnings reports from technology giants will be the highlight of this week. It is expected that the Fed will hold rates at their current level on Wednesday, in its second meeting with new chairman Kevin Warsh. Warsh shunned giving guidance, but pledged to bring down the inflation rate to its target. Uncertainty remains high because interest rates could rise at some point. Recent data on consumer and producer prices that were lower than expected by market participants helped calm rate-hike betting, but the resurgence of oil prices has traders raising their stakes once again. Apple, Microsoft, and Amazon will all be reporting earnings in the coming weeks. Investors are expecting a good quarter for U.S. corporations and are focusing on AI trends. After Alphabet's stock dropped this week, investors questioned the company about its capital expenditure plans and cash flow. In the Doldrums On Friday, the Bank of Japan will meet. Much depends on the policymakers' ability to send a hawkish signal that could lift the yen from its four-decade-low against the U.S. Dollar. The yen has not been lifted by a well-publicized rate hike, $73 billion in currency intervention, nor the hope that money will return home. It recently fell below 163 to the dollar for the very first time since 1986. Some BOJ sources believe that the BOJ could raise rates faster than the market consensus of twice a years if the price pressure from a weakening yen or rising energy prices persists. Tokyo's July Inflation figures are due ahead of the BOJ's Friday policy decision. However, market participants do not expect that the data will change the BOJ's outcome. What's the hurry? The Bank of England, unlike the European Central Bank and Bank of Japan has so far refused to raise rates due to the pressure of rising oil prices. The Bank of England is widely expected to raise rates again on Thursday. The markets expect at least one?rate rise this year, as?inflation rates are expected to pick up. However, signs of weakness in the jobs market suggest that the BoE may adopt a dovish tone. The rate-setters met just days after Andy Burnham, the new Prime Minister of Britain, entered Downing Street with a promise to reshape Britain. Andrew Bailey, the BoE's chief executive officer, will likely be asked about his views on Burnham’s agenda in the briefing that follows the policy meeting. Economists believe that a decision to reduce the tax on electricity could slow inflation by 0.1 percentage point. Bond markets will also assess whether John Healey will be a friend or foe. 5/ EUROPE EARNINGS DELEGAGE Barclays says that Europe is experiencing its busiest earnings week, with 40 percent of the STOXX600 market capital reporting. LVMH is one of the companies on the list, along with AstraZeneca and Shell. The second-quarter profit in Europe will increase by 17.3% if you combine the results from companies that have already announced their results with those that are still pending. This would be the highest growth rate since the 4th quarter of 2022. The surge in oil prices is largely responsible for this. If you exclude them, LSEG I/B/E/S predicts a modest 7.2%. The ECB's policy could be influenced by the latest euro zone inflation and GDP readings. It left its policy unchanged last Thursday after June's rate hike. (Graphics and Compiled by Yoruk BAHceli, Edited by Dhara Ranasinghe & Christopher Cushing).
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Copper Heads Weekly Rise Despite Mideast Pullback
The price of copper is expected to rise despite a drop from midweek, as an escalation in Middle East conflict has exacerbated inflation fears and affected the macroeconomic outlook. The benchmark three-month copper contract on the London Metal Exchange remained stable, adding 0.35% to $13,642.50 per metric ton at 0700 GMT. The Shanghai Futures Exchange's most traded copper contract fell by 1.19% to 104,750 Yuan ($15.461.03) per metric ton. Prices have risen by 0.88% at the LME, and 1.6% at the SHFE, since the beginning of the week. However, they are still down from the midweek highs when metal prices surged on demand expectations, inventory pressure, and supply concerns. Sandeep Daga is the head of research for Metal Intelligence Centre. The markets are concerned that higher oil prices will lead to increased inflation, forcing policymakers to raise interest rates. This could reduce demand for commodities like copper by dampening economic activity. Early support from fears about a shortage of supplies and perceptions of good demand from China has faded. Yangshan Copper Premium The previous session saw a record high for the interest in metal imports to China, the world's largest consumer. On the supply side: Stocks in LME-registered storage facilities For the first time in two weeks, metals were stable on Thursday. Yesterday, LME warehouses reported a rewarranty after consecutive days of withdrawal requests. Daga stated that this alerted buyers. Aluminium lost 0.39% among other LME metals. Zinc was barely?changed and only rose 0.04%. Lead?dipped by 0.32%. Nickel gained 1.06%. Tin gained 0.5%. Other SHFE markets saw a dip in aluminium of 0.26%, a drop in zinc of 0.12%, a loss of lead by 0.82%, tin losing 0.84%, and soaring nickel.
