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Australia sets a price floor for rare earth minerals to boost the industry
Madeleine King, Minister of Resources, said that Australia was considering a price-floor to support vital minerals projects. This includes rare earths. Her comments led to an increase in the share prices of Australian listed rare earths mining companies. Australia is positioning itself to be a source of minerals that are critical for sectors like the automotive and defence industries. On Tuesday, it offered a $87 million lifeline for Trafigura's metals-processing operations. Nyrstar has assessed the potential of its smelters at Port Pirie, Hobart, and Port Pirie to produce antimony bismuth germanium indium. This support is due to the fact that prices for certain metals, such as rare earths, have been too low in Western countries to finance processing capacity. As a result, China has become the world's largest supplier. Last month, the U.S. Government offered a price floor as part of a landmark agreement with its largest producer of rare earths to support an industry that is viable in the U.S. King, in a Monday night statement reported first by an Australian newspaper, said that "pricing certainty" would reduce the risk of companies and investors being exposed to volatile and opaque markets and prices. Australia wants to ensure price certainty through its role of a buyer for emerging critical minerals after it pledged A$1.2billion ($775.08m) earlier this year to build a critical strategic mineral reserve. "Mechanisms to establish a price floor that is appropriate are being actively considered," King said. She said that the focus would be on creating agreements for national offtake, or purchase deals. These will be voluntary. The agreements will be focused on minerals that have demonstrated applications in defence, strategic technologies and minerals for which Australia is particularly well placed to supply due to supply chain problems. This includes heavy rare earths. The rare earths group consists of 17 elements. There is a subset called heavy rare earths. These include terbium, dysprosium and other elements that are classified by their higher atomic mass, less abundant and more expensive than others. The shares of Australian producer Lynas Rare Earths - which began producing heavy rare Earths earlier this season - rose more than 6%, reaching their highest level in 13 years. Iluka Resources shares and Arafura Rare Earths's shares both rose close to 10% Tuesday. Luke Winchester is a portfolio manager at Merewether Capital. He said: "I believe the market now views rare earths miner and processors as strategic asset given the involvement of the (Australian government)." Last month, U.S. rare-earths producer MP Materials announced a multibillion dollar deal with the U.S. Government to increase output of rare-earth magnets and loosen China's hold on materials used in the construction of weapons, electric vehicles, and many electronic devices. Analysts said that the pricing agreement, which set a floor price for a buyer, would have global effects. Analysts said that the move would be beneficial for producers but increase costs for automakers, and their customers. Reporting by Melanie Burton and John Biju from Melbourne and Bengaluru, and editing by Alasdair Pala and Jamie Freed.
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Dollar steadies as Fed rate-cut bets boost Asian shares
The U.S. Dollar steadied on Tuesday as investors bet that the Federal Reserve would act to support the largest economy in the world. U.S. stocks rallied Monday, boosted by generally positive earnings reports. Bets on a Fed rate cut in September increased after Friday's disappointing jobs report. The oil prices fell after OPEC+ increased their output, but gold remained near a week-high and Vietnamese stocks reached a record high. Rodrigo Catril is a senior currency strategist with National Australia Bank. He said that there are signs of weakness within the U.S. The broadest MSCI index of Asia-Pacific stocks outside Japan grew 0.6% while Japan's Nikkei gauge rose 0.7%, after falling the most in over two months on Monday. Euro Stoxx futures in the pan-regional market rose by 0.2%. German DAX futures also increased by 0.3%, and FTSE Futures rose by 0.3%. U.S. S&P 500 e-mini stock futures rose 0.2%. The dollar was unchanged at 147.09yen and the euro fell 0.1% to $1.1557 on the same day. The dollar index, which measures the greenback's value against a basket major counterparts, rose 0.2% following a two-day drop. The soft U.S. payroll data on Friday added weight to the argument for a Fed cut, and gained another level of drama when Trump fired the director of labor statistics who was responsible for these figures. CME Fedwatch says that the odds of a rate cut in September are now at 94%. This is up from 63% on July 28. The market participants expect at least two quarter point cuts before the end of this calendar year. The news that Trump will fill the Fed governorship early has also increased concerns about a politicization of interest rates policy. Trump threatened again to increase tariffs on Indian goods above the 25% level announced by Trump last month over its Russian oil purchase. New Delhi, however, called Trump's attack "unjustified", and pledged to protect its own economic interests. Oil prices fell on mounting Oversupply Concerns are growing after Trump stated that he would