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Iron ore reaches a 2-week high after Sino-US trade truce; caution limits gains
Iron ore futures reached a two-week high Tuesday, supported by an interim trade agreement between China and the U.S., but caution about a final deal, and a possible slowdown in near-term demand, limited gains. The day-traded price of the most traded September iron ore contract at China's Dalian Commodity Exchange was 1.06% higher, closing at 714.5 Yuan ($99.34). The contract reached its highest level since April 24, at 727 Yuan, earlier in the session. As of 0700 GMT, the benchmark June iron ore traded on the Singapore Exchange had fallen 0.7%, to $99.3 per ton, after reaching its highest level since April 24, at $100.35. On Monday, U.S. agreed that it would reduce levies for Chinese imports by 145% and 30% during a 90-day period of negotiation. China announced that it would lower duties on U.S. imported goods from 125% and 10%. This boosted sentiments and led to a general price rise across commodities. The initial excitement faded as uncertainty over the final deal and seasonal slow demand arose, causing concerns about a sluggish demand for ore in the coming week. Analysts at Shengda Futures expect that the hot metal production will show signs of a slowdown in late May. Analysts at CICC say that the lower hot metal production is expected to coincide when miners increase shipments in order to meet quarterly targets. This will add downward pressure to prices. The hot metal product is typically used as a gauge for iron ore demand. The benchmark steel prices on the Shanghai Futures Exchange rose. Steel benchmarks on the Shanghai Futures Exchange advanced. The DCE also saw a decline in other steelmaking ingredients, including coking coal, which fell 0.85%, and coke, which dropped 0.69%. $1 = 7.1925 Chinese yuan (Reporting and editing by Amy Lv, Lewis Jackson and Sonia Cheema).
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South Africa coal miner Exxaro agrees deal to buy manganese assets
Exxaro Resources announced on Tuesday that it had reached an agreement with South Africa to purchase manganese mines. The deal is worth 11,67 billion rands. In a press release, the South African coal mining company announced that it had entered into a binding contract to purchase shares and claims on manganese assets owned by Ntsimbintle Holdings or OM Holdings. The coal miner is diversifying into manganese, copper and other minerals to take advantage of the booming demand for these minerals that are vital to the global shift from fossil fuels, which pollute the environment, to cleaner energy sources. In a statement, Ben Magara said that the acquisition provided Exxaro a strong entry into the manganese industry. Magara was appointed CEO of Exxaro in April. South Africa is the largest producer of this steelmaking ingredient in the world. Manganese can also be found in the lithium-ion batteries of electric vehicles. Exxaro gains exposure to four manganese mines operating in the Northern Cape Province of South Africa. It said that the mines had long-term contracts in China and India with customers where Exxaro sold its coal. Felix Njini, Johannesburg (reporting), Louise Heavens (editing)
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India is considering counter-duties on US products, a notice to WTO shows
A document sent to the World Trade Organization reveals that India may impose import duties on certain products manufactured in the United States as a counter to Washington's tariffs against steel and aluminum products. The document of May 12 stated that "the proposed suspension of concessions, or other obligations, takes the form an increase in tariffs for selected products from the United States." The tariff rate was not specified. In March, the U.S. levied 25% on imports of steel and aluminum - an extension to tariffs first imposed by President Donald Trump in 2018. India, which is the second largest producer of crude iron and steel in the world, stated that the WTO measures would impact $7.6 billion of India-made goods imported to the United States. Trump's administration, in addition to the duties on aluminium and steel, has threatened reciprocal trade tariffs of 26 percent on Indian goods. New Delhi is offering to reduce its trade deficit with the U.S. to two thirds as part of a deal between the two countries. India has some the highest import tariffs in the world, and Trump previously called India "tariff violator". India has also imposed tariffs on its steel. Last month it imposed temporary tariffs of 12% to reduce imports, mostly from China, of steel at a low price. New Delhi, in addition to trying to curb the supply of steel at home, is also seeking to increase access to Indian steel exports by engaging in trade negotiations with partner countries.
