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Copper prices rise, while others fall due to uncertainty
The price of copper rose on Tuesday as investors hoped for a stronger Chinese demand. However, they were concerned about the impact tariffs would have on economic growth and inflation. As of 0912 GMT the three-month contract for copper on the London Metal Exchange had increased by 0.2%, to $9,884 per metric ton. It was at its highest level in almost two weeks during the previous session. The launch of the massive Tibet hydropower station and the Chinese government's plans to stabilize industrial growth are positive signals for the metals markets, according to a Beijing based futures analyst. The price of other LME base metals fell amid worries about the negotiations ahead of a deadline on August 1 for countries to sign trade agreements with the U.S., or face high tariffs. There are many reasons to be cautious in the coming month. "We might see a drop in the price of base metals," Dan Smith, managing Director at Commodity Market Analytics. "I think that the next few months could be very interesting, with all the pressure on the Federal Reserve for them to reduce rates. But in fact inflationary pressure may be building up in the U.S." Smith said that the period from now until September will also be a weak season for demand. The most active contract on the Shanghai Futures Exchange rose 0.75%, to 20,900 Yuan ($2,913.26) per ton. A metals analyst from a Shanghai futures company stated that "Aluminium Fundamentals are the strongest among metals in China." LME aluminium fell 0.3% at $2,639.50 per ton. Zinc slid 0.2% to 2,832, while lead dropped 0.3% to $2,000, nickel dropped 0.1% to $16,505, and tin remained unchanged at $33,800. Click here to see the latest news in metals.
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Canada's Couche-Tard resumes its share buyback program after cancelling the Seven & I bid (July 21, 2018)
Alimentation Couche-Tard, a Canadian company, announced on Monday that it would resume its share repurchase programme. This comes just days after Circle K's parent company scrapped its $46 billion attempt to purchase Japan's Seven & I. The company announced that it would buy up to 77.1 millions shares, worth approximately $4.2 billion. This is part of its efforts to boost shareholder value following the failure of the long-term effort to purchase the Japan-based convenience-store chain. Couche-Tard with a market cap of $53 billion announced last week it would not pursue its bid to acquire Seven & I because the Japanese retailer refused constructive engagement on the deal. It would have been the largest foreign acquisition in Japan history if it had succeeded. Couch-Tard closed its stock up 8.3% when it canceled the deal with Seven & I on July 17. Stock is down 5% this year. Couche-Tard announced that the authorized share purchase program will start on July 23 and run through July 22 2026.
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Japan launches antidumping probe against stainless steel sheets imported from China and Taiwan
The Japanese trade and finance ministry announced on Tuesday that it has opened an investigation into the anti-dumping of nickel-based stainless steel cold-rolled sheets and strips imported to Japan from China and Taiwan. This move comes after a petition was filed by Nippon Steel, and other domestic producers, on May 12. They claim that they were forced to lower their prices because of a weakening demand in the domestic market, with buyers shifting to cheaper imports. The Ministry of Economy, Trade and Industry and Ministry of Finance intend to finish the investigation in a year and then decide if anti-dumping duty will be imposed. According to the request submitted by the steelmakers imported products are sold in Japan for prices that are 20% to 50% less than in China, and 3%-20% lower than in Taiwan. The Japanese steelmakers say that they are unable to set price that reflects rising costs. This has led to a decrease in operating profit and other damages. The exports and excess production of Chinese steelmakers has become a global concern. Japan is one of many countries who have criticised Chinese firms for receiving subsidies from the government to produce surplus steel, and then exporting at low prices. This has worsened global market conditions. Japan is the only country that has not taken anti-dumping or similar measures against China. Tadashi Imai, chairman of the Japan Iron and Steel Federation and president of Nippon Steel, has warned repeatedly that a global increase in protectionism could make Japan vulnerable to cheap steel imports and hurt domestic production. (Reporting and editing by Joe Bavier; Yuka Obayashi)
