2024-12-16 01:00

LONDON, Dec 13 (Reuters) - An unprecedented collapse in conversion fees spells hard times for the global copper smelting sector. The benchmark smelter treatment charges for next year have been set by Chilean copper miner Antofagasta (ANTO.L) , opens new tab and China's Jiangxi Copper (600362.SS) , opens new tab. Smelters such as Jiangxi will receive just $21.50 per metric ton and 2.125 cents per pound for smelting and refining concentrates from Antofagasta's mines to make refined copper. That is a huge drop from this year's benchmark of $80.00 per ton and 8.0 cents and the lowest outcome in at least 20 years. At other times the plunge could have been read as a bullish sign of mine shortfall. But by copper's standards, mine supply has had a relatively untroubled year. Global production is on track to grow by 2.0% in 2024. Rather, the tension is from the other side of the supply-demand equation. Global smelter capacity has expanded too fast, particularly in China. Too many smelters are chasing a finite amount of feed and the competition could intensify in 2025. EXUBERANT EXPANSION China's copper smelting capacity will grow from 14.26 million tons in 2024 to 16 million in 2025 and close to 17 million in 2027, Ge Honglin, chairman of the China Nonferrous Metals Industry Association, told a conference in late October. Fierce competition for raw materials to feed all this new capacity has kept spot smelter treatment charges at rock-bottom levels this year. The country's leading producers met in March and agreed to curb output to prevent processing fees from falling further. Any cuts they made were only enough to brake the production momentum. National output still grew by 5.0% year-on-year in January-November, according to local data provider Shanghai Metal Market. That's why the shortfall in mined concentrates has not been reflected in the refined metal segment of the copper supply-chain. Indeed, the International Copper Study Group (ICSG) estimates the global refined copper market registered a 402,000-ton supply surplus in the first nine months of the year. MARGIN SQUEEZE Smelters do not only rely on treatment charges for their revenue. They can make money from by-products such as gold, silver and sulphuric acid. They can tweak payability and payment term clauses to enhance revenues. They can also opt to split their pricing between the annual benchmark in the first half of 2025 and the mid-year benchmark in the second half, although that only works if treatment charges have recovered by then. But smelter ingenuity can only mitigate so much of the ongoing squeeze on margins. China's smelter problems are about to be compounded by expansion in the rest of the world. Smelters are coming online in Indonesia and the Democratic Republic of Congo next year, reducing those countries' exports of mined concentrates. The start-up of the Adani smelter in India means another new buyer in the international concentrates market. The ICSG forecasts mine supply growth to accelerate to 3.5% next year but even that may not be enough to meet smelter demand. SCRAP THREAT Many Chinese smelters can adjust their input mix away from mined concentrates to scrap copper. While China's imports of copper concentrates grew by just 3.2% in the first 10 months of 2024, those of recyclable scrap leapt by 16%. However, the incoming Donald Trump administration poses a threat to the flow of U.S. scrap to China. Shipments ground to a near halt in 2019 and 2020 after China retaliated against U.S. tariffs by imposing a 25% duty on U.S. recyclable copper. Trump has again dialled up the tariff rhetoric and Chinese scrap importers are already dialling down their purchases of U.S. scrap, fearing a rerun of the tariff wars. The United States is the second largest supplier of scrap copper to China after Malaysia. Chinese imports of U.S. material totalled 363,000 tons in the first 10 months of 2024, representing almost a fifth of the country's total call on the international market. A simultaneous squeeze on mined concentrates and scrap availability is going to pose a tough challenge for China's smelters in the months ahead. They may not all survive. The opinions expressed here are those of the author, a columnist for Reuters. Sign up here. https://www.reuters.com/markets/commodities/bleak-times-copper-smelters-conversion-fees-slump-andy-home-2024-12-13/

