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Gold falls on US-China Trade Talk Hopes; traders focus on Fed policy
The gold price fell on Wednesday, as investors awaited the Federal Reserve policy meeting that would be held later in the afternoon. As of 0225 GMT, spot gold was down by 1.2% to $3,388.67 per ounce. The metal rose by nearly 3% the previous session. U.S. Gold Futures dropped 0.7% to $3 397.70. "Gold is pulling back amid broad-based "risk-on" movement across markets... This pro-cyclical setup could echo optimism amid signs that the U.S. has begun real trade negotiations with China," said Ilya SPivak, Tastylive's head of global macro. This weekend, U.S. Treasury secretary Scott Bessent will be in Switzerland for talks with chief Chinese economic official He Lifeng. Last month, both countries imposed tariffs of equal value on each other. This triggered a trade conflict that fueled fears of global recession. On Tuesday, U.S. president Donald Trump announced that he will be reviewing potential trade agreements over the next two week to decide which to accept. Later in the day the Federal Open Market Committee meeting is expected to be the focus of the market, as the U.S. Central bank will likely hold rates steady. Spivak said that the FOMC would remain vague in order to maintain as much flexibility as is possible when it comes to determining what impact this trade war may have on growth and inflation. The traders expect 80 basis point rate cuts in this year starting in July. The remarks of Fed Chair Jerome Powell will also provide clues as to the timing of any future rate cuts. In an environment of low interest rates, gold, which is traditionally viewed as a hedge to economic and political uncertainty, thrives. Silver spot fell by 0.9%, to $32.93 per ounce. Platinum dropped 0.6% to $979.07 while palladium was down 0.4% at $970.28. (Reporting and editing by Sumana Nady and Sonia Cheema in Bengaluru)
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Sino-US trade talks and Chinese stimulus have boosted iron ore prices to a 2-week high.
Investor sentiment was boosted by China's recent stimulus measures, and the hopes that trade frictions between the two world's largest economies will be eased. As of 0154 GMT, the most traded September iron ore contract at China's Dalian Commodity Exchange was trading 0.78% higher. It was 711 yuan (US$98.47) per metric ton. Earlier in the session, the contract reached its highest level since April 24, at 726 Yuan per ton. The benchmark June Iron Ore traded on the Singapore Exchange rose 0.81%, to $98.3 per ton. It had previously reached a peak of $99.85. The People's Bank of China will reduce the amount of cash banks are required to hold as reserves, for the first time in 2025. This is part of a policy designed to boost the economy during a prolonged trade war with the United States. The magnitude of the stimulus package somewhat exceeded our expectations, and that is the main driver of the price strength, said an iron ore trader in Singapore. He requested anonymity because he was not authorised to talk to the media. Prices were also supported by positive signals about the possible easing of global trade tensions. U.S. Treasury secretary Scott Bessent, and chief trade negotiator Jamieson Grer will meet China’s top economic official on Saturday in Switzerland. This could be a first step in resolving the trade war that is disrupting the global market. The benchmark steel prices on the Shanghai Futures Exchange have gained some ground. Rebar rose by 0.39%, while hot-rolled coils rose by 0.59%. Stainless steel also gained 0.67%. Other steelmaking ingredients listed on the DCE, however, posted losses due to weak fundamentals. Coking coal and a coke both lost 0.16 and 0.2% respectively. ($1 = 7.2208 Chinese yuan). (Reporting and editing by Amy Lv, Lewis Jackson)
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Metals prices remain tight as the market waits for US-China summit
Investors were waiting for a weekend meeting in Switzerland between U.S.-China trade officials to see if they could bring down the trade war. As of 1400 GMT, the benchmark copper price on London Metal Exchange (LME), was down by 0.1% at $9,533.5 per metric ton. Scott Bessent, U.S. Treasury secretary, told Fox News that he believes the goal is to de-escalate tensions. China's central banking governor announced Wednesday that, to support the economy in the midst of a long-running trade war with the U.S. the bank would, for the very first time, reduce the required reserve ratio for banks by 50%. On Tuesday, U.S. president Donald Trump announced that he will be reviewing potential trade agreements over the next two week to decide which to accept. A trader stated, "We have been eagerly awaiting the advancement of relations between the U.S.A. and China as we had hoped to see the potential agreement." Other London metals saw aluminium drop 0.1%, to $2.425 per ton. Zinc rose 0.1%, to $2.635, while lead fell 0.1%, to $1.921. Tin was up 0.1%, to $32,020, and nickel was unchanged at $15.700 a tonne. The Shanghai Futures Exchange's (SHFE) most traded copper contract rose by 0.7%, to 78.220 yuan (10.759) per tonne, thanks to rapidly declining stocks that the SHFE monitors. SHFE aluminium fell by 0.9%, to 19,680 Yuan per ton. Zinc dropped 0.3%, to 22,350 Yuan. Lead declined by 0.2%, to 16,670 Yuan. Nickel rose 0.1%, to 124650 Yuan. Tin was up 0.4%, to 261,490 Yan. (Reporting and editing by Mrigank Dahniwala; Violet Li, Lewis Jackson)
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Lake Resources' shares in Australia surge after launch of strategic review
