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Iron ore prices fluctuate as investors weigh up rising freight costs versus falling demand
Iron ore prices slid on Tuesday as investors weighed the rising freight costs due to an escalating conflict in Iran, which is preventing shipments through the 'Strait of Hormuz. This was against a?falling demand amid production restrictions by Chinese steelmakers. Iranian media reported that a senior Iranian Revolutionary Guards official stated on Monday that the strait is closed and Iran will fire on any ship attempting to pass. This sent oil prices and shipping costs rocketing. The daytime trading price of the most traded iron ore on China's Dalian?Exchange closed up 0.67% to 753.5 yuan (109.32 dollars) per metric ton. As of 0734 GMT, the benchmark?April Iron Ore traded on the Singapore Exchange had fallen 0.21% to $99.05 per ton. Tomas Gutierrez is the head of data for consultancy Kallanish Commodities. Analysts said that rising freight costs increased the cost of iron ore, which in turn boosted ore prices. Hot metal production, which is a good indicator of demand for iron ore, will likely fall as a result of production curbs at China's annual parliament meeting, starting on March 5. This will keep the price of ore from rising. Some Chinese steel mills had to reduce output to maintain a 'cleaner air' during the important meeting. Portside iron ore stockpiles are at record levels. Also, lowered ore prices. In the afternoon, other steelmaking ingredients gained traction. Coking coal and coke both rose by 4.01% and 3.42 %, respectively, following the surge in oil and gas. The majority of steel benchmarks on the Shanghai Futures Exchange lost ground. The price of wire rod fell by 0.12%. Hot-rolled coils dropped 0.03%. Stainless steel lost 0.39%. Rebar grew 0.07%.
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Rare Earths Norway reports that the estimate of the deposit is now 81% larger than previously estimated.
The estimate of mineral resources at the?mine that Rare Earths Norway is developing, Europe's biggest rare earth project has increased by?81% from the last evalution two years ago, the privately owned firm announced on Tuesday. The Fen project, which is being developed by the company, would help Europe to reduce its dependence on China as the dominant producer of rare earths. According to a WSP statement, the project has?a total rare earth oxide of 15.9 million metric tonnes in indicated and inferred resource,' It added that the 'new estimate' reflects additional exploration drilling which took place in 2018 and compares with 8.8?million tonnes calculated for 2024. SEEMED AS A STRATEGIC?ASSET By nearly doubling the size of its known deposits, Rare Earths Norway is now a strategic asset that can be used in many different ways, said Bernd Schnefer, CEO at EIT RawMaterials. This agency, funded by the EU, focuses on critical minerals. The deposit size is larger than Per Geijer, which was described by LKAB as the largest in Europe in 2023 with a?1.3million tons of rare earth oxides. It?updated its?estimate last year to 2.2 millions tons. According to the company, the latest estimate of the Rare Earths Norway Project reveals that 19% are neodymium oxides and praseodymium oxides (NdPr), which are key minerals for permanent magnets needed in electric vehicles, windmills, electronic devices, and defence applications. It stated that it would produce 2,000 tonnes of NdPr in 2031. In its statement on Tuesday, it did not mention a production volume or a timeline. Reporting by Eric Onstad, Editing by Jan Harvey
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Trump is 'disappointed' to see that the US-UK relationship has changed.
Donald Trump, the U.S. president, said that it was "sad" to see the relationship between the United States and Britain "not what it used to be" after Keir Starmer held back on initially committing military support for the strikes against Iran. Trump said that France was more supportive than he expected and that he never anticipated to see these relationships, which were once the "most solid" of all. It's sad to see the relationship has changed from what it was, Trump said in an interview with the Sun on Tuesday. This is his second interview with a British newspaper within a span of two days that he criticised British Prime Minister David Cameron. Starmer stated late on Sunday that he would permit the U.S. military to use British bases for defensive attacks after they were not used during the initial attack against Iran. Trump said that the U.S. The?Britain is not needed to wage war on the Middle East, but Starmer added that it would not matter. France was great. All of them have been fantastic. "The UK is very different from other countries." Darren Jones, a senior British minister, told?Times Radio that the U.S. and UK relationship remained vital but that the country had learned lessons?from the 2003 Iraq War. He said that one of the lessons learned from 'Iraq' was to only get involved when aligned with international partners and, as he put it, with a legal basis in place. Starmer told the British parliament on Monday that President Trump had expressed his dissatisfaction with our decision to not?get involved? in the initial strikes. But it was my duty to decide what was in Britain's best interests. It is my duty to judge what's in Britain's national interest.
