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Gold drops 3% after US and China agree to reduce reciprocal tariffs
Gold fell 3% on Monday, reaching a new low of more than a week after the U.S. announced that it and China had agreed to cut reciprocal tariffs. This boosted the dollar and weakened the appeal of the metal as a safe haven. As of 0812 GMT on May 1, spot gold had fallen 3% to $3,224.34 per ounce. U.S. Gold Futures fell 3.5% to $3228.10. The de-escalation in tensions between China, the U.S. and tariff reductions for 90 days is reducing demand for safe assets such as gold, said UBS analyst Giovanni Staunovo. Near-term prices will likely remain volatile. The higher tariffs will still weigh on the economy and force central banks, later in the year, to lower interest rates. Central banks may also use this price drop to increase their exposure." The U.S., China and other countries have reached an agreement to reduce reciprocal tariffs in a bid to end the trade war which has impacted the global economy. After talks with Chinese officials, U.S. Treasury Sec. Scott Bessent informed reporters that the two sides reached an agreement for a 90 day pause in measures. Last month, the U.S. imposed tariffs of equal value on China. This triggered a trade conflict that fueled fears of a global recession. The dollar index rose more than 1% versus its rivals. This made gold more expensive to other currency holders. Jigar Trivedi is a senior commodity analyst with Reliance Securities. He said that gold could fall as the dollar may appreciate, and the reduction of geopolitical risks could "hurt haven demand... The yellow metal could decline to $3.200/oz within the next few months. Traders will also be watching the U.S. Consumer Price Index on Tuesday to get a fresh look at the Federal Reserve’s monetary policy. Spot silver fell 2.3% to $11.96 per ounce. Platinum dropped 1.2% to $983.44, and palladium declined 0.9% to $967.35.
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Iron ore prices rise as US and China cut tariffs
Iron ore prices rose on Monday, as investor sentiment was lifted by the agreement between two of the largest economies in world to reduce reciprocal tariffs. On Monday, the United States and China announced that they had reached an agreement to reduce reciprocal tariffs. Washington and Beijing are seeking to end a global trade war which has caused financial markets to be on edge and disrupted economies around the world. After talks with Chinese officials at the Geneva Economic Forum, U.S. Treasury Sec. Scott Bessent informed reporters that both sides agreed to a 90-day pause in measures. He also said that tariffs will be reduced by more than 100 percentage points and would reach 10%. The highest-priced contract for September iron ore on China's Dalian Commodity Exchange closed the daytime trading 3.16% higher, at 718.5 Yuan ($99.63), the highest price since May 7. As of 0713 GMT the benchmark June iron ore traded on the Singapore Exchange rose 2.9% to $99,75 per ton. It is now approaching the psychologically important level of $100. Analysts and traders said that the magnitude of tariff reductions was a bit higher than expected and helped boost sentiment. Ore prices were also supported by a relatively stable demand, backed by the mills' desire to continue operations and profit-driven motivation. A survey by Mysteel revealed that the average daily hot metal production - which is typically used to gauge demand for iron ore - increased 0.1% to 2,46 million tons on May 8. This was the highest level since October 2023. The price of crude steel has been fluctuating with the rise and fall in concerns over U.S. Tariff hikes, and discussions on China's crude output being cut to reduce demand for this key ingredient. Prices for seaborne ore Steelhome's data shows that prices have dropped by 11% since the peak of $107 per ton for the entire year in February. Coking coal and coke, which were previously weak, have both recovered to a higher level. The benchmark steel prices on the Shanghai Futures Exchange have gained some ground. Rebar gained 1.52%, while hot-rolled coil grew by 1.51%. Wire rod increased by 1.39%, and stainless steel jumped 1.34%.
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HESTA Pension Fund Exits Australia's Mineral Resources Citing Governance Concerns
HESTA, an Australian pension fund, announced on Monday that it sold the remaining stake in Mineral Resources founded by billionaire Chris Ellison. The reason given was "serious concerns" about governance. The mining services provider is grappling with governance problems, mostly involving Ellison. Allegations include tax evasion, and misusing company resources for personal purposes. HESTA confirmed in an email sent to that it has divested its Mineral Resources stake for approximately A$14 Million ($8.99 millions). HESTA stated that concerns regarding the company's management were not addressed as quickly as they should have been despite the repeated engagement of the board. The report added that the departure of directors from the Ethics and Governance Committee was a "significant backwards step" in dealing with the concerns. In an email response, a spokesperson for Mineral Resources said the company is committed to strengthening corporate Governance and that the appointment of a new chairman was "well advanced". The spokesperson stated that the Ethics and Governance Committee would continue to exist. (1 Australian dollar = 1.5571 dollars) (Reporting and editing by Rashmia Aich, Mrigank Dhaniwala, and Sneha Kumar in Bengaluru)
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Salzgitter's performance is affected by the subdued economy in Europe. A tariff threat is looming.