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Gold falls from its five-week high after investors book profits
The price of gold eased Tuesday, as investors took profits after the prices reached a five-week peak. Meanwhile, market participants focused on trade negotiations ahead of U.S. president Donald Trump's deadline on August 1. By 0808 GMT, spot gold had fallen 0.3% to $3386.25 an ounce. Bullion had reached its highest level since June 17 earlier in the session. U.S. Gold Futures fell 0.2% to $3,398.40. Jigar Trivedi is a senior commodity analysts at Reliance Securities. He said that gold prices fell amid profit-booking, but they remained near the five-week-high due to the lingering uncertainty before the August 1 deadline for tariffs. Gold is expected to remain bullish. Near $3,420 is a strong resistance. He said that $3,350 was a strong support. The U.S. Dollar index increased by 0.1% against its competitors. Gold priced in greenbacks becomes more expensive to other currency holders when the dollar is stronger. Diplomats from the European Union said that the bloc was exploring wider counter-measures to the United States, as the prospects of a trade deal with Washington are fading. Trump has threatened to impose 30% tariffs on European imports, if a deal is not reached by the deadline of August 1. U.S. Treasury secretary Scott Bessent stated that the administration prioritizes the quality of trade agreements over the timing. The U.S. Federal Reserve monetary policy meeting, scheduled for next Monday, is another important event. It is expected that the central bank will hold interest rates at current levels and begin reducing them in October. Gold is more likely to do well when interest rates are low and there's geopolitical or economic uncertainty. Spot silver dropped 0.3% per ounce to $38.81, platinum remained steady at $1.437.65, and palladium fell 0.2% to $ 1,261.91. Nornickel in Russia, the world's largest palladium producer, has lowered its forecast for palladium production. It now expects between 2.677-2.729 million ounces, down from the previous estimate of 2.704-2.756,000 million ounces. (Reporting and editing by Subhranshu S. Sahu in Bengaluru.)
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Iron ore increases for the fifth session of Beijing hydropower stimulus
The iron ore futures closed higher on Tuesday for the fifth consecutive session, boosted by expectations of additional stimulus following Beijing's announcement of a $170 billion project to boost the economy. The contract for September iron ore on China's Dalian Commodity Exchange was up 2.49% at 823 Yuan ($114.72). As of 0745 GMT, the benchmark August iron ore traded on Singapore Exchange was $1.61 higher per ton at $105.15. "Iron Ore Futures extended recent gains amid the prospect of additional stimulus measures. Beijing's announcement about the $170 billion project to build hydropower promises to deliver a positive boost for steel," ANZ analyst said in a report. ANZ stated that the move had also sparked an optimism among investors, who believe the government will return to its traditional fiscal stimulus strategy to boost economic growth. This positive feeling is further supported by the ongoing efforts to reduce excessive competitiveness and overcapacity within the steel industry. Mysteel, a consultancy, stated that the Chinese government's efforts to limit "involution-styled" competition between industrial enterprises has reinforced market optimism. The competition in China is characterized by an overcapacity of manufacturers and price reductions to get rid of excess stock. In the meantime, Chinese steelmakers bypass tariffs by exporting semifinished steel billets. These are not subject to trade restrictions in many countries as finished steel products. This strategy is a major factor in the rapid increase of exports by the world's biggest steel producer. Coking coal and coke, both of which are used in steelmaking, have also seen a spike. The price of coking coal futures has reached its highest level since the 19th March, as rumours about a possible government inspection into overproduction have sparked fears that supply could be disrupted. All steel benchmarks at the Shanghai Futures Exchange increased. Rebar jumped 3.12%, hot-rolled coil soared 2.84%. Wire rod soared 4%. Stainless steel rose 0.47%. ($1 = 7,1740 Chinese yuan). (Reporting and editing by Janane Venkatraman, Mrigank Dhaniwala.)