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Stocks fall as inflation fears fuelled by Middle East air war cause stock market panic
Investors weighed the impact of U.S.-Israeli strikes against Iran on energy and global economic prices, and the dollar increased on Tuesday. MSCI's broadest Asia-Pacific index outside Japan dropped 2.9%, extending losses for a second day. The biggest drop was 7.2% in Korean shares as the country returned from its holiday. It was their largest one-day loss since August 2024. Tokyo's Nikkei 225 fell 3.1%, and S&P500 e-minis futures dropped 0.9%. Rupal Agarwal is Asia Quant Strategist at Bernstein, Singapore. "Economic uncertainty was already high and with the Iran conflict the geopolitical risks are expected to increase too," she said. The last time these two spikes occurred was in 2022, during the Russia-Ukraine crisis. This didn't go well for Asian markets. Wall Street stabilized after a volatile session Monday, which saw the S&P 500 rebound from an initial selloff to finish flat and the Nasdaq composite climb 0.4%. Investors bought the dip in the markets. Donald Trump, the U.S. president, said on Monday that his campaign against?Iran was exceeding expectations. An official of Iran's Revolutionary Guards announced on Monday, with no end in sight to the hostilities, that the Strait of Hormuz was closed to all marine traffic. The?country would fire on any ships trying to pass. The threat was immediately felt, with the cost to hire a supertanker for oil shipping from the Middle East into China reaching a new record of over $400,000 a DAY, according to LSEG 'data. Brent crude futures rose another 2.3% on Tuesday to $79.50. On the natural gas market, European and Asian benchmark LNG prices soared by about 40% on Monday. Working through the Risk Scenarios The surge in energy costs could increase the cost of Asian companies, and impact their profits as well as their stock prices. These stocks have risen sharply this year. Goldman Sachs analysts wrote in a report that a rise of 20% in Brent oil could result in regional earnings falling by?2%, with large intraregional variations. However, this is dependent on the duration of the conflict. They said that spikes in geopolitical risks tend to have negative effects on the short term, but they dissipate with time. The current increase in geopolitical risks coincides with a regional vulnerability to a corrective action. Energy prices are on the rise, complicating the Federal Reserve's attempts to control inflation. Policymakers have already shown signs of division over the impact artificial intelligence will have on the U.S. Economy. Rubio, the Secretary of State said that the U.S. would take steps to reduce rising energy costs due to the spike in oil prices caused by the conflict with Iran. ISM manufacturing data, released on Monday, showed that U.S. business activity increased steadily in the month of February. However, a measure of factory gate prices soared to an?almost 3-1/2-years high amid tariffs. This highlighted upside pressure on inflation before even the attacks against Iran. FedWatch, a tool of the CME Group, shows that Fed funds futures price a 95.4% implied probability that the U.S. Central Bank will maintain rates at the conclusion of its two-day next meeting on 18 March. The odds of the?June rate hold, which were previously less than 50%, increased on Monday, and are now better than a toss of a coin. Several analysts were optimistic about the impact of the war on the economy, citing limited movements in global markets. Jahangir Aziz said, "It won't be positive, of course," at a round table for media in Singapore, on Tuesday. He said that any increase in political uncertainty was bad for economies. But right now...we do not really believe that this will?be systemic shock for the global economy." The U.S. Dollar Index, which measures the strength of the greenback against a basket six major counterparts, held near a six-week high at 98.73, as the currency recovered some of its appeal as a safe-haven. The yield on the 10-year Treasury bond in the United States was up by 0.9 basis points to 4.059%. Analysts from DBS stated in a recent research note that "current market dynamics only show a mild risk off tone. This is not enough to sustain a strong?bid for U.S. Treasury Bonds or to prompt the Fed to make 'quicker cuts. They added that "the conflict raises the spectre of?stagflation." While energy prices are not at the same level as they were during the beginning of the Russia-Ukraine war in 2022 investors will likely be watching closely the duration and extent to which energy supplies will be interrupted. Gold fell 0.4% to $5,307.08. Bitcoin dropped 2.1% to $68,937.84 while Ether was down 2.3% to $1,995.50. Early European trades showed pan-regional contracts down by 0.9%. German DAX Futures were also down by 1.0%, and FTSE Futures were off 0.5%. Reporting by Gregor Stuart Hunter, Rae Wee and Kirovan Donovan: Editing by Neil Fullick and Kirovan Donovan
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Sources say that Japan and India are in discussions to explore rare earths together.