2024-12-16 00:30

US PMI shows business activity accelerating in Dec China retail data misses forecasts Fed seen cutting 25bps, focus on future easing plans BOE, BOJ and Norges seen on hold, Sweden to cut Trump's Bitcoin reserve remarks send crypto higher NEW YORK, Dec 16 (Reuters) - Megacap tech shares muscled the S&P 500 and the Nasdaq to higher closes on Monday as U.S. Treasury yields paused and investors readied for a busy central bank week. Bitcoin surged, touching a new high after U.S. President-elect Donald Trump suggested he plans to set up a bitcoin strategic reserve. The FANG group of tech and tech-adjacent momentum stocks (.NYFANG) , opens new tab outperformed, gaining 2.7% on the day. "We’re continuing to see an uneven melt up of stocks. The rotation into value seems to have fizzled out, at least for now," said Oliver Pursche, senior vice president at Wealthspire Advisors, in New York. "There’s a risk-on type of mentality at that point that translates into stocks in a broader sense, and it continues to feed the view that under a Trump administration, the investment environment is going to be favorable to tech and new world-type investments," Pursche added. The Federal Open Market Committee (FOMC) is due to convene on Tuesday for its last monetary policy meeting of 2024, which is expected to conclude with a 25 basis point cut in the key Fed funds target rate. Investors will scrutinize the Fed's Summary of Economic Projections (SEC) and its "dot plot," which maps out the central bank's future rate cut path, which has become less certain in light of recent data showing sticky inflation amid a relatively robust economy. "I’ll be listening for any forward-looking statements that address whether the Fed believes after this next cut that they are in a restrictive mode and when they intend to get to neutral, what conditions would be required in order to get to neutral," Pursche said. A report from S&P Global showed that U.S. business activity has accelerated its expansion this month, despite ongoing weakness in the manufacturing sector. Among central bank actions elsewhere, Sweden's Riksbank is also expected to cut interest rates, while policymakers in Japan, Britain and Norway are seen holding steady. Soft retail sales data from China underscored the need for more aggressive stimulus from Beijing. The Dow Jones Industrial Average (.DJI) , opens new tab fell 110.21 points, or 0.25%, to 43,717.85, the S&P 500 (.SPX) , opens new tab rose 23.03 points, or 0.38%, to 6,074.12 and the Nasdaq Composite (.IXIC) , opens new tab was up 247.17 points, or 1.24%, to 20,173.89. European shares closed lower, weighed down by heavyweight luxury goods and energy shares in the wake of China's downbeat retail sales report. French stocks weighed on European markets after Moody's unexpectedly downgraded the country's rating on Friday. MSCI's gauge of stocks across the globe (.MIWD00000PUS) , opens new tab rose 1.62 points, or 0.19%, to 867.76. The STOXX 600 (.STOXX) , opens new tab index fell 0.12%, while Europe's broad FTSEurofirst 300 index (.FTEU3) , opens new tab fell 1.38 points, or 0.07 Emerging market stocks (.MSCIEF) , opens new tab fell 4.42 points, or 0.40%, to 1,102.59. MSCI's broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) , opens new tab closed lower by 0.38%, to 583.19, while Japan's Nikkei (.N225) , opens new tab fell 12.95 points, or 0.03%, to 39,457.49. Yields on 10-year U.S. Treasuries steadied near three-week highs as investors awaited the Fed's rate decision on Thursday. The yield on benchmark U.S. 10-year notes fell 0.4 basis points to 4.395%, from 4.399% late on Friday. The 30-year bond yield fell 1.2 basis points to 4.6023% from 4.614% late on Friday. The 2-year note yield, which typically moves in step with interest rate expectations for the Federal Reserve, rose 0.2 basis points to 4.243%, from 4.241% late on Friday. The greenback was hovering near three-week highs as investors anticipated that the Fed could signal a more measured pace of easing in the coming year. The dollar index , which measures the greenback against a basket of currencies including the yen and the euro, fell 0.01% to 106.86, with the euro up 0.07% at $1.0509. Against the Japanese yen , the dollar strengthened 0.31% to 154.13. Bitcoin, which has surged more than 50% since the U.S. presidential election, touched a new high, topping $106,000 after Trump indicated the possible establishment of a bitcoin reserve fund. Bitcoin gained 3.10% to $106,015, while Ethereum rose 4.94% to $4,046.40. Crude oil prices settled lower as soft data from China fed fears of softening demand from the world's largest oil importer. U.S. crude fell 0.81% to settle at $70.71 per barrel, while Brent dropped to $73.81 per barrel, down 0.78% on the day. Gold prices inched higher as the dollar eased ahead of the central bank decision. Spot gold rose 0.17% to $2,652.29 an ounce. U.S. gold futures fell 0.15% to $2,652.00 an ounce. Sign up here. https://www.reuters.com/markets/global-markets-wrapup-1-2024-12-16/