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As trade optimism fades, Asian stocks slump and the dollar falls
The dollar stumbled on Tuesday, as renewed concerns about the impact of U.S. President Donald Trump’s trade policies on the global economic climate kept risk sentiment at bay. European futures indicated a weaker opening, while Chinese stocks were flat. They failed to latch on to the strong Wall Street rally following a 90-day stop in the Sino-U.S. Trade War. The S&P 500 futures and Nasdaq futures were both slightly lower during the afternoon of Asia, highlighting the cautious mood on the markets. Christopher Hodge is the chief U.S. economics at Natixis. He said that a de-escalation of tensions was inevitable. The tariffs are still going to be much higher than they were before and this will have a negative impact on the U.S. growth." MSCI's broadest Asia-Pacific share index outside Japan fell 0.2% after reaching a session high of more than six months earlier. The ratings agency Fitch estimates that the U.S. tariff rate has dropped to 13.1% from 22.8% before the agreement, but is still higher than it was in 2024. Since Trump announced his tariffs at the beginning of April, the markets have been roiled by concerns about U.S. economic growth and a lack of progress on negotiating deals with its trading partners. Since then, investors have withdrawn from U.S. assets and pushed safe havens such as the yen (yen), Swiss franc (franc suisse) and gold higher. The dollar initially surged on Monday following the announcement of the pause in tit for tat tariffs. However, the dollar fell in the afternoon Asian trading session on Tuesday as the rally faded. The U.S. announced it would reduce tariffs on Chinese imports from 145% to 30%, while China announced it would lower duties on U.S. imported goods from 125% to 10%. The markets were relieved, despite the fact that there is still concern about how tariffs might affect the global economy. Hong Kong's Hang Seng Index was down 1.67%, while Japan's Nikkei rose over 2% and reached its highest level since the 25th of February. "Fundamentally uncertainty still persists, particularly around the possible pullback in corporate and consumer spending," said Charu C. Chanana. Chief investment strategist for Saxo, Singapore. Institutional investors were mostly on the sidelines, and held a neutral stance on U.S. stocks. This opens the door to aggressive dip-buying on any retracement. US INFLATION TESTS Investors will now focus on the details of the contract and what happens following 90 days. The U.S. Inflation data will come into focus later Tuesday. Matt Simpson, City Index's senior market analyst, said that if we were to receive another set of soft CPI numbers, traders could refocus their attention on Fed policy, including the possibility of cuts, and this would take some steam off the dollar's recovery. Trade relations between the United States and China have changed, leading traders to reduce Federal Reserve rate-cut bets. They expect policymakers to be less under pressure to ease interest rates in order to boost growth. The traders are now pricing in 56 points of reductions this year. This is down from the over 100 points they were quoting during the peak of tariff-induced panic in mid-April. The yields on U.S. Treasury bonds rose to an all-time high of one month on Monday, and they were still hovering around that level at the start of trading on Tuesday. The yield on the two-year bond was at 3.9873% while that of the benchmark 10-year bond was last at 4.4512%. Bitcoin, the most popular cryptocurrency, was unchanged at $102,676 Tuesday. It is still above the $100,000 threshold it broke last week. On Tuesday, oil prices eased after reaching a two-week peak in the previous session due to optimism about trade deals. Gold prices recovered some of their losses from Monday when they fell 2% as investors fled some safe havens.