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Nuclear factors and demand in Germany are on the rise
The projections of a daily increase in demand in Germany on Tuesday boosted European prices for prompt power, while nuclear outages in France and Switzerland created short-term uncertainty regarding timely restarts. According to LSEG Research, the higher wind generation volume and thermal availability weighed negatively. By 8am GMT on Wednesday, the French baseload contract was 79 euros (92.33 dollars) per megawatt-hour (MWh), up 36.2% from the previous close. The German equivalent gained 6%, to 79.5 euros/MWh. The power consumption in Germany will rise by 1.7 gigawatts to 53.1 GW, but in France it is expected to drop by 400 MW. On a broader scale, the region including Switzerland and Austria saw a daily increase of 1.4 GW, to 110.3 GW. The German wind energy output was forecast to increase by 2.9 GW, to 22.4 GW. The Belleville 2 reactor in France went offline Monday afternoon due to faulty signals detected in the turbine control rooms located in the nonnuclear portion of the installation. Repair checks are currently underway, according to EDF, the operator. The French nuclear capacity increased by 3 percentage points overnight to 75%. The operator of Switzerland's largest reactor in Leibstadt said that the plant will be restarted in a controlled manner on Tuesday and Wednesday following a minor repair. The load had already been reduced by 875MW since Friday. The German baseload power for the year ahead was down by 0.4% to 85.2 euros/MWh. However, its French counterpart was not traded after closing at 62.2 euro. The benchmark European carbon contract fell 0.4%, to 68.92 euro per metric ton. It had traded mainly in the 70-72 euros range last week. Veyt, a consultancy, saw the market trading sideways in this week's report but noted that there was some downward pressure due to higher wind speeds expected for late July which favor low-carbon energy generation. (Reporting and editing by Susan Fenton, Vera Eckert, Forrest Crellin)
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Toxic algae bloom off South Australia devastates marine life, tourism
Peter Malinauskas, the state premier, called Tuesday's massive algae bloom off South Australia a "natural catastrophe" because it has destroyed hundreds of marine species and affected local tourism and fishing. According to environmental officials, the algal bloom was first detected in march and covers an area of 4,500 square kilometers (1,737 square mile). It has also been aggravated due to rising ocean temperatures. Malinauskas, a national broadcaster for ABC News Breakfast, said that "over 400 different marine species have died or been affected by this algal bloom." This is a natural catastrophe and it should be recognized as such. Malinauskas has announced a support package of A$14million ($9.11million) to combat the outbreak. This package matches that offered by the federal government. The A$28 million combined would help with clean-up, research and business support. According to the environment department of Washington state, the toxic bloom is caused by an overgrowth of Karenia micromotoi algae, which damages fish gills while sucking oxygen from the water. A marine heatwave in 2024, which saw sea temperatures rise by about 2,5 degrees Celsius (36,5 degrees Fahrenheit), contributed to the growth of this disease. Local media reported that the bloom had a negative impact on tourism, and caused oyster and mussel farming to be temporarily closed due to an algal toxin in water. The iNaturalist application has recorded over 13,850 dead animals including sharks, rays, and invertebrates. Murray Watt, the federal Environment Minister, said that on Monday algal blooms were a "very severe environmental event." However he did not declare it a disaster of national proportions which would have allowed for more federal assistance.
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Shanghai aluminium reaches nearly nine-month high amid better China demand
On Tuesday, the most traded aluminium contract at the Shanghai Futures Exchange hit its highest level since November. This could be due to a better demand from China for metals as the authorities promise to stabilize industrial growth including metals. SHFE aluminium rose by 0.75% at 20,900 yuan (2,913.26) per ton as of 0702 GMT. This is the highest price since November 12. The fundamentals of aluminum are among the strongest in China. It is the only metal that has a maximum smelting capability of 45 million tons. Alumina's price surge also helped, according to a Shanghai-based futures company metals analyst. SHFE alumina rose 4.23%, to 3,452 Yuan per ton. This is the highest level since February 26. Aluminium stocks in the SHFE monitored warehouses also increased. Totaled 108,822 tonnes by July 18 or the lowest level since February 2024, despite three consecutive weeks of rebound. The Chinese government's plans to stabilize industrial growth, and the opening of the massive Tibet hydropower station are all positive signs for the metals markets. In addition, the prospects of metals demand in the country will boost the sentiment. Analysts added that it is unclear just how much demand there will be. An analyst in Shanghai echoed this view and said, "Despite all the uncertainty, such news seems definite and positive. This may support the commodities market for a little while." China started building the largest hydropower project in the world on the eastern edge of the Tibetan Plateau. The dam is estimated to cost at least $170 billion. The price of nickel rose 1.51% at SHFE to 123.530 yuan per ton. Tin increased 1.11%, to 268,520, and zinc was up 0.7%, to 22,945, the highest level since April 2. Copper was up 0.61%, to 79.740, while lead fell 0.21%, to 16,900. The London Metals Exchange saw the three-month price of zinc rise 0.14%, to $2.842.5 per ton. Tin rose 0.1%, to $33,845, while copper increased 0.07%, to $9,866.5. Lead fell by 0.55%, to $2.003.5. Nickel dropped 0.18%, to $15,495. Aliuminium was flat at $2.645.5. Click or to see the latest news in metals, and other related stories.