impose secondary tariffs of 100% on Russian crude purchasers such as India. Brent crude futures < LCOc1> The price of a barrel dropped 0.1%, to $68.67. U.S. West Texas intermediate crude > dropped 0.1% to $66.21 per barrel. Investors are eagerly awaiting the earnings reports of Walt Disney, Caterpillar and other companies this week. Palantir Technologies' revenue forecast was raised for the second time in this year, as it expects to see sustained demand for artificial intelligence services. Michael McCarthy, Moomoo Australia's market strategist, said in a recent note that "Company earnings continue to drive market movements." Today's data from Asia's largest economies revealed resilience in the service sector. S&P Global's final services purchasing managers’ index (PMI), which measures the performance of the service sector in Japan, grew to 53.6 from 51.7 in the previous month. This is the largest increase since February. China's service sector expanded last month at the fastest rate in over a year. The blue-chip CSI300 Index in China rose 0.4% while the Shanghai Composite Index grew 0.6%. Vietnam's stock index soared by 2.4%, reaching a new record high. Bitcoin dropped 0.4% to 114448.59, while spot gold fell slightly at $3,368.44 an ounce.
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Henan Province in China receives new funding to help the drought-hit grain industry
Henan Province, known as China’s Granary for its wheat production, announced that it had received funding of 131.5 million Yuan ($18.3million) from the central government to support its drought-stricken agriculture sector. This was more than double the amount that the province of central China had raised on its own between mid-July to early August in order to protect the fall grain harvest. The autumn harvest accounts for approximately three quarters of the annual grain production of the country. The Henan Finance Department said on its website that the total amount of funds allocated since then to repair wells, maintain irrigation equipment, and construct water projects has reached 260 million Yuan. Since July, the North China Plain, which includes provinces like Henan and Shandong as well as Hebei, has experienced persistently high temperatures with lower than normal precipitation. The Ministry of Agriculture and Rural Affairs warned that drought conditions could worsen in certain areas due to the hot weather and low rainfall expected in August. Rice-growing areas in the lower and middle reaches of Yangtze River have also been flooded by unprecedented rainfall. The ministry warned that China's fall grain production is at risk and faces challenges due to overlapping droughts and floods. According to a statement released on Monday, the ministry has taken 34 measures to reduce yield losses in areas that are severely affected, stabilize production in areas that are mildly affected, and increase output for areas not affected. Reporting by Ryan Woo, Editing by Michael Perry. $1 = 7.1821 Chinese Yuan Renminbi
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Canada's First Quantum signs $1 billion gold streaming agreement with Royal Gold
First Quantum Minerals, a Canadian mining company, signed a streaming agreement worth $1 billion with Royal Gold's subsidiary. The two companies announced the agreement in a joint statement released on Tuesday. A gold streaming financing method is one in which the buyer pays an upfront amount to a mining company in exchange for future production. First Quantum, in the agreement, will receive an upfront payment of $1 billion from Royal Gold AG for gold deliveries based on copper production at First Quantum Kansanshi Mine in Zambia. The deal is expected to be finalized on Wednesday. First Quantum receives 20% of the spot price for every ounce delivered. This will increase to 35% in certain cases, such as achieving credit or leverage targets. Royal Gold says the agreement provides immediate cash flow on a large-scale, long-term asset. The company anticipates receiving about 12,500 ounces from the stream in this year, and on average 35,000-40,000 ounces per year over the next 10 years.
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Aurubis beats profit expectations despite earnings dip
Aurubis reported a core profit of $1.2 billion for the first nine-month period of its financial year 2024-2025, which exceeded market expectations. Contributions from copper products, sulfuric acid and precious metals helped to boost this figure. The largest copper producer in Europe reported that operating earnings before taxes (EBT) dropped to 286 millions euros ($330.44) during the first nine-months of its fiscal year from 333million euros a year ago. This was higher than the 281 million euro estimate of analysts in a poll provided by the company. Aurubis expects the contribution from sulfuric acids, copper products, and metals will continue throughout the remainder of the financial year. However, it is also expecting a continuing shortage of copper concentrates, and recycling materials. The Hamburg-based firm has narrowed their forecast for 2024-2025 and expects an operating EBT of between 330 and 370 millions euros, down from the previous range 300 to 400 million euro. Aurubis stated in a press release that it anticipated the result to be in the middle of the range. Aurubis has also narrowed the range of its operating return on capital used, a measure for analysing profit, from 7% to 11%.