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Gold prices drop on the prospect of Fed rate hikes
Gold fell?lower? on Friday, after dropping 2% in the previous session. The move of Brent crude back above $100 per barrel has stoked inflation fears and reinforced the case for higher rates before the Federal Reserve's policy meeting next Monday. Spot gold prices fell more than $130 since Wednesday's two-week high, falling to $4,037.29 an ounce at 0702 GMT. U.S. gold futures for delivery in August were down 0.3% at $4,039.80. Bullion is still on course for a 0.5% weekly gain. "In the near term, we anticipate more volatility... Gold has been stuck between $3,980 and $4,170 for weeks. We see big buyers come to buy it back up every time the price hits $4,000 or slightly below," said GoldSilver Central Managing Director Brian Lan. Donald Trump, the U.S. president, promised "major military sanctions" against Iran and its Houthi ally after Yemeni fighters attacked two Saudi oil tanks in the Red Sea. Brent crude increased by 7% on Friday, surpassing $100 per barrel for the very first time since last May. This is one of the steepest increases since the start of the war. The market is concerned about inflation and interest rates that could rise for a longer period of time. Gold is often seen as an inflation hedge, but its appeal as a low-yielding investment diminishes when interest rates are high. Investors also have their eyes on the Fed meeting next week, when policymakers are expected to leave rates unchanged. According to the CME's FedWatch Tool, traders are pricing in an?81% probability of a rate hike in September. The European Central Bank kept rates at the same level as expected but left the door open to another rate increase in September. Silver spot was up by 0.1% at $57.76 an ounce, and is on track to gain 3.4% in a week. Palladium fell 1.7% and platinum dropped 1%, both heading for a weekly decline. (Reporting from Pablo Sinha and Swati verma in Bengaluru. Editing by Subhranshu Sahu and Mrigank Dhaniwala. Ronojojo Mazumdar.
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Policymakers at the ECB warn of rising inflation risks
Three policymakers on Friday said that the European Central Bank might need to increase 'interest rates again. The ECB kept rates the same on Thursday, and gave strong indications that a rate hike is likely in September as oil prices have returned to around $100 a barrel and natural gas prices continue to surge. Even though policymakers' public comments were more measured, this has reinforced the expectation that the ECB would?pull the trigger? after the summer holiday. Joachim Nagel, Bundesbank President, said in a press release that "we?are observing in the Middle East the situation remains extremely fragile." "We still face intense uncertainty." Nagel said that the ECB was in a 'good position' to respond to a deterioration of the inflation outlook. The ECB's June projection was based on a scenario where oil prices would be near "baseline". This assumption assumed that policy would tighten in the months to come. Other people have expressed similar views. In a recent blog post, Slovenian Central Bank Chief Primoz Dlenc stated that the risks remain high. He added that the developments surrounding the war in Iran exacerbate the risk. The ECB stated on Thursday that the risks of economic growth are more negative than expected, while inflation is more positive. Martin Kocher of the Austrian central banks said that a rate hike could be needed, but it was unclear if this would happen in September. "I believe everyone knows that if inflation expectations, such as those for the medium term, are deteriorating, there is a need to act," he said on Bloomberg TV. The financial markets expect at least 'two more rate increases from the ECB, with the first fully 'priced-in by October and second by February. However, market economists polled only expect a single rate hike in September. (Reporting and editing by Francosi Murphey and Balazs Coranyi; Kira Donovan, Jamie Freed and Kira Donovan)
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Acerinox Steels posts strong profit on US and recovering Europe
The Spanish steelmaker, 'Acerinox', reported a second-quarter profit that was higher than expected and predicted further growth for the third quarter. This is due to the strong performance in America and a recovery?in Europe. The stainless steel manufacturer reported core earnings of?EUR176 million ($200million) for the second quarterly, an increase of 57% from a year earlier. Analysts surveyed by LSEG expected earnings to rise to EUR154m on average. The company stated that it expected the third quarter earnings to be higher than the second, due to the strong U.S. economy and gradual improvement in Europe. In the earnings report, CEO Bernardo Velazquez highlighted the turnaround at Acerinox Europa, as being particularly notable. Acerinox has benefited from increased protectionist measures in its key markets. From President Donald Trump's tariffs of 50% on steel imports, to the European Union carbon tax on high-emissions imports and its recently implemented policy to halve the quotas for importing?steel from outside the EU.
Enervoxa Canada plans India rare-earths project and may tie up Vedanta or NALCO
Enervoxa, a Canadian developer of climate technology, plans to talk with Vedanta and Hindalco Industries in India as well as the state-owned NALCO. The company is looking at setting up a plant there to 'extract rare Earths from waste byproducts produced during aluminium production.
Enervoxa CEO Vandit Verma said that a?commercial-scale' plant would cost between $250 and $350 million. It could be funded by a combination of project financing and strategic equity. He said that the company was looking for possible locations in eastern India to build this project.
The recovery of rare?earth?concentrates from bauxite residue, a byproduct known as "red mud" in aluminium production, is a relatively recent commercial application. It has gained momentum due to growing geopolitical concern over China's dominance?of rare-earth processing.
Rare earth elements play a vital role in technologies such as mobile phones, electric motors for vehicles and defence applications like cruise missiles.
India has large reserves of rare earth minerals, but does not have the industrial scale facilities to process them at high purity. India is the second largest aluminium producer in the world and third biggest consumer.
Verma, in an interview with Wednesday's newspaper, said that Enervoxa spent eight years developing their own process for recovering rare earths from the red mud.
Enervoxa will also approach steel producers and critical minerals processing firms to create an integrated value chain of the products that can be recovered from red mud. These include iron oxides, pigments, coagulants and titanium bearing materials.
Verma added that the company plans to also seek?assistance from the Indian government.
The government announced last year that India's Jawaharlal Nehru Aluminium Research Development and Design Centre is working with other stakeholders in the government think tank NITI aayog to conduct?research on metal extraction and rare element enrichment from mud red.
Verma stated that Enervoxa’s project may involve the full processing of red clay within India, or a?production of rare earth concentrate to be refined at a downstream facility.
He said that the company was evaluating potential commercial partnerships with companies from India, North America and Southeast Asia, as well as other alumina producing regions. (Reporting and editing by Mayank Bhardwaj, Kevin Buckland and Neha Arora)
(source: Reuters)