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Gold firms as safe-havens amid rising trade tensions
The gold price edged higher on Thursday, as traders flocked to bullion in response to rising trade tensions. However, gains were capped by a rise in the dollar. By 1307 GMT, spot gold had risen 0.4% to $3326.48 an ounce. U.S. Gold Futures rose 0.4% to $3335.10. Daniel Pavilonis is a senior market strategist with RJO Futures. He said, "I believe that the entire metals complex has gone up due to the knock-on effect of the tariffs on copper." "However there are limited upsides unless a geopolitical escalate occurs." On Wednesday, U.S. president Donald Trump launched another tariff attack, announcing new tariffs of 50% on U.S. imports of copper and 50% on Brazilian goods, both starting on August 1. In a recent note, Paul Wong, Market Strategist, Sprott Asset Management, said that gold is "gaining in popularity among emerging economies, who see its counterparty-free properties as appealing in a world weighed down by geopolitical risks." Minutes of the Federal Reserve meeting in June showed that only "a few" officials felt rates could be cut as early as this month. Most policymakers are still worried about the inflationary impact they expect from tariffs. The U.S. Dollar index rose 0.2%, limiting the price increase. When the U.S. Dollar strengthens, gold tends to lose its appeal as it becomes more costly for investors who hold other currencies. The number of Americans who applied for unemployment benefits dropped unexpectedly last week. This suggests that employers are holding onto workers despite signs of a cooling of the labor market. Silver spot rose by 1.4%, to $36.62 per ounce. Wong said that if you break above $35, it increases your chances of reaching $40. Palladium rose 3.5%, to $1144.40, while platinum gained 0.3%, to $1350.95.
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Rivers in southwest China exceed warning levels and thousands are evacuated
State media reported that 25 rivers in southwest China were above safe levels after the remnants from former typhoon Danas combined with East Asian Monsoon Rains. More than 10,000 people had been evacuated. Meteorologists attribute extreme rainfall and severe floods to climate change. They pose a major challenge as they threaten to overwhelm the ageing flood defences and displace millions. Beijing Daily, a state-run publication, reported that heavy rains hit the capital as well. One area of the Chaoyang district received 68.2mm (2.7") in just one hour, on Thursday morning. The water ministry warned that ten rivers in the southwest, including Longyan which flows through densely populated Chongqing region, could rupture their levees and embankments at any moment, according to broadcaster CCTV. It added that the remaining 15 were above the level at which their banks could be blown up, but still posed a lower risk. The broadcaster reported that more than 24 hours torrential rainfall had pushed the Chishui River in Guizhou Province to its highest level since records began in 1952, and the Xiaocao River, in Sichuan Province, was at its highest for 29 years. State media reported that more than 10,000 people had been evacuated from cities of Sichuan province and Yunnan province on Wednesday, as monsoon rains from East Asia pushed northward from India. Xinhua reported on Thursday that two people were killed by torrential rainfall in Yunnan’s Zhaotong City. Beijing's health authorities have warned that the combination between frequent downpours and high temperatures, as well as humidity, increases the risk of food and water contamination. Reporting by Joe Cash & Ethan Wang. Clarence Fernandez, Mark Potter and Clarence Fernandez edited the report.
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Copper traders are looking to Chinese buyers after Trump's tariffs
Global copper traders offer cargoes to Chinese customers as they try to unload metal that is no longer able reach the U.S. by President Donald Trump's deadline for a 50% tariff on copper. Trump announced late Wednesday that he will impose a new tariff on August 1, to encourage domestic production, from semiconductors to ammo. He did not specify which copper products will be affected or whether any exceptions will be considered. China is the largest copper consumer in the world. The number of overseas sellers' offers has increased since late June, and now is at its highest level for months, said a Chinese copper dealer who spoke under condition of anonymity. A second China-based broker said that he had received a bid for a cargo of 1,500 metric tons from South America, due to be delivered in late July or early august by a buyer who was "eager to locate a home." The increase in the offers to China shows how traders who spent months shipping cargoes to the United States to prepare for the tariff must now start to look for alternative destinations to ship their cargoes that cannot cross the border of the United States before the tariff takes effect. Logistics sources say that only copper from Latin America, which is currently being loaded or is already on its way, is likely make the deadline. And even then, it will be very close. Albert Mackenzie is a copper analyst with Benchmark Mineral Intelligence. He said that if Chilean material was being released to go to Europe, because the U.S. is receiving less, it would mean that everyone is benefiting. You might also see this in Asia. According to a copper trader based in Singapore, the Yangshan Copper Premium, or bill of lading, a benchmark that measures what Chinese buyers are willing to pay over the LME price for copper outside China, dropped 5% on Thursday to $62, reflecting the current offers. They added that major international trading houses offer thousands of tons originally intended for the U.S. to Chinese buyers for delivery between late July and early August. The Shanghai Futures Exchange's most traded copper contract fell for the fifth consecutive day on Thursday. It dropped 0.4% to 78.600 yuan (10,952.87 dollars) per ton, after reaching its lowest level since June 23.
