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Andy Home: LME traders at the ROI were wrongly pricing metal supply crises.
Metals traders began the year fretting about an upcoming supply crunch for copper, but ended the first quarter with a very imminent aluminium supply crisis. In its fifth week, the Iran war has calmed some of the frenzy of speculation that erupted in the London Metal Exchange's (LME) base metals complex in January. It has pushed aluminium to its highest level since 2022, with two Gulf smelters being damaged by Iranian missile strikes and shipping through the Strait still severely restricted. Even though energy prices are surging, the metals bulls still have a good grip on the market. EXPLOSIVE ALUMINIUM The Iran War has revealed the fragility in the Western Aluminium Supply Chain. Around 9% of the world's smelting capability and 18% global exports are accounted for by the Gulf. Initial impact was the logistical squeeze that resulted from the closure of the Strait of Hormuz. The Qatari smelter Qatalum, as well as Aluminium Bahrain (Alba), both reduced their operating rates in order to conserve?raw materials stocks. Next came direct attacks. Alba, which was hit by Iranian missiles, has now been reduced to 30% of its capacity. The giant Al Taweelah, operated by Emirates Global Aluminium is also completely out of action due to damage to the power plant. The supply chain is being shook by a crisis no one could have predicted. Western aluminium buyers face a 'double blow' from the simultaneous increase in the LME aluminum price and the sharp jump in physical prices. The LME copper price hit a nominal record of $14,527.50 a metric ton last January, as investors bought in to the enticing "bull narrative" of stellar demand growth. However, there is no shortage of the metal in the present. Global exchange stocks ended March at just under 1.4 million metric tonnes, which is a multi-year record. LME's three-month copper ended the quarter at $12335.50 per tonne, 15% lower than the peak of January and essentially flat compared to the beginning of the year. In January, tin reached a record-high price of $59 040 per ton as investors chased a similar meme of scarcity. Industrial players also responded to the scarcity of tin by delivering it into LME's warehouses. Since the beginning of the year, registered tin stock has increased by 60%. Another 2,951 tonnes are in the LME’s non-warranty stocks. As with copper, the LME spread structure for tin shows no signs of tightness. Both metals are in wide contango and there is no shortage of units. Nickel and lead markets are not in danger of a shortage. Both LME stocks are very high, and the time-spreads have been relaxed. LME lead stock has risen to over 500,000 tonnes and is set to replace aluminium as the metal of choice for financing. Zinc is still an "outlier", the galvanising material stubbornly refusing to perform as script. LME inventories have not been rebuilt in a meaningful way. Stocks are only up 7,900 tonnes on the start the year. It is currently trading at a marginal contagious of $5.00 per tonne. SECOND-ROUND ?IMPACT As we enter the second half of the year, the biggest question hanging over LME base metals is the impact that the Iran War will have on demand. The escalating energy costs are bad news for both manufacturers and consumers. It is important to consider how long the hostilities will last. This is why metals went from being in the spotlight in January, to following them slavishly in March. The war in the Gulf has been going on for too long, and it will be felt for months. Andy Home is a columnist at. This column is great! Check out Open Interest, your new essential source for global financial commentary. Follow ROI on LinkedIn and X. Listen to the Morning Bid podcast daily on Apple, Spotify or the app. Subscribe to the Morning Bid podcast and hear journalists discussing the latest news in finance and markets seven days a weeks.
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Sudan appoints Yassir Al-Atta as Chief of Staff for the Armed Forces
Sudan appointed General Yassir al-Atta as the chief of staff for the Armed Forces of the country. He is a member of the 'Sovereign Council' of the 'country and an assistant to commander-in-chief Abdel Fattah al-Burhan. This is the biggest personnel change?since the war between the Sudanese Army and the paramilitary Rapid Support Forces, three years ago. It could also lead to a shift in strategy as a?new front opens in the southeastern Blue Nile State. Al-Atta has been in the military more than 40 year and has made many public speeches accusing the United Arab Emirates of supporting the RSF. He also claims that civilian politicians support the paramilitary organization. The UAE and politicians deny support for the "RSF". Al-Atta assumes the role of chief of army staff, taking over from Othman Al-Hussein. This gives him a less 'political' role and a tighter control on the armed forces. (Reporting and writing by Khalid Abdelaziz; Editing by Alex Richardson).