The shares of Australia's Lake Resources soared by more than 9% after the company announced a strategic review on its Kachi lithium project, located in Argentina. The lithium developer believes that the asset is undervalued, even though the long-term demand has increased for battery metals after a recent drop in the price of lithium carbonate. The price of lithium carbonate fell to its lowest level since August 2021 last month, due to a prolonged decline in demand from the electric vehicle industry. The benchmark index rose 0.1% to 0050 GMT, while Lake's stock is on course for its largest one-day gain since April 24. The company is considering a number of options, including the sale of a stake in the project or a possible sale or merger. The Kachi Lithium Brine Project is the largest independently-funded project in South America's "lithium triangular" region, with resources totaling more than 10.6 million metric tonnes of lithium carbonate. Lake Resources stated that recent examples of companies with Argentine Lithium projects receiving proposals far exceeding their current market valuations has influenced the decision to explore alternative strategic options. The review is more than five-months after the company agreed to sell its non-core assets of lithium brine in Argentina for nine million dollars. Reporting by Nichiket in Bengaluru, editing by Mohammed Safi Shamsi & Alan Barona
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US futures rise on China trade talks
U.S. stocks futures rose and Asian currencies rose as investors welcomed the news that a top-level meeting between U.S. officials and Chinese officials is scheduled for this weekend in Switzerland. This could be a chance to calm down the trade conflict. Scott Bessent, U.S. Treasury secretary, said on Fox News that he believes the goal is to de-escalate. S&P futures gained about 0.9%. This was a recovery from a drop in the cash session, when U.S. president Donald Trump seemed to have struck a more confrontational note. The stock markets of Japan and Australia have both edged up. The dollar increased a bit against the yen, but declined against other Asian currencies. The offshore yuan is close to reaching a six-month-high and the Australian Dollar has reached a five month-high and just above 65 U.S. Cents. Ray Attrill, head of Foreign Exchange Research at National Australia Bank, said: "It seems that both sides are willing to reach out and meet on a high-level. I wouldn't have thought it could be anything other than positive." It's positive for Asian foreign exchange in general. Asian currencies have been gaining on the dollar lately, led by a flying Taiwan Dollar, on speculations that a weaker greenback is part of Trump’s trade agenda, and as large investors reduce their dollar positions built up over years of purchasing U.S. assets. Gold dropped 1%, while oil rose 1%. Benchmark 10-year Treasury rates remained at 4.3238%. Later on Wednesday, the U.S. Federal Reserve will meet to set interest rate cuts. The markets indicate that there is almost no chance for a move to be made on Wednesday, and only 33% of a reduction in June. This is down from 64% one month ago. India and Pakistan are nuclear-armed neighbors and the fighting has been intense for more than 20 years. India fired gunfire and shells over the border in Kashmir, while India also hit targets in Pakistan. Attrill of NAB said that it would add another layer to the geopolitical tensions and likely cause India's currency to fall. The euro was supported above $1.13, with German conservative leader Friedrich Merz being elected chancellor after his alliance with Social Democrats suffered a shock defeat in the initial round.
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Oil prices rise on signs that Europe and China are increasing their demand and US production is decreasing
Prices rose on Wednesday as buyers returned to the market after the prices had fallen to new lows the previous week. Brent crude futures rose 37 cents a bar, or 0.6% to $62.52 a bar by 1215 GMT. U.S. West Texas Intermediate Crude was at $59.53 a bale, up 44 cents or 0.74%. The benchmarks fell to a 4-year low following OPEC+’s decision to accelerate output increases. This stoked concerns of an oversupply, at a time that U.S. Tariffs are causing concern about demand. The lower oil prices of recent weeks have led some U.S. companies like Diamondback Energy, Coterra Energy, and others to announce they will cut some rigs. Analysts say that this should increase prices over time by reducing production. Daniel Hynes, senior commodity strategist at ANZ Bank, believes that the latest announcements suggest that output will decline in the months to come. Last month, we warned that the falling oil prices and decreasing drilling activity could lead to a fall in U.S. output. Market sources cited American Petroleum Institute data on Tuesday to report that crude stocks dropped by 4.5 millions barrels during the week ending May 2. The U.S. Government will release data about stockpiles at 10:30 am ET. ET (1430 GMT). The average expectation of the analysts polled is that U.S. crude stock will decline by 800,000 barrels for last week. The signs that demand was improving also helped to support prices. China's consumers increased their spending on May Day and when the market returned from the holiday. Analysts expect companies in Europe to report a 0.4% increase in their first-quarter earnings. This is an improvement from the 1.7% decline analysts expected just a week earlier. As tariffs threaten the economy, it is expected that the Federal Reserve will leave interest rates unchanged Wednesday.