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German reinsurers report a drop in profits after $1.9 billion Los Angeles Fire claims
Munich Re and Hannover Re reported a sharp drop in their first-quarter profits on Tuesday, after they received a total of 1.7 billion euro ($1.89 billion), in claims related to the Los Angeles fires. Wildfires in the area larger than Paris have killed or injured nearly 30 people, and destroyed more than 16,000. Clemens C. Jungsthoefel, Hannover Re's Chief Executive Officer said: "The devastating California wildfires are yet another example of climate change exacerbating risks of extreme weather," Both companies, however, said that they would stick to their full-year profits forecasts. Munich Re, world's biggest reinsurer, reported a net profit of 1.094 billion euro in the quarter that was reported, down from the 2.115 billion euro a year ago. Analysts had expected a net profit of around 1.112 billion euro. However, the company maintained its forecast for 2025, which projected a rise from 5.7 billion euro in 2024 to 6 billion euro by 2025. Hannover Re, the rival insurer, reported a profit drop of 14% on Tuesday. The company cited wildfire claims totaling 631 million Euros. Hannover's profit for the quarter dropped from 558 to 480 millions euros. This is slightly higher than analyst expectations of 447 millions euros. $1 = 0.8999 euros (Reporting and editing by Tom Sims, Alexander Huebner and Friederike Heine)
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Birla's paints bet shakes Asian Paints India's reign
Elara Securities, which has shared exclusive data with us, shows that Asian Paints, India's largest paint manufacturer, has lost more share of the market than analysts had expected in the first year after billionaire Kumar Mangalam Birla launched his ambitious paints venture. Elara Securities' data shows that Asian Paints market share dropped to 52%, from 59%, in the 12-month period ending March 31. This puts pressure on the leader of the industry to spend more money on marketing and promotions to maintain its crown. Birla Opus has reached a market share of 6.8% for the last quarter. "Whenever there is a new entry, their strategies are aggressive. This time the scale has been much larger," said Geojit Financial Services Analyst Antu Thomas. He had originally expected Grasim's market share to be only 1%-2 %. Birla Opus is the paints division of Aditya Birla Group's Grasim. They have borrowed heavily from Asian Paints to gain ground on the $9.5 billion market that includes Berger Paints Kansai, Indigo Paints, and AkzoNobel India. Analysts said that after its launch in February 2024 with an investment 100 billion rupees (1.18 billion dollars), the sector expanded at a rate never seen before. According to interviews with former Asian Paints and paint dealers, the company offered discounts to attract paint dealers. It also hired managers at mid-level positions from Asian Paints and built factories close to its rival's established units. "Asian Paints accounted for 70% of my paint sales in 2023." In 2024 the share was only 30%," Sunny Rahman said, a paint seller in Kolkata's eastern city, who switched brands because of cheaper prices. Asian Paints has been hurt by the moves. Last week, it reported a 45% decline in profit for the fourth quarter that was higher than expected. It also warned of the worst demand conditions in decades. Amit Syngle, CEO of Asian Paints, said in the call after earnings that "in a market where things are already slow the intensity of the competitive action was much more." "It's a double whammy," said Syngle. INTENSIFYING BATTLE Asian Paints has not responded to any requests for further information. Rakshit H. Hargave, CEO of Birla Opus, said that the company has no plans to slow its pace. Hargave stated that "our objective is to increase market share and, I believe, we have already built that into the plan we have." He denied that the Birla Opus factory locations were chosen based on their proximity to Asian Paints units, and claimed Birla Opus hired across the industry. Analysts at ICICI Securities have flagged "downside risks" in Asian Paints' forecast, which calls for an EBITDA margin of 18%-20% (operating profit). "Asian Paints' future is not in steep discounts. Thomas stated that it will be successful by introducing products with differential values. $1 = 84.8553 Indian Rupees
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Shanghai copper prices fall as caution tempers US/China trade optimism