2024-12-16 00:24

LONDON, Dec 16 (Reuters) - British manufacturers have reported the sharpest loss of confidence since the start of the COVID-19 pandemic in the face of higher costs including tax increases by the new government, a group representing the sector said on Monday. Make UK said its gauge of manufacturers' confidence about the economic outlook over the next 12 months in its quarterly outlook survey dropped to 5.8 in the fourth quarter of 2024 from 6.8 three months earlier. The group cut its forecast for manufacturing output in 2024 which it now expected to shrink by 0.2% this year, down from a previous forecast of 0.5% growth. The sector was likely to expand by 0.7% in 2025, half the rate of the broader economy, it predicted. Output and orders were positive while recruitment and investment intentions remained stable, Make UK said. But the mood among manufacturers worsened from the previous survey when almost six in 10 companies were upbeat about the outlook. "Having faced a cost creep for most of the year, manufacturers are now facing a cost crisis which has brought a sharp dip in their confidence," Fhaheen Khan, senior economist at Make UK, said. British finance minister Rachel Reeves announced in her Oct. 30 budget a 25 billion pound ($32 billion) increase in social security contributions paid by employers which will take effect from April, which is also when the minimum wage is due to rise by almost 7%. Other recently published surveys have shown a drop in hiring intentions by employers following the budget. Official data published on Friday showed Britain's economy shrank in both September and October in the run-up to the announcement by Reeves of her tax and spending plans - the first back to back declines in gross domestic product since 2020. The survey of 303 companies was carried out between Oct. 28 and Nov. 27. ($1 = 0.7923 pounds) Sign up here. https://www.reuters.com/world/uk/uk-factories-take-fright-budget-adds-cost-pressures-survey-shows-2024-12-16/