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Oil drifts lower on rising supply, concerns about demand
Oil prices fell on Tuesday due to concerns about oversupply. OPEC+ increased production despite a weak outlook for demand. This more than offset the possibility of a tightening Russian oil trade as a result of U.S. policy. Brent crude futures fell 11 cents or 0.16% to $68.65 per barrel at 0424 GMT. U.S. West Texas Intermediate Crude was down 12 Cents, or 0.1%, to $66.17 per barrel. Both contracts fell more than 1% the previous session, settling at their lowest level in a week. Both benchmarks have declined because the extra capacity of OPEC+ acts as a buffer to any deficiencies in Russian barrels. This is according to Priyanka Sackdeva, a Phillip Nova senior analyst. The Organization of the Petroleum Exporting Countries (OPEC+) and its allies agreed to increase oil production in September by 547,000 barrels a day. Analysts caution that the actual amount returned to the market may be lower. Analysts are concerned about the demand side of things, and some predict a slowdown in economic growth for the second half. Analysts at JPMorgan said that the risk of an American recession is high, as the labour demand has stagnated. The analysts noted that the July Politburo Meeting in China signaled no further policy easing, with the focus now shifting to structural rebalancing. Oil prices are now being driven by concerns about possible disruptions in supply, not the weakening of economic fundamentals. Donald Trump, the U.S. president, has stated that he may impose secondary tariffs of 100% on Russian crude purchasers such as India. This comes after Trump announced a 25% tariff in July on Indian imports. Trump threatened to increase tariffs again on Monday over Russian oil purchases. New Delhi branded his attack as "unjustified," and pledged to protect its own economic interests. This further exacerbated the trade gap between the two nations. India is the largest buyer of Russian crude oil by sea. It imported about 1.75 million barrels per day (bpd) from January to June, an increase of 1% compared to a year earlier, according to trade sources. Analysts fear that the latest U.S. trade tariffs could dampen demand for fuel and slow down economic growth. (Reporting from Anjana Anil, Bengaluru; Siyi Liu, Singapore; editing by Christian Schmollinger & Jamie Freed).
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Heerema Installs Substation at Inch Cape Offshore Wind Farm
The Inch Cape Offshore Wind Farm offshore jacket foundation and substation platform have been installed at the North Sea site of the 1.1 GW Scottish project.The Siemens Energy Offshore Transformer Module (OTM) and its 68-meter jacket foundation are now in position 21 kilometers from the Angus coast having been installed by Heerema Marine Contractors (HMC) semi-submersible crane vessel Sleipnir.The compact 2700-tonne platform comprises two circuits with two transformers and reactors, making it Siemens Energy’s first ever double OTM.The modular fabrication, which enables offshore wind platforms to be smaller and lighter than conventional alternating current designs, has now been in use for 10 years.A team of more than 250 at the Smulders yard in Newcastle, fitted out and assembled both the OTM and its jacket foundation over the past approximately 18 months. Around 80 local U.K. sub-contractors supported the project with work that included lifting, scaffolding, engineering and coating.Owned in a 50-50 equal joint venture by ESB and Red Rock Renewables, Inch Cape, is the largest offshore wind farm now in construction in Scotland. Once complete it will generate almost 5 terawatt hours (TWh) of energy each year or enough to power half the homes in Scotland.“This has been an impressive team effort by Siemens Energy, Smulders, Heerema and the myriad smaller contractors who contributed to ensuring the safe and efficient fabrication and installation of these major Inch Cape components,” said John Hill, Inch Cape Project Director.Inch Cape Offshore Wind Farm is owned by Inch Cape Offshore Wind, an equal joint venture between ESB and Red Rock Renewables.Construction of the project’s onshore substation and landfall works in Cockenzie, East Lothian, are well advanced and the next key offshore activity will be the installation of the first of two export cables, scheduled for late summer this year.First power is expected in late-2026 and with commercial operation date in 2027.