Salzgitter's first-quarter earnings were below analyst expectations, due to the subdued economy in Europe and Germany. Birgit Potrafki, Chief Financial Officer of the company, said that "the economic environment was not supportive." In a poll conducted by the company, analysts had predicted a quarterly profit of 90 million euro. The 2.33 billion euro sales were lower than the analysts' expectations of 2.46 billion and the 2.7 million euros reported by the company last year. Salzgitter stated that U.S. tariffs will affect individual business units by indirect steel imports into the United States from Germany. It added that "The current discussions about increasing duties on steel and pipes imported to the U.S. as a response to EU tariffs will likely put EU exports into an even worse position in the global competition arena." At current tariff levels, it is expected that direct and indirect exports of steel from Europe will decline by between 2 and 3 millions tonnes, or 2% to 3.0% of the demand. If tariffs of up to 25% are imposed on European products, this figure will double. Salzgitter stated that its import-oriented KHS Group subsidiary, which manufactures machinery for the beverage packaging and filling industry, will be especially impacted by U.S. Tariff Policy, but it does expect to be able pass on to customers a large portion of the tariff burden. The group confirmed its annual guidance and said the first-quarter earnings were weighed down by 23 million euros in charges from the reporting-date-related valuation of derivative positions and a 10 million euro impairment risk from planned portfolio streamlining.
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Cobalt Holdings to raise $230 Million in London Listing
Cobalt Holdings announced on Monday that it intends to raise $230,000,000 through a global offering and possibly list its shares at the London Stock Exchange. The company wants to give investors pure-play exposure in cobalt prices. The company has a contract to purchase cobalt worth $200 million from Glencore, the world's largest miner. It plans to use proceeds from its equity raising to complete the purchase of this metal, which is a key component of electric vehicle batteries. Glencore and Anchorage Structured Commodities Advisor, an investment firm, have agreed to invest approximately 20.5% in the shares being offered. A six-year contract between the company and Glencore guarantees a cobalt supply worth up to $1billion. The company also has a contract with Anchorage to purchase up to 1,500 metric tons of cobalt in 2031. "We think now is the time to build up a strategic cobalt stockpile." In the past, cobalt prices have been higher than current spot prices. This is what CEO Jake Greenberg stated in an anticipated intention to float filing. The company has stated that its shares will be admitted to the stock market in June.
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Andy Home: A gallium-lens on China's mineral dominance, and how to end it
Since China began restricting the exports of exotic metals in August 2023, the price of gallium is on an upward trend. It is not surprising that China holds a near-monopoly in the global production of gallium, as well as across a wide range of critical materials. What should we do about the fact that the price for something few people know is at a 14-year high? According to the United States Geological Survey, global production was only 760 metric tonnes last year. The world market is worth only $550 million, even at the current high prices. Metal is used in so small quantities that it has no impact on the price of a cell phone or electric vehicle. If you are in the semiconductor industry, it is important. It's even more important to U.S. defense planners. That's why China selected element 31 as a metal pressure point. The Multiplier Effect The economic impact of China's export bans is multiplied by the fact that gallium is used to make so many gadgets. USGS estimates a suspension of Chinese exports for a year would result in a hit to the U.S. economic system of $3.1 billion. The semiconductor industry would account for about half of this decrease, while the remaining half will come from downstream industries like computers, printed circuit assemblies and electric vehicles. China hasn't completely suspended exports but has banned direct sales into the United States. Outbound flows are down since 2023, when dual-use regulations came into effect. The USGS projections also assumed that gallium prices would increase by more than 2,5 in the event of an export stop. Gallium prices have more than doubled since July 2023, when they were $350 per kilogram. They are now $725 per kilogram and still increasing. As more gallium is kept on the Chinese market, the Chinese price falls. Other times, physical arbitrage could close the price gap. But not when China's Ministry of Commerce is guarding the gate. THE MILITARY ANGLE Gallium is of even greater importance to U.S. military planners. The U.S. Defense Advanced Research Projects Agency, or DARPA, was responsible for the development of a compound known as gallium arsenide. This compound is used in precision-guided and radar weapons. More recently, DARPA has been involved with the next-generation semiconductor chip, gallium nitride. According to The Center for Strategic and International Studies (a non-profit research