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Mercuria warns that aluminium faces a 'black-swan' supply shock
According to Mercuria's top metals analyst, the global aluminium market will experience a "black-swan" event this year as disruptions caused by a Middle East conflict trigger a supply shock. This will cause major shortages. Around 7 million metric tonnes of aluminium is smelted in the region each year, which represents about 9% of global production this year. Aluminium is used in the construction, transport and packaging industries. Nick Snowdon of Mercuria's metals and mining division said that the scale of supply shock in the aluminium industry is the biggest?single?supply shock a base-metals market has experienced since the year 2000. He was speaking at the Financial Times Global Commodities Summit in Lausanne. "We're already experiencing a black swan event." He said that no one could have predicted something of this magnitude. The London Metal Exchange rallied on April 16 due to concerns about supply disruptions resulting from the U.S./Israeli war against Iran. Aluminium prices reached a record high of $3,672 per ton, a four-year-high. Mercuria believes that the market will be facing a deficit between now and the year's end of approximately 2 million tonnes. Snowdon stated that this estimate could be conservative as it assumes an improvement in the near-term alumina flow via the Strait of Hormuz, which will allow some smelters restart production during this quarter. Snowdon stated that the market has limited buffers. "This shortfall compares to about 1.5 million tonnes of visible inventory, and just over three million tons total global stock including non-visible items." He said that if the conflict continues and alumina, which is a key feedstock in the production of aluminium, is not flowing to the Gulf, then a larger deficit could be possible. Middle East aluminum cannot be easily replaced. China, which is the top producer in the world, has a 45-million-ton annual production limit, while the U.S., Europe, and other countries have limited idle capacity. Snowdon stated that the U.S., and Europe are particularly vulnerable to the supply shock due to?low stock. According to Trade Data Monitor (an information provider), the Middle East contributed nearly 22 percent of the 3.4 millions tons of primary and alloyed aluminium the U.S. imported last year. TDM reports that Europe imported 1.2 million tonnes, or 18.5% of its primary and alloyed aluminum, from the Middle East in 2017. The premiums paid over the LME price of physical metal have also risen. In the U.S., they reached a record of $1.14/lb, or $2,521.50/ton, and in Europe, they hit a four-year high at $599/ton, early in April. (Reporting and editing by Paul Simao; Additional reporting by Tom Daly, Polina Devitt, and Pratima Dasai)
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Oil prices rise as investors grow more skeptical about Iran peace talks
Wall Street stocks followed their global counterparts down on Tuesday, and crude prices continued to rise as optimism faded over peace negotiations and the expiration of the U.S. Iran ceasefire loomed. The three main?U.S. The three major?U.S. Iran has not yet decided whether it will send a delegation for peace talks in Islamabad at the eleventh hour after U.S. troops seized an Iranian oil tanker on international waters as part of President Donald Trump's ban. Chuck Carlson is chief executive officer of Horizon Investment Services, based in Hammond, Indiana. "What's going on in the Middle East will be the primary market driver in the very short-term, which can even be minute-by-minute," he said. "I am not surprised at the market's behavior, given that the deadline is looming." WARSH FACES THE SENATE Kevin Warsh is Donald Trump's choice to replace Jerome Powell at the Federal Reserve. In comments to the Senate Banking Committee he urged a "regime shift"?at the central banks. He also called for an overhaul of communications to discourage his colleagues from expressing too much opinion about the direction of the monetary policy. The Commerce Department reported that U.S. Retail Sales were higher than analysts had expected in March. However, the majority of this surprise was due to a 15.5% increase in gasoline station receipts as a result of price spikes associated with the U.S. and Israel's war against Iran. The Dow Jones Industrial Average fell 214.93?points, or 0.4%, to 49,227.63. The?S&P500 fell 32.47?points, or 0.4%, to 7,076.67. And the Nasdaq Composite dropped 94.73?points, or 0.39% to 24,309.86. EUROPEAN, GLOBAL STOCKS DIP The European stock market ended the day lower, as investors' risk appetite waned ahead of the ceasefire deadline. The MSCI index of global stocks fell by 4.75 points or 0.44% to 1,067.24. The pan-European STOXX 600 fell by 0.87% while Europe's FTSEurofirst 300 fell by 22.64 points or 0.91%. Emerging market stocks increased 12.09 points or 0.76% to 1,612.47. MSCI's broadest Asia-Pacific share index outside Japan closed up by 0.87% to 825.46. Japan's Nikkei gained 524.28 points, or 0.89% to 59349.17. Retail sales data showed