2024-12-15 23:48

Bitcoin hits record high amid Trump's pro-crypto stance Price up over 50% since Nov US election Bitcoin buyer MicroStrategy joins Nasdaq 100 Dec 16 (Reuters) - Bitcoin's record rally topped $107,000 on Monday after President-elect Donald Trumpreiterated that he plans to create a U.S. bitcoin strategic reserve similar to its strategic oil reserve, stoking the enthusiasm of crypto bulls. Investor sentiment also got a lift from the inclusion of MicroStrategy (MSTR.O) , opens new tab into the tech-heavy Nasdaq 100 index that will likely lead to more inflows for the software firm turned bitcoin buyer. Bitcoin , the world's biggest and best known cryptocurrency, extended gains to a session high of $107,148 and was most recently at $106,877, up 5.43% from late Friday. The No. 2 digital currency ether was up 1.85% at $3,975.70. "We're in blue sky territory here," said Tony Sycamore, an analyst at IG. "The next figure the market will be looking for is $110,000. The pullback that a lot of people were waiting for just didn't happen, because now we've got this news." Bitcoin and crypto have been catapulted into the spotlight as investors wager the incoming Trump administration will usher in a friendlier regulatory environment, boosting sentiment around the alternative currency. Bitcoin is up about 150% in 2024. "We're gonna do something great with crypto because we don't want China or anybody else - not just China but others are embracing it - and we want to be the head," Trump told CNBC , opens new tab late last week. When asked if he plans to build a crypto reserve similar to oil reserves, Trump said: "Yeah, I think so." He advocated the same thing earlier this year. Governments around the world held 2.2% of bitcoin's total supply as of July, according to data provider CoinGecko , opens new tab, with the United States possessing nearly 200,000 bitcoins valued at more than $20 billion at current levels. China, UK, Bhutan and El Salvador are the other countries with a significant amount of bitcoins, data site BitcoinTreasuries , opens new tab showed. Other countries have also been considering cryptocurrency strategic reserves. Russian President Vladimir Putin earlier this month said the current U.S. administration was undermining the role of the U.S. dollar as the reserve currency in the global economy by using it for political purposes, forcing many countries to turn to alternative assets, including cryptocurrencies. "For example, bitcoin, who can prohibit it? No one," Putin said. There are skeptics though, with Federal Reserve Chair Jerome Powell likening bitcoin to gold earlier this month. Analysts also point out that any such move will take time to implement. "I think we still need to be cautious on a BTC strategic reserve, and at least consider that this is not likely to happen anytime soon," said Chris Weston, head of research at Pepperstone. "Of course, any comment from Trump that offers an increased degree of hope that plans for a strategic reserve are evolving are an obvious tailwind, but this would come with consequences which would need to be carefully considered and well telegraphed to market players." CRYPTO BOOST Bitcoin has surged more than 50% since the Nov. 5 election that saw Trump elected along with many other pro-crypto candidates. The total value of the cryptocurrency market has almost doubled over the year so far to hit a record over $3.8 trillion, according to CoinGecko. Trump - who once labeled crypto a scam - embraced digital assets during his campaign, promising to make the United States the "crypto capital of the planet." Trump this month named a White House czar for artificial intelligence and cryptocurrencies, former PayPal executive David Sacks, a close friend of Trump adviser and megadonor Elon Musk. Trump also said he would nominate pro-crypto Washington attorney Paul Atkins to head the Securities and Exchange Commission. On Friday, exchange operator Nasdaq said MicroStrategy, led by chief executive Michael Saylor, will be added to the Nasdaq-100 Index, with the change coming into effect before the market opens on Dec. 23. MicroStrategy, an aggressive investor in the world's largest crypto asset, has seen its shares soar more than six-fold this year, taking its market value to almost $94 billion. It is now the largest corporate holder of the cryptocurrency. As part of the Nasdaq 100, investors would buy MicroStrategy shares to mirror the holdings of the broader index, thereby driving up the value of the stock and allowing the company to buy more crypto, through debt and equity offerings, Matthew Dibb, chief investment officer at crypto asset manager Astronaut Capital, said. "The inclusion seems a bit unexpected, but that hasn't stopped the excitement of what many believe to be the start of a looping cycle of capital that could potentially drive up the spot bitcoin price," he said. MicroStrategy shares were up 4.2% on Monday. Sign up here. https://www.reuters.com/markets/currencies/bitcoin-powers-above-105000-first-time-2024-12-15/