Two people who are familiar with the discussions say that Japan and India are in talks to explore rare earth deposits together in Rajasthan's arid state. Tokyo is looking to reduce its reliance on China as a source of magnet manufacturing supplies. India's Mines minister G. Kishan Reddy announced last month that three hard rock deposits of rare earth oxides containing 1,29 million metric tonnes had been identified in Rajasthan state and Gujarat in western India. Sources directly involved in decision-making said that Tokyo expressed interest in the Rajasthan deposits, and planned to send experts there. The sources declined to give their names as the discussions were not public. The experts did not specify when they would arrive. The sources stated that the Japanese government was interested in providing technology and funding for the?extraction of rare earths that would be taken to Japan. The Indian Ministry of Mines, and the Japanese Embassy did not reply to requests for comment. Naoki Kobayashi, Deputy Director at Japan's Ministry of Economy, Trade and Industry, said that Japan was examining mining projects around the world to diversify its mineral supply, which includes rare earths. Kobayashi, however, denied that any discussions were held about specific corporate partnerships or technology in Rajasthan. India, like Japan, wants to reduce its dependence on Chinese imports through the development of industrial-scale facilities that can process rare earth elements at high purity levels. Permanent magnets are used in wind turbines, drones, fighter jets, and electric vehicle motors. They are critical to India, which is the fastest-growing economy on earth. China banned the export of dual use items last week - materials which can be used for both civilian and military uses - to twenty Japanese entities, Beijing claims that they supply the Japanese military. This is the latest in a series of disputes with Tokyo. This move effectively blocks Japanese companies from accessing the seven rare earths?and related materials? that are currently on China's dual use?control list?, as well as a number of other controlled critical minerals? One source said that Japan was seeking to collaborate with Indian companies in order to explore copper, cobalt, and lithium in Africa. (Reporting from Neha Arora, New Delhi; Additional Reporting by Yuka Obaashi, Tokyo; Editing and Mayank Bhardwaj & Sonali Paul).