economic strength, and the U.S. Dollar edged up on optimism about Iran war negotiations. The dollar index (which measures the greenback versus a basket including the yen, the euro and other currencies) rose by 0.38%, to 98.44?, while the euro fell 0.45%, to $1.1734. The dollar gained 0.4% against the Japanese yen to reach 159.42. Bitcoin fell by 1.08%, to $75,490.88. Ethereum fell 1.38% to $ 2,306.21. Prices of oil reversed a dip that had occurred earlier after Trump stated that he hoped for a "great" deal, but did not wish to extend the ceasefire. U.S. crude oil rose by 2.81%, to $92.13 a barrel. Brent closed at $98.48 per barrel, an increase of 3.14% for the day. U.S. Treasury Yields climbed after retail sales data confirmed expectations that the Fed would 'keep rates stable this year. The yield on the benchmark 10-year U.S. notes increased 4.5 basis points from late Monday to 4.296%. The 30-year bond rate rose by 2.2 basis points, from 4.881% to 4.903% late Monday. The yield on the 2-year note, which is usually in line with expectations of interest rates for the Federal Reserve, increased?6.7 basis point to 3.783% from 3.716% at late Monday. As investors looked towards the tentative U.S. Iran talks and Warsh’s Senate confirmation hearing, gold prices fell as the dollar firmed. Spot gold dropped 2.46% to $4700.89 per ounce. U.S. Gold Futures dropped 2.15% to $4703.40 an ounce.
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After criticism from Italy's PM, Terna CEO waives claim for severance payment
Italian grid operator Terna announced on Tuesday that its departing CEO, Giuseppina Di Foggia will waive her claim to severance payment of?7.3 million euros ($8.56 millions) in order to accept a new position as chairperson of energy group Eni. Di Foggia was under pressure by Prime Minister Giorgia Meoni to renounce a?payment at a moment when the government struggles to find ways to help families cope with rising energy prices. In a?statement, Terna stated that Di Foggia "expressed her desire to sign an agreement?to?give up" her severance payment. It added that it would "provide further details in due time "in full compliance with the principles of corporate Governance." Reports on Monday stated that Terna would hold an extraordinary board of directors meeting to discuss this issue in the coming days. Meloni said to reporters on Tuesday that Di Foggia "had to choose between the presidency Eni or the severance packages from Terna." She added, "It seems to me like the issue is fairly?straightforward." The Italian economy ministry stated on?Sunday that it is against state-backed companies paying severance money to executives who are resigning voluntarily or whose contracts expire. Eni's shareholders will be meeting on May 6th. Italy's Treasury holds a 29.85% stake in Terna through the state lender CDP. Eni is also controlled by the ministry and CDP, with a combined shareholding of 33.1%.
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As dollar and yields rise, gold slips by over 2% ahead of tentative US/Iran talks
Gold prices continued to fall on 'Tuesday, as a stronger US dollar and rising yields weighed down on the price. Investors awaited the results of tentative U.S. Iran talks and Federal Reserve Chair nominee Kevin Warsh’s confirmation hearing. At 1:46 pm EDT (1746 GMT), spot gold dropped 2.2% to $4.712.04 per ounce, its lowest level in more than a week. U.S. Gold Futures for June Delivery settled 2.3% lower at $4,719.60. The U.S. Dollar gained?0.2% versus its peers, making bullion priced in greenbacks more expensive for holders other currencies. Meanwhile, benchmark 10-Year U.S. Treasury yields rose as well. Bob Haberkorn is a senior market strategist with RJO Futures. He said that "stronger yields and the Dollar are putting a lot of pressure on gold. Along with?a lot of headlines and mixed messages coming out regarding the Iran situation, which causes energies to rise, putting... pressure on metals." Donald Trump stated on Tuesday that he didn't want to extend the ceasefire that expired on Iran, and that the U.S. Military was "ready to go" in the event of a collapse of negotiations. This pushed crude oil prices higher by more than 3%. The rise in oil prices following the U.S.-Israeli war on Iran, which began on February 28, has led to fears of an increase in inflation and dimmed the prospects for rate reductions. Gold is often seen as a hedge against inflation, but the non-yielding investment suffers in high interest rates. Investors focused their attention on the Senate Banking Committee's hearing to confirm?former Fed Governor Kevin Warsh as Fed head. Warsh demanded "regime changes" at the U.S. Central Bank, including a different approach to controlling inflation and a communication overhaul that could discourage his colleagues from expressing too much about the direction monetary policy. "Traders are going to be very attentive and paying close attention to the comments (Warsh) makes." You can expect "lots of volatility" with a hearing like that,?Haberkorn said. (Reporting by Ishaan Arora in Bengaluru; Editing by Alexander Smith, Joe Bavier and Diti Pujara) (Reporting and editing by Alexander Smith, Joe Bavier, and Diti pujara in Bengaluru)