organization), the latter "revolutionizes modern radar by allowing new modules to track smaller and faster threats, and to be more numerous from a distance nearly doubled." The U.S. Army is deploying gallium nitride-enhanced Radars in its Lower-Tier Air and Missile Defense Sensors (LTAMDS), which are an integral part Patriot missile defence units, and F-35 Joint Strike Fighter. There's likely a lot more we don't even know. Gallium, like many other critical metals, has a small market but a wide range of applications. Many of these are at the forefront of semiconductor design. It's not a coincidence that China announced their export controls as a direct response to U.S. sanctions on next-generation chip imports to China. THE CHINA CHALLENGE Can the West break China’s grip on gallium? The solution to the problem is right in front of us, or better yet, in the tailings pool. Gallium isn't particularly rare on the surface of the Earth, but it only occurs at concentrations high enough to be extracted as a byproduct from other minerals. China's gallium dominance has increased along with its massive expansion of aluminum capacity. China accounts for 60% global aluminium production and all of that metal requires alumina which is produced from bauxite. Gallium can be produced by other refineries than China's. Western companies have stopped producing gallium after China took over the market in the first decade of this century. That's changing. Rio Tinto and Indium Corporation just announced that they had successfully extracted pure gallium out of a waste stream from Rio's Vaudreuil Alumina Refinery in Quebec. The next step will be to build a pilot plant that can produce 3.5 tons of gallium per year. METLEN, a Greek aluminium manufacturer, plans to increase its bauxite-and-alumina processing capability to 50 tons annually by 2028. This is one of 47 strategic mineral projects in the European Union. Two key lessons can be learned from this article for other mineral markets that are being affected by Chinese export restrictions. First, it is likely that the West already produces many of these materials but has not appreciated their value until now. Rio Tinto has begun extracting tellurium and scandium at its Kennecott Copper Smelter, Utah, as well as titanium from its operations in Quebec. The two plants had been in operation for several years before anyone thought it necessary to separate the metals from the waste stream. Second, it's clear that Western operators have to learn or, in the case gallium, re-learn the processing technologies needed to separate them and refine them. It will take some time, especially since China restricts the export of this technology in many cases. The higher prices that result from China's export restrictions are encouraging more and more Western companies back to metallurgy. The author is a columnist at
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Prices of oil rise after US-China trade talks calm market fears
The oil prices increased on Monday, after both sides of the U.S. and China trade talks announced their progress over the weekend. This lifted the market's sentiment that they may be moving towards a resolution to their trade dispute. Brent crude futures rose 43 cents or 0.67% to $64.34 per barrel at 0500 GMT. U.S. West Texas Intermediate crude futures traded at $61.50 per barrel, up 48c or 0.79% from Friday's closing price. The benchmarks gained more than $1 last Friday, and over 4% in the past week. This was their first weekly gain since mid-April. A U.S. deal with Britain has boosted investors' confidence that U.S. tariffs against trading partners will not cause economic disruption. The United States. The United States and China concluded their trade talks in a positive way on Sunday. U.S. officials hailed a "deal", which would reduce the U.S. deficit. Chinese officials claimed that both sides had reached an "important consensus". However, neither party released any details about the discussions with Chinese Vice Premier He Lifeng. They said a joint announcement would be made on Monday. Positive talks could boost crude demand, as the trade between these two countries is restored after being disrupted for years by huge tariffs imposed by both. Toshitaka Takawa, an analyst with Fujitomi Securities, said: "Optimism about constructive U.S. China talks supported sentiment. However, limited details and OPEC’s plan to increase output capped gains." Tazawa was referring plans by the Organization of the Petroleum Exporting Countries (OPEC+) and its allies to increase output in May and Juni, which will add crude oil to the market. A survey revealed that OPEC's oil production was slightly lower in April. Officials said that talks between Iranian and U.S. negotiators on Sunday to resolve disputes about Tehran's nuclear program ended in Oman, with future negotiations planned. Tehran, however, publicly insisted on its uranium-enrichment programme. The U.S. and Iran nuclear deal may alleviate fears about a lower global oil supply that could also affect oil prices. Baker Hughes, an energy services company, said that the U.S. oil and gas companies cut their number of operating oil and natural-gas rigs to its lowest level since January last week. Yuka Obayashi reported from Tokyo, Colleen in Beijing and Clarence Fernandez edited.
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The devil is in the details.