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Gold falls on stronger dollar and rising bets of higher interest rates
Gold prices dropped?on Friday as the U.S. dollar and oil prices rose after?President Donald Trump announced that the U.S. will continue its attacks against Iran. This sparked inflation fears and raised expectations for higher interest rates. As of 9:15 am EDT (1315 GMT), spot gold was down by 3.6%, at $4.587.55 an ounce. This is after it had hit a session high two weeks earlier. U.S. Gold?futures dropped 4.2% to $4613.30. Dollars rose sharply and made greenback bullion more expensive for other currency holders. David Meger is director of metals at High Ridge Futures. He said that the market was very focused on Trump’s comments. They have so far shown little indication of a "quick solution" to the energy crisis. He added that this is impacting?gold and?silver prices as it is less likely to see rate cuts. Trump claimed in a televised address that the U.S. had achieved its objectives in Iran but did not provide a timeline for the end of the war, and promised to bomb Iran back into "the Stone Ages". Oil prices rose in response. Energy prices are rising, which leads to higher inflation and a reduction in the ability of central banks to reduce rates. Gold is not a good inflation hedge, and it struggles to earn interest when rates are high. Since the Iran conflict began on February 28, spot gold has dropped 13%. The news that the Turkish central bank's reserves of gold dropped from 702.5 to 69.1 tons in the past week - a drop of more than 118 tonnes - also impacted the mood. Authorities are trying to mitigate the market impact caused by the war. Gold prices in India rose for the first time in over two months, as softer prices increased demand. Premiums in China were slightly lower, as buyers waited for a more significant correction. Other metals saw a 7.1% drop in spot silver to $69.78. Platinum fell 2.7% to $ 1,911.13 while palladium dropped 1.3% to $1.453.70. Ashitha Shivprasad, Bengaluru (Reporting and Editing by Jan Harvey).
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India graveyard raid unearths hidden cooking gas canisters amid a shortage
A government official reported that Indian police seized 414 cooking gas 'canisters' hidden in a cemetery in Hyderabad this week and arrested people who were trying to sell them in the "black market" amid shortages due to the Iran war. The authorities have intensified raids in order to reduce the hoarding and stockpiling of liquefied gas canisters following the U.S./Israeli war on Iran, which disrupted shipping and caused shortages. India is the second largest LPG importer in the world. India, the world's No. 2 LPG importer meets 60% of its demand through overseas purchases. Sujata?Sharma, a senior officer in the Ministry of Petroleum and Natural Gas told a regular briefing about the Middle East Crisis that "just yesterday, around 2,600?raids were carried out and approximately 700 cylinders seized". "Also, 400?cylinders have been found in a cemetery in Hyderabad. Ten people were detained and the distributor has been suspended, she added. The police said that the accused were selling domestic and commercial canisters at a price nearly three times higher than the current market. A canister worth approximately 2,100 Indian rupees (22 dollars) was sold for up to 6,000 rupees. Police said that the total value of the canisters seized and certain vehicles used by the suspects was approximately 2.2 million rupees. Police could not contact the accused immediately or their representatives. Sharma stated that the supply of natural gas to domestic customers is guaranteed. The price of LPG has not increased despite the volatility in international markets. India is promoting the use?of alternatives like kerosene and coal, while accelerating the rollout?of piped natural gas to households.
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Maldives wants fuel from India during Iran war
A spokesperson from India's Foreign Ministry said that the Maldives was seeking fuel supplies. India?is still shipping fuel to its neighboring countries?, she added. Randhir Jaiswal, at a press conference, stated that India is the world's?fourth largest refiner? and supplies fuel to Bangladesh, Nepal, Bhutan, and Sri Lanka. The government of Maldives also contacted us to supply petroleum products on a short-term as well as long-term basis. Jaiswal stated that the request from Maldives is being evaluated in light of our own needs and availability. According to World Bank statistics, the Maldives sources most of its fuel from Oman. The U.S./Israeli war against Iran has caused the Strait of Hormuz to be closed, disrupting the shipping of oil and oil-based products out of the Middle East. Jaiswal stated that India has also discussed the current energy situation in India with Mauritius, Seychelles and Seychelles. He said, "We haven't received any requests from them yet." Jaiswal stated that India has been in contact with Iran and other countries about the safe passage of tankers carrying oil and products such as liquefied gas and liquefied petrol gas. India has so far managed to remove six LPG carriers from the Gulf. Mukesh mangal, the additional secretary of the federal shipping ministry, said that 18 India-flagged ships are still stuck. After the U.S. allowed a waiver of the sanctions, Indian refiners are also preparing to purchase Iranian oil. India imported Iranian oil for the last time in 2019. According to LSEG ship tracker data, the sanctioned vessel Ping Shun is heading for Vadinar on the Indian west coast. Mangal said that Indian authorities were unaware of the tanker arriving in Indian ports. (Reporting and editing by Nidhh Verma; Saurabh Sharma, Nikunj Ahri and Jan Harvey).