2024-12-15 23:11

SINGAPORE, Dec 13 (Reuters) - China's refined oil consumption peaked in 2023 at 399 million metric tons (7.98 million barrels per day) and is expected to fall 1.3% to 394 million tons in 2024, CNPC Economics & Technology Research Institute said on Friday. As a result, crude oil imports are expected to fall to 544 million tons this year, according to a presentation by the research arm of China's largest oil producer, although the world's top importer still accounts for a quarter of global imports. CNPC's forecast underscores expectations that China's crude oil imports are on track to peak next year as transport fuel demand begins to decline for the world's top crude buyer, ending the country's decades-long run as the dominant driver of expanding oil consumption. By 2035, China's overall refined products consumption is expected to fall by 25-40% to 240 million to 290 million tons in 2035 from the 2023 peak, CNPC said. Gasoline consumption is forecast to fall to 80 million to 100 million tons in 2035, down 35-50% from 2023, as electric vehicles are expected to make up half of China's car fleet by then, it added. Similarly, the growth in trucks powered by alternative fuels such as electricity, liquefied natural gas and hydrogen, is expected to reduce diesel demand to 100 million to 120 million tons in 2035, a 35-50% decline from 2023, CNPC said. Jet fuel or kerosene consumption will rise by 70% to 60.8 million tons in 2035 from 2023 on aviation demand, added. In line with falling fuel demand, China's refining capacity is expected to peak in 2028 while its capacity for ethylene, a basic plastic raw material, could exceed 90 million tons per year, it added. Demand for naphtha and liquefied petroleum gas (LPG), feedstocks for petrochemicals, hit a record 169 million tons this year and is expected to drive China's oil demand going forward, it added. Oil-based chemical feedstock demand expected to grow by 55% to 210 million tons in 2035 from 2023, CNPC said. Sign up here. https://www.reuters.com/world/china/chinas-oil-consumption-peaked-2023-cnpc-says-2024-12-13/

2024-12-15 21:50

Dec 16 (Reuters) - A look at the day ahead in Asian markets. Asia kicks off the final full trading week of 2024 with the monthly 'China data dump' landing on Monday, and with investors leaning toward keeping the stock market bull run going as central banks around the world go into easing mode. Several G10 central banks last week cut interest rates or, in the case of Australia, signaled it may do so soon, and authorities in China pledged to dive even deeper into monetary and fiscal stimulus territory. This helped buoy risk appetite, despite the inclination to take chips off the table ahead of year-end and with Wall Street at record highs. Another wave of G10 central bank decisions, including from the Federal Reserve, will go a long way to determining whether that continues this week. A quarter point rate cut from the Fed is a near certainty, according to futures market pricing, while in Asia, the focus will be on the Bank of Japan. The BOJ is heading in the other direction, slowly 'normalizing' policy after years of zero interest rates. Could the stronger-than-expected 'Tankan' survey of business conditions last week seal a rate hike this week? Economist Phil Suttle thinks it should. "The question now is whether the BoJ has the confidence to make the move or whether ...(Governor Kazuo) Ueda might prefer to wait (for what?). Importantly, rate normalization would be presented as a success, not as a problem," Suttle wrote on Friday. Meanwhile, the South Korean won could come under further selling pressure after President Yoon Suk Yeol's impeachment on Saturday, the latest twist in a remarkable crisis sparked by his surprise decision to impose martial law on Dec. 3. Monday's economic calendar in Asia is packed with potential market-moving releases, especially the clutch of Chinese economic indicators including industrial production, fixed asset investment, retail sales, house prices and unemployment. This comes days after Beijing said it will increase the budget deficit, issue more debt and loosen monetary policy to support growth. China is girding for more trade tensions with the U.S., and U.S. Treasury Secretary Janet Yellen told Reuters on Friday that Washington won't rule out sanctions on banks and further curbs on "dark fleet" tankers. Investors have welcomed Beijing's stimulus announcements since September. But only time will tell if they will pull the economy out of a property sector bust and deflation, revive growth, and draw investment back into the country. Official data on Monday are expected to show that the annual rate of industrial production and fixed asset investment growth last month held steady, while retail sales growth dipped slightly. House price data for November also will be released after October's 5.9% year-on-year fall was the steepest decline in almost 20 years. Here are key developments that could provide more direction to markets on Monday: - China 'data dump' (November) - Australia, India manufacturing PMIs (November) - Japan machinery orders (October) Sign up here. https://www.reuters.com/markets/asia/global-markets-view-asia-graphic-2024-12-15/