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ASM International beats expectations with its second-quarter forecast
ASM International, a computer chip equipment manufacturer, forecast on Tuesday?stronger revenue guidance for the second quarter?than expected by markets?after?a first-quarter result that exceeded expectations. LSEG data estimated that second-quarter revenues would be around 883.9 millions euros, but Europe's second largest maker of chipmaking tool forecasts 980 million euro ($1.15 billion) instead. The first-quarter revenue was 862.5 millions euros, versus the analysts' expectations of 828.5 millions euros. The forecast was published after the European market closed. Analysts felt it was strong enough to distract from the decision to cease publishing the eagerly anticipated new order figures because they are too volatile. Michael Roeg, Degroof Petercam's analyst, said via email that "with a beat in the guidance like this we couldn't care less about not providing bookings numbers." ASML, a sector major, also increased its 2026 guidance last week as the demand for artificial intelligence appears to be resilient despite the economic disruption caused by the Middle Eastern conflict. ASM's CEO Hichem M’Saad stated in a press release that customers are not only investing in the latest technology, but also testing production lines for next-generation chips. These chips could be used in Apple and Nvidia products. He said that customers are increasing their spending on the leading-edge nodes of today, as well as pilot-line investments in the 1.4nm?node. These are expected to begin in the second half of the year.
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Spain and Ireland will assess the viability of an undersea link
The Irish government announced on Tuesday that the 'energy ministers of Spain and Ireland will sign a preliminarily agreement on Thursday to assess the viability a 'undersea power link between the two countries. The connection would allow for the exchange of energy between countries who have increased their renewable energy production. It would also be in line with Europe's focus on decarbonisation and security of supply. The lack of power links between?Spain and the rest of Europe has been a source for frustration in?Spain. By 2030, each European country must have enough connections to import the equivalent of 15% of their electricity production. Spain's current interconnection capacity is equivalent to less than 3% of the country's production. Madrid has been pushing to increase its power connections with continental Europe for years, and a recent blackout added urgency. According to a draft that was seen by, the memorandum establishes a "general framework" for analysing the feasibility and economics of a project. Irish and French grid operators are building a connection between their countries. It is expected to begin operations in 2028 and will be the first interconnector between Ireland, continental Europe and Britain. (Reporting from Pietro Lombardi; additional reporting by Padraic HALpin; editing by Aislinn L. Laing, Barbara Lewis and Aislinn L. Laing)
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Sources: HSBC hires JP Morgan executive to lead global precious metals sales
Four sources familiar with the matter said that HSBC is hiring JPMorgan executive James Willis as its global precious metals sales director. Mark Augustynak, formerly of ICBC Standard Bank, was recruited by HSBC this month to lead its global metals trading division. HSBC is a market'maker' and a clearer on the London Over-the-Counter Market, where participants do not trade via an exchange but directly with one another. Each day, London clears 20 million troy-ounces of gold worth $96 billion at current prices. The appointments are part of a wider reshuffle in the trading and sales departments at major bullion bankers in London, "the largest OTC gold trading hub" worldwide. The hiring spree was triggered by the gold price surge to successive records highs. This attracted a wider pool of investors into the market. This included expansions of smaller banks' teams and a push by the crypto group Tether into the sector. Willis, who worked for JPMorgan for 20 years, is expected to join HSBC by mid-2026. HSBC & JPMorgan declined comment. Two sources claim that Nomura also wants to expand its precious metals department after it hired Aleksander Ganchev. Ganchev was a former 'precious metals Trader at Standard Chartered. According to his LinkedIn profile, Ganchev joined Nomura back in March. Nomura declined to comment. Sources said that several other banks were looking to replace departing staff, or expand their precious metals teams. Others are assessing the market. One source said: "I think that everyone will have a new job by the time they head to Sorrento in October." This was referring to the London Bullion Market Association’s global precious metals conferences in Sorrento in Italy. Reporting by Polina Devitt. (Editing by Veronica Brown, Mark Potter and Mark Potter.