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MP Materials surges on mega deal to boost US magnet supply
MP Materials has signed a multi-billion dollar deal with the Department of Defense to build a rare earth magnet factory. The U.S. is looking to reduce its dependence on foreign sources for this critical input. Shares of the company have risen by 41% during premarket trading. The DoD is buying $400 million of preferred stock, and also receiving a warrant from the company, which will make it the largest shareholder. China's restrictions in April, which impose a virtual monopoly in the refining and processing of rare earths, caused a drop in exports of rare earth magnets by 75% last month. Later, the U.S. signed an agreement with China to accelerate rare earth approvals. In March, U.S. president Donald Trump invoked emergency powers in order to increase domestic production of vital minerals that are used across the economy. This was part of an effort to counter China's near total control of this sector. MP Materials announced that it will construct its second magnet production facility in the U.S. - the 10X Facility - at a location yet to be determined, for defense and commercial customers. The company stated that the facility should be operational by 2028. The DoD agreed to a NdPr floor price commitment of $110 per kilo for the product that is being stored or sold. Metal NdPr can be used to produce magnets for wind turbines and electric motors. A 10-year agreement will also be signed by the defense and commercial sectors to purchase all magnets. MP Materials plans to expand its heavy rare earth separation capability at Mountain Pass, a California facility. It will receive a loan of $150 million from the Defense Department. Rare earths is a grouping of 17 metals, used in the production of magnets for electric cars, cell phones and other electronic devices.
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UAE ready to boost oil production if market demand arises
United Arab Emirates' energy minister stated on Thursday that the country could increase its oil production after 2027, if the market demands it. This move could push the country into the top five oil producing countries in the world. OPEC granted the UAE a larger production quota for this year. The country argued that it was restricting too much its output after investing heavily to increase capacity from 3 million barrels to 4,85 million. Suhail Mohamed al-Mazrouei, Energy Minister of the country, told reporters that capacity could increase further after 2027. He said that if the market demanded it, they could go up to 6 million. However, this was not an officially set target. The UAE could cover just under 6 percent of the global demand if they were to reach this level. It will also be the fourth largest oil and liquids producer on the planet, only behind the United States of America, Saudi Arabia, and Russia. These countries can produce around 21 million barrels, 12 millions, and 10-12million respectively. The UAE will surpass the oil production of Canada, China and Iraq in 2024 with a 6 million barrel per day output. (Reporting and writing by OPEC Newsroom, Dmitry Zhdannikov, editing by Mark Heinrich & Tomaszjanowski)
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EU lawmakers criticize China for rare earth restrictions before summit
The European Parliament condemned China Thursday for its export restrictions of rare earths, and demanded that the European Union reject any attempt by Beijing to force concessions out of the bloc. Two weeks ahead of an EU-China Summit at which rare Earths will be a major topic, EU legislators backed a resolution saying that China's actions were unjustified and had a coercive intention and that its "quasimonopolistic position" provided it with enormous leverage. The European Parliament passed the motion with 523 votes in favor, 75 against and 14 abstentions. The motion, although not binding, is influential because the European Parliament is the only directly elected institution in the EU. China, which produces 90% of the rare earth magnets that are used in automobiles, home appliances and other products, has imposed export restrictions since early April. Exporters must obtain licenses in Beijing. The motion in parliament urged China, amid a trade conflict with the United States to lift restrictions. Beijing, however, had set up "green lanes" for European firms to make the process easier. Last week in Berlin, China's foreign minister Wang Yi played down European concerns, saying that it is standard practice to restrict exports of goods with a potential military use. However, Europe's requirements could be met by submitting applications. The EU legislators also called for the European Union's 2030 targets to be backed up with a budget and to determine minimum levels of strategic stock of rare earths. (Reporting and editing by Philip Blenkinsop, Aidan Lewis, and Milan Strahm)
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Italy: Conference pledges more than 10 billion euros for Ukraine reconstruction
Giorgia Mello, the Italian prime minister, said that participants in a Rome-based conference on economic recovery for Ukraine had pledged more than 10 billion euros ($11.7billion) to aid the war-torn nation. The conference is being attended by Ukrainian President Volodymyr Zelenskiy and other political leaders. It takes place in the backdrop of more intense drone attacks and missile strikes on Kyiv. Zelenskiy, speaking at the conference's opening, described the attacks in terms of "pure terror". Meloni, as well as German Chancellor Friedrich Merz, cited the recovery from World War Two of their respective countries as an example of the progress Ukraine can achieve. Meloni, in her opening address at the conference, said: "I believe we should be proud today of what we have accomplished together - nations and international organizations, financial institutes, local authorities, business sectors, and civil societies." She added, "Together at the conference today, we made commitments amounting to over 10 billion Euros." It is the fourth conference of this kind since Russia invaded Ukraine in February 2022. The main goal is to mobilize international support for Ukraine. The European Commission announced a support package of 2.3 billion Euros for Ukraine's reconstruction. Von der Leyen stated that "with 2.3 billion euro in agreements signed, our aim is to unlock up 10 billion euros of investments for rebuilding homes, reopening hospitals, revitalizing businesses, and securing energy." She added, "We literally stake our future on the future of Ukraine."