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Australia warns that there is no need for panic buying petrol in the wake of the Iran War as supplies are high
Australian Energy Minister Chris Bowen stated on 'Tuesday' that there was no need for consumers to be concerned about fuel shortages, despite the growing U.S./Israeli conflict against 'Iran. Bowen, a reporter, told reporters that Australia had 36 days' worth of petrol in reserve, 34 days' worth of diesel and 32 days' worth of jet fuel. This is the highest level of reserves in over a decade. He said that there was no rush to fill up at the service station. "I understand people's concerns, but it's vital that they know we have a good stock of petrol in Australia. There's 'no immediate danger' to petrol supplies in Australia." Tuesday, oil prices increased for the third consecutive day due to fears of disruptions in supply. Israel attacked Lebanon while Iran responded with attacks against energy infrastructure and tankers in Gulf countries. Bowen stated that regulators would act against price gouging, even though petrol prices 'could be under pressure due to a spike in oil prices. He said that panic buying would only make things worse. In a social media post, Treasurer Jim Chalmers revealed that he had written the 'consumer watchdog' to ask it to make sure fuel retailers don’t "use events in the Middle East as a way to price gouge Australians". (Reporting from Christine Chen in Sydney, Editing by Edwina gibbs)
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Australian stocks have their worst day in two weeks due to the Middle East air war
Tuesday saw Australian shares have their worst session in more than two weeks, as an escalating Middle East air war dampened risk sentiment and raised inflation fears. The S&P/ASX 200 closed at 9,077.30 down 1.3%, its lowest level since February 13th. It was flat on Monday. Israel increased its offensive with new strikes against Iran and Hezbollah. Meanwhile, Iran fired missiles and drones towards?Israel, Gulf States and even a British base in Cyprus. This raised investor concerns over a prolonged conflict. "Now that the reporting season is over in Australia, investors are focusing on the Middle East tensions and the possible ramifications of an extended disruption," said Craig Sidney. The longer the Middle East crisis continues, the higher the oil prices should be, which could lead to an increase in inflation. The Reserve Bank of Australia's (RBA) Governor warned that the rate increase was still on the table if inflation expectations were deemed to be drifting away from anchor. Sidney stated that the RBA could refrain from immediate increases in rates due to the uncertainty of the situation, despite the short-term pressures on inflation. The?bourse saw the miners lead the way, with a decline of 3.1%, their worst session in nearly a month, and gold stocks dropping 3%. Sidney said that profit-taking was the main reason for these movements. BHP and Northern Star Resources, both heavyweights, fell 2.6% and 3.2% respectively. Banks were down?0.1%, but Commonwealth Bank of Australia, Australia's largest lender, was up 0.3%. Meanwhile, energy companies rose 1.4%, their highest close in 18 months, as oil prices surged. Investors will be watching for the Gross Domestic Product data of the country due on Wednesday. New Zealand's S&P/NZX50 index closed 0.3% lower, at 13,620.21. (Reporting by Kumar Tanishk in Bengaluru; Editing by Harikrishnan Nair)
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The chief economist of the ECB warns that inflation in the Eurozone could rise due to a prolonged Iran war
In an interview published on Tuesday, Philip 'Lane, Chief Economist at the European Central Bank (ECB), said that a prolonged conflict in the Middle East could lead to a significant spike in inflation in the euro zone and reduce economic growth. The U.S.-Israeli war against Iran intensified on Monday with no end in site as Israel attacked Lebanon, and Iran continued its attacks on Gulf States, driving up oil prices over 10%. Lane explained that "directly, an increase in energy prices puts upward pressures on inflation in the short-term and would be negative for economic activity." He said that "the breadth and length of the conflict will determine the scale of impact and implications?for the medium-term inflation," adding that the ECB would monitor the situation. Lane explained that previous sensitivity analyses by the ECB had shown that a war of this kind would result in a?substantial spike? in energy-driven prices and a?sharp fall? in output if energy supplies were to continue to drop out of the area. Separate analysis from the ECB in December suggests that a permanent spike in oil prices of this magnitude would increase?inflation to 0.5 percentage points and reduce growth by 0.1 percent. The euro zone inflation rate is currently 1.7%. This is below the bank's 2% goal. A small increase in prices?is unlikely?to trigger policy action. The ECB tends to ignore energy-induced 'volatility' in prices, as long as the fluctuations don't impact on longer-term expectations or seep through into underlying inflation via a second-round effect. Market-based 'longer-term expectations of inflation are not much different at this time. And markets expect the ECB to maintain its 2% deposit rate throughout the year. Gursimran K. Kaur and Balazs Koranyi report from Bengaluru, and Tom Hogue and Raju G. Gopalakrishnan edit the story.
CORRECTED-Shell's Singapore refinery sale and its market significance
Oil huge Shell said on Wednesday that it has consented to sell its Bukom refinery in Singapore among the world's largest oil refining and trading centres to a joint endeavor of Indonesian chemicals firm PT Chandra Asri and global trading home Glencore, culminating a. process that started last year.
Here are the key information and what's next:
WHY IS SHELL SELLING ITS SINGAPORE CROWN GEM REFINERY?
The sale of the complex, which opened in 1961, becomes part of. CEO Wael Sawan's strategy to reduce the company's carbon footprint. and to concentrate on its most lucrative businesses.