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Lynas CEO: Company is looking to buy rare earths in Malaysia and Brazil
Amanda Lacaze, CEO of Lynas Rare Earths, said that the company is looking at potential purchases of rare-earth deposits in Malaysia and Brazil. It also plans to work with developers who are still in the early stages to bring their mines on line. She said that the Macquarie Australia Conference, held in Sydney, was a forum where she discussed how to grow the world's second largest producer of rare earths outside China. She said that Lynas' processing facilities in Malaysia have a similar geology to many other parts of Southeast Asia. This includes Myanmar. Myanmar is an important supplier of rare earths to China. Yes, there are deposits in Brazil. Lacaze replied, "Yes we are looking into them." Lacaze stated that Lynas is open to working with companies in Malaysia to "put our script into action". Would we like to see these developed? Yes. We will facilitate this development. "Yes," she replied. A weekend election in Australia has brought back the Labor government, which had implemented a policy of stockpiling critical minerals like rare earths. Lacaze said that this is a "uneconomical" policy. She added, "You should focus on building a successful and strong business. One that relies on government funding for construction and then government financing to produce is likely uneconomic by definition." The administration of U.S. president Donald Trump has focused on the development of rare earth deposits. Last week, they signed a supply agreement with Ukraine. Rare earths can be used for industrial magnets as well as in certain defence applications. Lacaze explained that new supplies can be difficult to develop, and take years. "I want to run an advertisement in the Washington Post that says, 'Want Rare Earths?" She said, "Call 1800 Lynas." (Reporting and editing by Christine Chen, Melanie Burton, Christopher Cushing).
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Sources say that a major refinery in Venezuela has restarted a processing unit after an absence of 365 days.
Four sources said that Venezuela's Cardon refinery, the second-largest in Venezuela, has restarted a fluid catalytic reactor which was out of service due to a breakdown and a lack of raw materials for over a year. One source said that the 88,000 barrels per daily (bpd), or FCC cracker was processing 26,000 barrels per day on Tuesday. Meanwhile, a similar unit in Amuay, the largest refinery of the country, was processing 38,000 barrels a day. Sources said that the Paraguana Refining Center includes Amuay as well as Cardon refineries. On Tuesday, it processed about 187,000 barrels per day, or 20% of its installed capacity, which is 955,000 barrels per day. Cardon was operating one crude distillation unit, which processed about 50,000 barrels per day, against a capacity installed of 310,000 barrels per day. Source: Amuay was only processing 137,000 bpd crude oil, when it had a capacity to process 645,000 bpd. The Venezuelan state oil company PDVSA has not responded to a comment request immediately. According to a source, the refinery complex receives crude oil from upgrading companies Petropiar and Petromonagas, as well as the eastern coast of the oil-rich Zulia State. (Reporting and editing by SonaliPaul)
OPEC reduces global oil demand forecasts citing US tariffs
OPEC reduced its forecast for global oil demand growth in 2025 on Monday, for the very first time since the end of December. They cited the impact of the data from the first quarter as well as the trade tariffs announced the United States.
In a report published monthly, the Organization of Petroleum Exporting Countries (OPEC) predicted that the world's oil demand will rise by 1,30 million barrels a day in 2025, and by 1,28 million bpd by 2026. Both forecasts are 150,000 barrels per day lower than last month.
The U.S. President Donald Trump’s trade tariffs, as well as a planned increase in production by OPEC+ (which includes OPEC, as well as allies like Russia), have put downward pressure on the oil price this month, and raised concerns about economic growth.
In its report, OPEC lowered the world's economic growth forecast for this year from 3.1% to 3.0% and for next year from 3.2% to 3.1%. Last month, OPEC stated that trade concerns will contribute to volatility, but they kept their forecasts stable, saying the world economy would adjust.
OPEC's Monday report stated that "the global economy has shown a steady growth at the start of the year. However, recent trade dynamics have increased the uncertainty in the short-term outlook for global economic growth."
Brent crude traded near $66 per barrel after U.S. exemptions from some tariffs. Prices are still down over 10% this month.
OPEC still sees oil demand as higher than industry estimates and expects it to continue to rise for many years. This is in contrast to the International Energy Agency which believes that oil demand will peak this decade due to the switch to cleaner fuels.
The IEA will update its oil consumption forecasts on February 2.
KAZAKHSTAN RAISES ITS OUTPUT
OPEC’s report showed that the crude production of OPEC+ as a whole fell by 37,000 bpd in March to 41,02 million bpd. This was due to Nigeria and Iraq reducing their output.
The group will increase output in April, and then again in May. This is part of its plan to undo the most recent cuts in oil production that were implemented to support markets.
The report showed that Kazakhstan, who has consistently exceeded its OPEC+ production target, increased their production by 37,000 bpd in March, again violating the restrictions.
Last month, the Central Asian nation's production grew to 1.852 millions bpd. This is above its OPEC+ quota for January-March of 1.468million bpd.
Interfax reported that the energy ministry stated last Thursday that Kazakhstan had exceeded its OPEC+ quota for March, but it would fulfill its commitments by April and partially compensate earlier overproduction.
A source in the industry told me on Monday that Kazakhstan’s oil production fell during the first two week of April compared to the average for March, but it was still higher than the OPEC+ quota. (Editing by David Holmes & Mark Potter)
(source: Reuters)