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Copper prices fall as hope for a quick end to the Iran war fades
Copper prices fell on Thursday for the first time in five sessions, as investors grew more concerned about economic growth following Donald Trump's promise to continue a flurry of strikes on Iran. Open outcry official activity on the London Metal Exchange showed that benchmark three-month copper was down 1.6% to $12,235.50 a metric tonne. The metal is considered to be a bellwether of the global economy and was expected to finish the Easter holiday-shortened weekend up 0.4%, after a run of four consecutive daily gains. "Copper is trading like a risk asset that's sensitive to macroeconomics, moving in line with equities as sentiments weaken around macroeconomics and geopolitical uncertainties persist," said DBX Commodities CEO, Alexandre Claude. Stocks continue to grow. LME copper stock The 364,450 tonnage is the highest for almost eight years. Major Chinese smelters plan to 'raise or maintain production in 2026, despite an earlier public commitment made late last year that they would reduce output by more than 10 %. Aluminium prices fell 3%, to $3.424 per ton. This is despite fears of smelter closures in the Gulf after last Saturday's Iranian attacks. Iran's Revolutionary Guards warned that Tehran would respond in a "more painful way" if Iranian industry is again targeted. Ewa Mnthey, ING commodities analyst, said that despite the escalation rhetoric aluminium prices are still lower as markets struggle to determine how severe and long these Gulf disruptions will be. "Current prices reflect headline risk but not the full physical impact. This is especially true if shutdowns continue or spread." The LME cash aluminium contract traded at a premium of $67.25 per?ton over the forward three-month contract This indicates a shortage of metal in the near future. Zinc fell 1.7% to $3.235, while lead dropped 1.3% to $2,916, nickel slipped 0.9% to $17.050, and tin dropped 3.9% to $45,500. Manthey said that the pullback in LME metals "looks more like short-term risk-trimming and positioning ahead of the long weekend." The LME will close on Friday, April 19th and Monday, April 21st for Easter. (Reporting and additional reporting by Ruth Chai, Editing by Emelia Sithole-Matarise & Arun Koyyur; Reporting by Tom Daly)
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Several countries form a coalition to ensure passage through the Strait of Hormuz
Britain said on Thursday that around 40 countries were discussing a joint action to reopen Strait of Hormuz after U.S. president Donald 'Trump' stated that securing this waterway is a problem other nations must solve. The virtual meeting was chaired by British Foreign Minister Yvette Cooper and included France, Germany Canada, United Arab Emirates, India, and started around noon in London. Cooper stated at the beginning of the meeting that "we are focusing our efforts on diplomatic and international planning, including the collective mobilisation and use of all of our diplomatic and economic pressures and tools." One official confirmed that the United States was not present at the discussions. Representatives of around 40 countries participated in the discussions after Trump stated on Wednesday that the Strait could?open "naturally". It was up to the countries who depend on it to make sure it is open. Focus on Military and Diplomatic Options In retaliation to the U.S. and Israeli strikes that began late February, Iran has 'effectively closed down the waterway which carries around a fifth the total world oil consumption. As energy prices rise, reopening the waterway has become a top priority for governments worldwide. European countries initially rejected Trump's request to send their navy?to this area out of fear?about getting dragged into conflict. Concerned about the impact that the cost of energy is having on the global economic system, they have formed a coalition in order to defend their interests. European diplomats stated that the formation of the coalition was still in its early stages, with Britain leading. Officials have said that the discussion on Thursday will focus on which countries are willing to participate, before military planners gather for discussions next week. Vernet, the spokesperson for France's Armed Forces, said at a press conference held on Thursday that this process would take place in phases and couldn't begin until hostilities were calmed down or ended. The talks will focus on ensuring shipowners feel confident enough to allow vessels to travel through the area again and lowering insurance premiums. Vernet also said that there would?eventually? need to be coordination with Iran in order to guarantee the security of ships. This is something that seems unlikely at this time. He said that discussions had begun on the types of military assets that could be provided. He said that "we will need to have a sufficient amount of vessels, coordination capabilities?in the air and at sea as well as being able to share intelligence." Trump said Wednesday evening that countries who use the Strait of Hormuz "should build up some delayed courage" to "just grab it". He said, "Just take it, protect it and use it yourself." But?France’s President Emmanuel Macron, speaking to South Korea's media on Thursday, said that seizing the Strait of Malacca militarily is an "unrealistic option". He said: "It will take an indefinite time and expose those who travel through the Strait to coastal threats from the Revolutionary Guards as well as missiles." Andrew Heavens, Philippa Fletcher and Andrew Heavens edited the article.