Wayne Cole gives us a look at what the future holds for European and global markets. Choose from "substantial", "constructive", a "first step", a "reached an important consensus", or "good news for world". The best is "as we say in China, as long as the food is delicious, timing does not matter". These were the words of negotiators at the U.S. - China trade talks that took place over the weekend in Geneva. They sound more positive than the jingoistic rhetoric of the initial announcement by President Trump of his 145% tariffs. It was not clear what the actual tariffs were. Later on Monday, a joint statement may provide more details, but markets do not believe the White House's claim that there is a "deal". Investors trusting the word of an uni-party communist state more than the United States is a strange world. Markets are relieved there were no weapons drawn during the discussions and Nasdaq and S&P futures have gained almost 2% and 1.4% respectively. European stock futures are up about 0.8%. Treasuries are being sold in a knee-jerk reaction as the market continues to reduce its expectations about the future pace of Fed rate reductions. Now, the odds of a June easing have been priced at 17% and July at 59%. Futures suggest 63 basis point cuts for this year compared to 110 bps at mid-April. The fragile ceasefire between India and Pakistan helped to lift the mood, while Ukrainian president Volodymyr Zelenskiy announced that he would be ready to meet Vladimir Putin for talks in Turkey on Friday. Analysts believe that the first impact of tariffs on the economy will be seen in the report for May. Retail sales for April are expected to remain flat, but the risks to the downside will be high due to the impact of the import levies on consumer sentiment. Tariffs are not expected to be applied to the 747 Trump intends to accept from Qatar's royal family, which is decked out in gold. It seems that membership comes with its own privileges. Market developments on Monday that may have a significant impact ECB members Buch and Cipollone are present at the Eurogroup. Also, BoE Deputy Governor Lombardelli is in attendance as well as policymakers Greene Mann Taylor and Greene. Kugler, Fed Board Governor, speaks about the economy
China's CATL will raise at least $4 Billion in Hong Kong listing
According to the prospectus it filed on Monday, Chinese battery manufacturer CATL aims at raising at least HK$31.01bn ($3.99bn) through its Hong Kong listing. This is the largest new share sales in the city for this year.
According to documents filed with the Hong Kong Stock Exchange, the maker of batteries used in electric vehicles will sell 117.9 millions shares at a maximum price of HK$263 each.
If the offer size adjustment and greenshoe options are used, then the size of this deal could reach $5.3 billion.
The prospectus revealed that more than 20 cornerstone shareholders, including Sinopec, Kuwait Investment Authority and Kuwait Investment Authority have subscribed for CATL shares worth $2.62 billion.
With the offer size adjustment, up to 17,7 million additional shares can be sold to raise an extra HK$4.65billion ($598,00 million). The greenshoe option allows for the sale of up to 17,7 million additional shares.
The filings indicated that the price of the shares is expected to be determined between Tuesday and Friday. A final price will be announced no later than May 19.
CATL will sell its Hong Kong shares at a slight discount to Shenzen's Friday closing price if they are priced at HK$263 per share. If the Hong Kong shares are below this level, the discount is larger.
CATL stated in its prospectus that it had been granted a Hong Kong Stock Exchange exemption to not publish the minimum price at which shares can be sold, as this could have an impact on the trading of the Shenzhen listed stock.
The prospectus stated that 109,1 million shares will be sold to institutional investors. Hong Kong retail investors can bid on 8,8 million shares.
This will be the biggest share sale in Hong Kong since Midea Group raised $4,6 billion last year.
CATL shares will begin trading at the Hong Kong Stock Exchange from May 20.
CLOSING EYE ON US - CHINA TRADE WAR
The filings revealed that U.S. investors onshore will not be allowed to purchase CATL shares as part of the Hong Kong deal. However, many of these funds have overseas operations and would be eligible to participate.
In January, the company was listed on a list of Chinese companies that U.S. Defense Department claimed worked with China's Military. CATL stated in its prospectus that it was working closely with the U.S. Department to correct the 'false label'.
It said: "It doesn't restrict us from doing business with entities, other than a few U.S. government authorities. Therefore is expected to not have a substantial adverse impact on business."
CATL's book-building comes at a time when the U.S., China and other countries held constructive talks on de-escalating the trade war in Geneva. However, the 145% tariffs on Chinese goods by Washington and the 125% tariffs on U.S. products by Beijing remain in effect.
Tariff policies are rapidly changing. We cannot assess with accuracy the impact that such policies will have on our business. However, we will monitor the situation closely.
CATL previously stated that the impact of U.S. Tariffs would be minimal, as this market only accounts for a small portion of the company's business.
The Biden administration's policies have severely restricted its North American business. These policies excluded Chinese batteries under an EV subvention scheme.
CATL licenses its battery technology in order to assist its U.S. customers, including Ford and Tesla, to build their own battery plants rather than building its. Such partnerships are often criticized by U.S. lawmakers.
(source: Reuters)