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France freezes spending to cover Iran crisis costs
French officials said that they would 'fully offset the economic impact of the Iran crisis' by freezing certain spending. They announced this on Tuesday as part of a new set support measures. The government will be hit with a surge in energy costs and higher bond yields after the Iran War began. This is expected to cost between 4 billion euro ($4.7 billion)?and 6 billion euro, while increased borrowing costs are responsible for 3.6 billion, according to Finance Minister Roland?Lescure. After a meeting of lawmakers, budget minister David Amiel said to reporters: "In light of the 6 billion euro cost we expect this crisis will have, we are?putting 6 billion in spending on hold." Sebastien Lecornu, Prime Minister of France, has promised to reduce the impact on the budgetary plan of the'measures taken to help households cope with the shock caused by the conflict in the price for energy. But the government is under increasing pressure to provide more assistance. Lecornu announced that emergency fuel subsidies would be increased for the farming and fishing sectors, and assistance would be provided to small construction firms as well as taxi drivers. Plans are in place to help an additional 3,000,000 low-income individuals who drive for work. Lecornu, a journalist, said that the philosophy behind our efforts is to ensure a robust growth and that certain sectors that are 'particularly dependent on hydrocarbons' are not negatively affected. Lescure said that France, with one of the highest budget deficits in the Eurozone, could only afford to support those who are most in need. The government has been under pressure by the 'far right' to reduce the value-added tax on fuels from 20% to 20%. Meanwhile, the hard left wants to cap energy prices.
US bonds drop as retail sales data supports Fed rate-cut pause
U.S. Treasuries fell for a second session in a row on Tuesday, after data showed that retail sales were higher than expected in the month of March. This data reaffirmed expectations that Federal Reserve would?hold interest rate steady this year.
However, the war against Iran remains a major focus for bond markets. In an interview with CNBC, President Donald Trump said that he didn't want to extend the Iranian ceasefire. He added that the U.S. had a strong negotiation position and was likely to end up with a deal he called great.
Washington expressed its confidence that the talks with Iran would continue in Pakistan. A senior Iranian official stated that Tehran was considering participating.
The benchmark 10-year yield (which moves in the opposite direction of prices) was up 3.4 basis point at 4.284% by late morning. The 30-year U.S. yields moved higher by 1.7 basis points to 4.898%.
U.S. 2-year yields, which are a reflection of interest rate expectations, have risen 5.3 basis points to 3.769%. Treasury yields rose after the data revealed that U.S. Retail Sales jumped 1.7% in March after a revised upwards 0.7% increase in February. Retail sales were expected to rise by 1.4%, according to economists polled. The report showed that the war in Iran increased gasoline prices and receipts from?service station, while tax refunds encouraged spending elsewhere.
Tom Simons is the chief U.S. economic at Jefferies. He wrote a note following the data, saying that he expected the headline retail sales figure to be "gaudy" due to an increase in gasoline prices and a rise in unit auto sales, but was surprised by other components' strength.
He noted that there was no evidence to suggest that consumers have tightened their belts elsewhere because of higher gas prices.
According to LSEG estimates, U.S. futures rates showed a 10 bps easing in this year. This is down from the 14 bps that were priced in late Monday.
The yield curve flattened again for the second consecutive session as a result of the decline in odds. The difference between the yields on two-year bonds and those of ten-year bonds has narrowed to 50.6 basis points, down from 52.5 basis points late Monday.
The curve exhibited a bearish flattening, where yields on shorter-dated bonds?are increasing faster than those on longer-term obligations. This suggests that the market doesn't expect the Fed will cut interest rates any time soon.
BMO wrote in an email after the report that "Overall the data this morning was consistent with the perception of the U.S. economy remaining resilient" and that FOMC (Federal Open Market Committee), is justified in staying on hold until a "more durable turn is seen in the realized data."
Market attention will now shift to the Senate Banking Committee's Tuesday hearing regarding Kevin Warsh’s nomination as Federal Reserve chair. The hearing is likely to be combative, after a Republican key said he would delay Warsh's nomination until the White House drops a criminal probe linked to Fed Chair Jerome Powell.
Investors should also watch for signs that Warsh has changed his mind about cutting interest rates due to the escalating Middle East conflict and rising oil prices. (Reporting and editing by Andrew Heavens, Keith Weir, and Gertrude Chavez Dreyfuss)
(source: Reuters)