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India graveyard raid unearths hidden cooking gas canisters amid a shortage
A government official said that Indian police seized 414 canisters of cooking gas hidden in a cemetery in Hyderabad and arrested people who were trying to sell the canisters on the black market. This was in response to shortages caused by 'the Iran War. The authorities have increased raids in order to reduce the hoarding and stockpiling of liquefied gas canisters, after the U.S./Israeli war on Iran caused shipping disruptions that led to shortages. India is the second largest LPG importer in the world. About 60% of India's LPG demand is met by overseas purchases. Sujata sharma, a senior official at the Ministry of Natural Gas and Petroleum, said that yesterday around 2,600 raids had been carried out, and about 700 cylinders seized. "Also, 400 cylinders have been?recently discovered at a location within a cemetery in Hyderabad. She said that ten?people were detained and the distributor was suspended. The police said that the accused were selling domestic and commercial canisters at almost three times current market prices. A canister worth about 22,100 rupees (about 2,100 Indian rupees) was sold for?as much as 6,000 rupees. Police said that the total value of seized canisters as well as some vehicles used by accused was approximately 2.2 million rupees. The police could not contact the accused immediately or their representatives. Sharma stated that the?supply?of?natural gas for domestic consumers was 100% guaranteed. "In terms of LPG supplies, the prices are stable, despite international volatility. And there is no increase in the price of LPG cylinders sold domestically." India is promoting alternative fuels such as kerosene and coal, while also accelerating the rollout of natural gas piped to households.
McGeever: The 'no hire' US economy is exposed by the war in Iran.
The U.S. employment growth has virtually stopped. This was acceptable for policymakers and investors before the Iran War, but it shouldn't still be.
Since a while, the labor market has steadily declined, but it has been hidden by a rising headline unemployment rate, which has only been increasing gradually. It is still low by historical standards at 4.4%.
The labor market has stagnated.
JOLTS, the closely watched Job Openings and Labor Turnover Survey released this week, showed that hiring has now reached its lowest level since April 2020. It's possible that hiring will not pick up in the next few months.
Bureau of Labor Statistics figures are expected on Friday to show that the U.S. created a total of 60,000 non-farm payroll positions in March. This would give a monthly average of around 30,000 in the first three months.
The average six-month monthly payroll growth was negative just a few short months ago. This is not sustainable or desirable for the largest economy in the entire world. With a workforce of 170 million and a $30 trillion juggernaut, this is not sustainable.
The increase in incomes leads to increased spending, economic activity and, ultimately, growth. Low hiring slows down the flow of tax revenue into the government's coffers. This puts a strain on public finances.
BREAKEVEN JOB GROWTH IS NOW ZERO
The fall in the "break-even job growth" explains why there is a relatively constant unemployment rate, despite an evaporating?job growth. This is the amount of employment required to maintain the unemployment rate.
According to a Dallas Fed?publication this week, three years ago there were around 250,000 monthly jobs. It has been declining steadily ever since and is now almost zero. This means that the unemployment rate is stable even though the economy barely creates any jobs.
Slowing demand for workers is usually a warning sign that unemployment is on the rise, that the economy is slowing down, and the recession risk is increasing. A job growth rate below the estimated breakeven level is an even more alarming warning.
The labor supply is also decreasing rapidly. This is largely because of the Trump administration’s policy to reduce net immigration. The longer-term impacts are yet to be determined. Currently, however, they are compensating for the decline in hiring.
The jobs market might appear stable from the outside if the labor supply and demand is roughly equal, and the unemployment rate has remained relatively stable. It's not healthy.
No longer so ruthless or insecure
The fragile labor market is also more susceptible to breaking, which puts the delicate balance at risk.
Due to supply shocks caused by the Middle East conflict, the economy faces structurally higher energy costs and increasing inflation pressures. These prices will continue to rise at least through the end of this year and possibly beyond. This means that consumers' bills as well as companies' costs are likely to increase.
Gasoline is over $4 per gallon and oil is above $100 a barrel. Household budgets are under pressure.
While businesses struggle with increasing input costs, such as transportation and energy, the financial climate has tightened. Spring and summer seasonal factors are also a hindrance to hiring.
The Federal Reserve paused ?its interest-rate-cutting cycle in January, and policymakers seemed more confident that downside risks to the labor market were diminishing. Jerome Powell, Chair of the Federal Reserve, said that artificial intelligence-driven productivity growth could help complement the "low-hire and low-fire" labor dynamics, which would keep inflation under control.
This was not a new view. The labor market is also looking less robust.
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(source: Reuters)