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China solar stocks soar as Beijing tries to end price wars
Several China solar stocks rose sharply on Friday, continuing an upward trend that began on Wednesday, on the news that Beijing is looking to slow down aggressive price cuts that have driven prices of certain components by almost 30% over the past year, according to one estimate. Price wars have been sparked by overcapacity and price reductions made to clear stocks among Chinese manufacturers. Analysts are concerned that further price cuts could lead to deflation, and hinder efforts to stabilize the $19 trillion economy. The shares of JA Solar, the leading solar manufacturer, rose by nearly 10%. They had gained 20 percent since July 1, when leaders of the second largest economy in the world pledged to take measures to stop the price wars. On July 3, the industry ministry announced that it would stop price wars in the solar sector and phase out old capacity. The Oil Price Information Service's (OPIS') assessment of high-efficiency TOPCon (tunnel oxide passivated contacts) modules indicates that prices in the solar industry will fall by nearly 30% between 2024 and 2025. The stock prices of Longi Green, JinkoSolar, and Trina Solar all rose more than 10% in the last month. Companies did not respond when asked for comments. Longi announced to state media last week that it would begin commercialising high-efficiency products earlier in order to solve the low-price problem. Stocks of Xinjiang Daqo New Energy, Tongwei and Xinjiang Daqo New Energy have both risen by 29% since the start of July. Daqo shares, listed in Shanghai, closed Thursday at 26,48 yuan (3.69 dollars), their highest price in almost seven months. Daqo didn't respond to an email request for comment, and Tongwei refused to comment. In a note published on Thursday, Pierre Lau, Citi's managing director, stated that "whether solar share prices will rise this time around is dependent on the release of an effective policy." He said that prior initiatives to reduce excess capacity in the industry had driven prices up as much as 40 percent in just two weeks in October of 2024. Rumours unconfirmed that the National Development and Reform Commission, a powerful state planner, had met with polysilicon producers and asked them to maintain prices above the cost level also supported the price rise. NDRC has not responded to a faxed comment request. Berneuter Research, a consultancy, reports that the market price for a kilogram of meat in China is below $4.50, which is lower than most manufacturers' actual costs. Caixin reported that Tongwei, along with its polysilicon-producing peer GCL, were also preparing a plan for a new company, which would be set up to purchase excess factory capacity. This was according to people familiar with the situation. Citi's Lau stated that although the price of polysilicon has risen by 18% to 21% in the past two weeks, downstream solar manufacturers have continued to resist the increases. (Reporting and editing by Clarence Fernandez; Colleen howe)
Demand for oil is skewed by Trump's tariffs
The oil prices fell on Thursday, as market participants viewed the latest tariff announcements from U.S. president Donald Trump as a threat against global economic growth. However, signs of strong U.S. gas demand helped to limit losses.
Brent crude futures fell 3 cents to $70.16 per barrel at 0401 GMT. U.S. West Texas Intermediate Crude lost 6 cents, to $68.32 per barrel.
In a recent note, Kpler, an analytics firm, noted that the geopolitical risks premiums had diminished with the Israel-Iran ceasefire.
After a public spat, Trump threatened to impose a 50% penalty on Brazil's exports to the U.S.
Trump had announced tariffs for copper, semiconductors, and pharmaceuticals. His administration also sent tariff letters to Iraq, the Philippines, and other countries. These letters were added to more than a dozen that his administration issued earlier this week, including to U.S. powerhouse suppliers South Korea, and Japan.
Minutes released by the Federal Reserve on Wednesday show that policymakers are still concerned about inflationary pressures caused by Trump's tariffs. Only "a few" officials said they thought interest rates could drop as early as this month.
The cost of borrowing increases with higher interest rates, and the demand for oil decreases.
The Energy Information Administration reported on Wednesday that the rise in crude oil stocks and declines in gasoline and distillate stockpiles last week helped support prices. The EIA reported that gasoline demand increased 6% last week to 9.2 millions barrels per day.
J.P. Morgan stated in a note to clients that global daily flights averaged 107,600 during the first eight days in July. This is an all-time record. Flights in China reached a peak of five months, and port and cargo activities indicated a'sustained growth' in trade activity from last year.
The note stated that "year to date, the global oil demand has grown by an average of 0.97 million barrels a day, which is in line with our prediction of 1 million barrels a day."
Tony Sycamore is an analyst with IG. He said that there are doubts about the increase in production quotas recently announced by OPEC+, since some members have already exceeded their quotas.
He said that "others, such as Russia, are unable meet their targets because of damaged oil infrastructure."
OPEC+ producers will approve a big increase in output for September as they finish both the unwinding and the United Arab Emirates moving to a higher quota.
(source: Reuters)