In 2015, Shell said it was conducting a tactical evaluation. of its Singapore properties.
WHO ARE THE PURCHASERS?
Chandra Asri is bulk owner of the joint endeavor with. Glencore, called CAPGC Pte. Ltd. (CAPGC).
Chandra Asri runs Indonesia's sole naphtha cracker which. can each year produce 900,000 tons of ethylene and 490,000 tons. of propylene, which are standard basic materials that are processed. into other petrochemicals. It is a joint endeavor between numerous. Thai and Indonesian firms consisting of Siam Cement Group, Thai Oil. and PT Barito Pacific.
Glencore is a Swiss-based producer and marketer of. products such as copper, cobalt, zinc, nickel and. ferroalloys. It markets aluminium and alumina and iron ore, and. trades oil and fuel products.
WHAT IS BEING OFFERED?
Shell's Bukom refinery complex consists of several crude. distillation units with total processing capability of 237,000. barrels each day (bpd) and a 1 million-ton-per-year steam. cracker.
Its Jurong Island center has other derivative. petrochemical units making items such as monoethylene glycol. and styrene, which are essential feedstocks for the polyester and. plastic industries.
The deal is set to nearby year-end, pending regulatory. approval.
HOW WILL THE OFFER AFFECT REGIONAL TRADE IN PETROLEUM AND. FINE-TUNED PRODUCTS?
Glencore will likely provide cashflow for Chandra Asri's. procurement of crude oil feedstock for its Bukom operations and. take fine-tuned fuel products such as gasoline, diesel and jet fuel. either for its own agreement shipments or for area sales, a. source with direct understanding of the matter stated.
It's really normal for a trading house to supply trade. finance to refiners and in return they earn money by freights. This. method, a trading house can protect long-lasting steady product. supply, stated Beijing-based director of downstream consulting at. S&P Global Product Insights Harry Liu.
Glencore decreased to comment.
It is most likely that the refinery will continue to procedure. mostly sour crude as it is a relatively complex refinery with a. recurring fluid catalytic cracker, a mild hydrocracker and a. vacuum gas oil desulphurisation system, unless the economics. favour sweet crude, said FGE head of Asia refining Ivan Mathews.
In the longer run, however, there could be a shift in focus. from fuel production to chemicals rather since of economics.
The website produces about 60% transport fuels and about 14%. chemicals. Offered the long-term worth add from chemicals, we. could see a much deeper shift from transportation fuels to chemicals at. the site. This will depend on how conversations work out. between Chandra Asri and Glencore, stated Wood Mackenzie's. research director Sushant Gupta.
From the downstream part, Chandra Asri is most likely to take. naphtha from the Bukom center to feed its steam cracker,. according to a source straight involved in the matter along with. experts.
The ownership of Shell's refinery will offer (Chandra Asri). additional versatility in feedstock sourcing. Chandra Asri can. Tap into Glencore's logistical abilities to improve the. synergy in between the two producing websites, stated Wood. Mackenzie primary analyst Catherine Tan.
Chandra Asri may likewise opt to shelve an earlier cracker. expansion at its Cilegon website, rather using the recently gotten. Jurong Island site as its 2nd complex, two sources familiar. with the plant operations added.
While we are not expecting any instant impact to. supply/demand in the near to medium term as the offer will take. a long time to close, the offer will likely impact Chandra Asri's. prepare for CAP2, which might be shelved, Tan stated, referring to. a 2nd naphtha cracker.
Chandra Asri did not instantly respond to a request for. comment.
WHICH OTHER REFINERIES STILL OPERATE IN SINGAPORE?
ExxonMobil operates a 600,000-bpd refining site in Jurong. Island and Tuas, while Singapore Refining Co has a 290,000-bpd. refinery at Jurong Island.
WHAT OTHER ASSETS DOES SHELL HAVE IN SINGAPORE?
Shell states it owns over 57 retail fuel stations in the. city-state, and has stakes in two petrochemical plants, the. Petrochemical Corp of Singapore
(source: Reuters)