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Gold prices rise for a fourth session, as US job data boosts Fed rate-cut bets
Gold edged higher on Tuesday for a 4th session, supported by a weaker dollar and lower Treasury yields. Weaker-than-expected U.S. job data boosted expectations of a September rate cut. As of 0239 GMT, spot gold rose 0.1% to $3375.89 an ounce. U.S. Gold Futures gained 0.1%, reaching $3,430.40. Dollar index was near its lowest level in a week, making gold more accessible to holders of currencies other than the dollar. The yield on 10-year Treasury notes, the benchmark note, fell to a new low. OANDA Senior Market Analyst Kelvin Wong stated that "short-term momentum for the bullish story has improved...fundamental message supporting gold prices is the Fed's continued intention to cut rates in September." U.S. Employment growth in July was lower than expected, and non-farm payroll numbers for May & June were revised downward by 258,000 jobs. This suggests a worsening of labor market conditions. CME FedWatch shows that traders now expect a rate cut in September. Mary Daly, San Francisco Fed Bank president, said that rate cuts are imminent given the mounting evidence of a softening U.S. labor market and the lack of persistent inflation due to tariffs. In an environment of low interest rates, gold, which is traditionally viewed as a safe haven during times of political and economic uncertainty, tends thrive. Donald Trump threatened again on Monday, on the trade front to increase tariffs on Indian products over its Russian oil purchase. New Delhi called Trump's remarks "unjustified," and pledged to protect its own economic interests. This further exacerbated the trade gap between the two nations. Gold still faces technical resistance. "I do not believe traders will push up above $3,450. OANDA's Wong stated that the gold price will not rise above this level unless there is a clear catalyst. The price of palladium rose by 0.2%, while platinum was up 0.1% at $1,330.31. (Reporting and editing by Sumana Nandy, Sonia Cheema, and Brijesh Pate in Bengaluru)
Toyota and Honda prepare for profit drops as US tariffs and strong yen weigh
Toyota Motor and Honda Motor will report lower first-quarter earnings in the coming week as U.S. tariffs on imports and a stronger Japanese yen impact profits, despite strong demand for hybrids from their largest overseas markets.
Japanese automakers are facing increasing uncertainty in the U.S. where tariffs on imported vehicles are driving up vehicle prices, and testing consumer demand. Investors are looking for clues as to how Japan's largest automakers will offset such burdens.
According to the average forecast of seven analysts surveyed by LSEG, Toyota, the top selling automaker in the world, will post a 31% drop year-on-year in operating profit on Thursday. This would amount to 902 billion yen ($6.14 billion). This would be its worst quarterly result in over two years.
Honda will report its second consecutive quarterly decline of 36% in operating profit, to 311.7 billion Japanese yen. The automaker had already predicted a 59% drop in its full-year profits.
Following a bilateral agreement last month, both companies are now facing 15% tariffs on Japanese imports of autos to the U.S.
The same tariffs and stronger currency have caused other Japanese automakers to report lower earnings.
Christopher Richter, an autos analyst with CLSA, said that the first quarter will be tough for Toyota. He said that things should improve in the future, thanks to lower tariffs.
Honda's dependence on the U.S., in particular, has grown in recent years due to the decline in sales in other areas. Both companies manufacture key models for the U.S. markets in Canada and Mexico.
Honda's U.S. sales accounted for about two-fifths in the first six months of the year. The company's sales worldwide fell by 5% during the period. This was mainly due to double-digit drops in China, Asia, and Europe.
Toyota's sales worldwide rose by 6% during the period, largely due to the strong demand for hybrid petrol-electric cars that typically have higher margins than traditional petrol cars. The Camry and Sienna Hybrids are still strong sellers in the U.S.
In recent months, the company's performance in China has improved. It posted a 7% increase year-on year in vehicle sales in the first half year.
Honda announced in May it would scale back its investments in electric vehicles due to a slowing market and focus on hybrids, with several redesigned models. The company had delayed its plans to establish an EV base in Canada because of the slowing demand for electric vehicles.
Investors are looking forward to updates on pricing strategies and revisions of full-year forecasts from both companies.
CLSA's Richter stated that the Japanese automakers are taking steps such as transfer prices to reduce the import tariff burden.
Toyota shares are down 16% this year so far, while Honda's are flat.
(source: Reuters)