The copper prices fell on Tuesday. The most traded contract on the Shanghai Futures Exchange dipped lower as caution continued to linger, tempered by the relief of a U.S. - China tariff truce. As of 0432 GMT the SHFE contract fell 0.3% to 77,790 Yuan ($10,818.89), while the London Metal Exchange's benchmark contract for copper rose 0.1% to $9.526 per ton. Industrial metals saw a surge in demand on Monday following the Sino-U.S. agreement to temporarily reduce tariffs. Chinese duties on U.S. imported goods will fall to 10%, from 125%. U.S. duty on Chinese imports will drop to 30%, from 145%. Copper prices reflected the fear that further negotiations would be a long and tedious process. "78,000 Yuan is not a low amount, and the remaining U.S. Tariffs on China's Exports are still high, even though they are better than the 145% tariffs that were previously in place," said a Beijing based metals analyst. He also mentioned the slower decline in SHFE copper inventory last week. SHFE copper stock fell 10% between the end of April and last week. This is less than the declines that were 23.5% in the previous two weekends. Other London metals include aluminium, which fell by 0.1% on Tuesday to $2477.5 per ton, zinc, which fell by 0.1%, and lead, up 0.3% at $1982.5, while nickel dropped 0.7% to 15520. Tin fell 1.2% to $22,200. The SHFE Nickel fell by 2%, to 123230 Yuan. Aluminium gained 1.1%, to 19,980 Yuan. Zinc eased by 0.6%, to 22,185 Yuan. Lead gained 0.2%, to 16,950 Yuan. Tin was unchanged at 261,030 Yan. Hongmei Li (Reporting and Editing)
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Delays in Store for Two Wells at Shell’s Perdido Development
Shell, the top U.S. offshore producer, said this week that two of its wells to boost production at the Perdido offshore development were delayed to the end of the year, while one was brought online in March.All three wells, part of Perdido's Great White unit, were originally expected to be online in April and set to produce up to 22,000 barrels of oil equivalent per day (boepd) at peak rates, expanding output from the platform.Perdido, which began production in 2010, has an output capacity of 125,000 boepd at peak rates. Shell is the operator of the field with a 35% working interest, while Chevron CVX.N and others hold the remaining stake.Shell in December had also announced plans to bring online two additional wells as a part of the Silvertip unit to boost Perdido's output. These wells are expected to collectively produce up to 6,000 boepd at peak rates, with first oil expected in 2026.(Reuters - Reporting by Arathy Somasekhar in Houston)
Petrobras announces $2.1 Billion in dividends and a first-quarter profit increase on the back of one-offs
Petrobras, Brazil's largest oil company, announced a first-quarter net profit of $35.2 billion, an increase of 48.6% over the same period last year. Non-recurring events boosted this figure. The company also announced dividends worth $2.1 billion.
If not for one-off events such as fluctuations in the exchange rate of the real against the dollar, state-owned oil company would have seen a 12.1% decline in its net profits over the same period to 23.6 billion reais.
Magda Chambriard, Petrobras' Chief Executive Officer, said in a press release that the company's financial results and operational performance were "robust."
EBITDA (earnings before interest, tax, depreciation, and amortization) for the oil producer was 61 billion reals, an increase of 1.7% year-on-year. Petrobras reported that adjusted EBITDA was 62.3 billion reais without non-recurring effects.
LSEG polled analysts who had predicted an EBITDA of 62.9 billion dollars.
Petrobras announced in a separate filing that its board of directors had approved the payment to shareholders of 11,72 billion reais ($2,1 billion) as dividends and interest. This is equivalent to 0.91 reals per share.
The earnings report revealed that the amount was due to investments, as measured by capital expenses (capex), a measure which is of great interest for investors. It rose from $3 billion a few years ago to $4.1 billion, a significant increase.
In a statement, the company's Chief Financial officer Fernando Melgarejo said that the majority of the investments were concentrated in presalt projects in Buzios, Atapu and Buzios. He added that Petrobras had invested 22% its annual guidance.
Petrobras investments are special
Investors' attention
After they exceeded the firm's estimates in 2024 there was concern about dividends being reduced.
Petrobras reported that net revenue for the quarter increased 4.6%, to 123.1 billion reals, a slight decrease from the 124.9 billion reals analysts had expected.
The company had already published an operational report
Last month
The country's oil, gas, and gas liquids output fell by 0.2% to 2,77 million barrels per day. $1 = 5.6699 Brazilian reais (Reporting and editing by Gabriel Araujo in Rio de Janeiro, Andre Romani and Chris Reese in Sao Paulo)
(source: Reuters)