Russell: OPEC and IEA crude demand forecasts could be too conservative
The International Energy Agency (IEA), as well as OPEC, are both more conservative in their growth forecasts.
The numbers contained in the monthly report of the Organization of the Petroleum Exporting Countries and the wider OPEC+ are less optimistic.
The IEA has a similar view. In its monthly report for July, it predicted that the global crude oil demand would grow by 700,000.00 barrels per day in 2025. This is the lowest growth rate since 2009.
OPEC’s July report is a little more optimistic, predicting that oil demand will rise by 1,29 million bpd by 2025. Of this, 1.16 million bpd will come from countries outside of the Organisation for Economic Cooperation and Development.
Both the IEA's and OPEC's forecasts are so cautious now that they run the risk of actually being too pessimistic. This is especially true in Asia, the region with the highest imports.
Last year, OPEC was incredibly bullish about its demand predictions, despite the fact that Asia's crude imports fell.
The difference between the demand forecasts and the imports are obvious, but it is the volume of seaborne crude imports that is driving the price of crude oil, as this market accounts for 40% of the daily global demand.
OPEC's July 2024 Monthly Report forecasts that Asia's non OECD oil consumption will rise by 1,34 million bpd, with China representing 760,000 bpd.
According to LSEG Oil Research, Asia's crude oil imports will actually decline in 2024. They will drop by 370,000 bpd and reach 26.51 millions bpd.
The first drop in Asia's imports of oil since 2021 occurred at a moment when the demand was impacted by COVID-19-related lockdowns.
The difference between OPEC’s bullish predictions for most of 2024 and reality of low crude imports from Asia may have tempered their forecasts for the year 2025.
Question is, are they now being too cautious?
ASIA RECOVERY
OPEC's monthly report for July forecasts that non-OECD Asia will see its oil demand rise by 610,000 bpd by 2025. China, Asia's largest crude importer with 210,000 bpd, and India, Asia’s second biggest crude importer with 160,000 bpd, are the two main contributors.
In its report from July, the IEA stated that they expect China's oil demand to increase by 81,000 bpd by 2025. India is also expected to gain 92,000 bpd. The demand for oil in Asia non-OECD is expected to rise by 352,000 bpd.
The IEA and OPEC numbers are both modest, particularly since Asia's crude oil imports have actually seen a relatively high growth rate in the first half 2025.
According to calculations based upon LSEG data, Asia's imports for the first half of the year totaled 27,25 million bpd. This represents a 510,000 bpd increase over the same period in 2013.
Imports rose in the second quarter in particular in China as refiners capitalized on the lower oil prices at the time of cargo arrangements.
Some of the increased oil imports were likely used to build up inventories. This process may continue into the second half if the oil prices remain low and OPEC+ continues to increase production amid the economic uncertainty caused by President Donald Trump's global trade war.
The difference between the cautious oil demand estimates of this year and those of last year, which were more optimistic, shows that price is a much bigger factor in demand. This is especially true in Asia.
In part, the low crude oil imports in Asia in 2024 were due to the high prices that persisted throughout the year. Prices peaked at $92 a bar in April before falling briefly below $70 a barrel only in September.
Brent futures, the benchmark, peaked at just under $82 per barrel in January and traded as low as $58.50 a barrel as late as May.
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These are the views of the columnist, who is also an author. (Editing by Kate Mayberry).
(source: Reuters)