2024-07-30 04:38

A look at the day ahead in European and global markets from Tom Westbrook Oil prices slipped as worries about the demand outlook weighed broadly on commodities, while Asian equities and European stock futures eased in an otherwise quiet session ahead of key central bank decisions in the U.S., Japan and Britain. Inflation readings in Germany and Spain, which could influence the outlook for euro zone rate moves, and a smattering of earnings fill out the countdown to the week's rate policy events. Europe also gets preliminary GDP data, although inflation will probably take what room is left on centre stage since markets have all but priced in an ECB rate cut in September and so would be vulnerable to upside surprises on consumer prices. Oil prices were at a seven-week low, with demand-related worries for now eclipsing concern that war in Gaza is at risk of spreading into Lebanon as tensions rise between Israel and the Iranian-backed Lebanese movement Hezbollah. The yen took a breather after sharply rebounding over the past two weeks from this month's 38-year low. The currency has been buoyed as investors unwind popular carry trades around the world. Earnings reports from Microsoft and AMD will be closely watched later on Tuesday, as investors seek clues on appropriate valuations after a recent tech-sector rout. In Europe, results at BP and Rio Tinto, Airbus and consumer-focused firms such as L'Oreal could give a steer as to economic conditions along the supply chain. The main events are this week's rate policy meetings, and market moves are likely to be capped until those are out of the way. After a benign June inflation report, investors bet the Federal Reserve will lay the groundwork for a September rate cut at its policy meeting on Wednesday. Futures are fully priced for a quarter-point easing and even imply a 10% chance of 50 basis points, and have 66 basis points of easing priced in by Christmas. Economists polled by Reuters expect the cuts would allow the world economy to keep growing steadily. The Bank of Japan's policy decision, also on Wednesday, looms over Japanese assets. Sources have told Reuters that a rate hike will be discussed and policymakers may also unveil a plan to roughly halve its bond purchases in the coming years. Markets price a near 60% chance of a 10 basis point hike, with another 10 basis points expected by year's end. The Bank of England meets on Thursday with markets pricing a roughly 40% chance of a 25 basis point rate cut. Key developments that could influence markets on Tuesday: Economics: Eurozone preliminary GDP, CPI for Germany, Spain and Belgium, U.S. job openings. Earnings: Airbus (AIR.PA) , opens new tab, L'Oreal (OREP.PA) , opens new tab, Rio Tinto (RIO.L) , opens new tab, BP (BP.L) , opens new tab, AMD (AMD.O) , opens new tab, Microsoft (MSFT.O) , opens new tab, Starbucks (SBUX.O) , opens new tab, Archer-Daniels-Midland (ADM.N) , opens new tab, Procter & Gamble (PG.N) , opens new tab, Mondelez (MDLZ.O) , opens new tab. Sign up here. https://www.reuters.com/markets/europe/global-markets-view-europe-2024-07-30/

2024-07-30 00:32

MELBOURNE, July 29 (Reuters) - Global miner BHP Group (BHP.AX) , opens new tab and Canada-listed Lundin Mining (LUN.TO) , opens new tab will jointly take over developer Filo Corp (FIL.TO) , opens new tab for C$4.5 billion ($3.25 billion), the companies said on Monday, as they move to progress the South American projects. BHP and Lundin will form a 50/50 joint venture to hold both the Filo del Sol and Josemaria projects around the Argentine-Chile border. BHP and Lundin have offered C$33 per Filo share, reflecting a 12.2% premium to the Canadian copper miner's last close on Monday. Under the deal, BHP is expected to pay a total of $2.1 billion in cash. Reuters reported on July 12 that Lundin and BHP were weighing a joint bid. The deal comes as miners race to build out their pipelines of copper, a metal whose use is expected to underpin the energy transition. The world's biggest miners are increasingly preferring to buy instead of building assets to grow, given rising costs for developing new mines and a blow-out in time lines for regulatory approvals. BHP in May walked away from a blockbuster $49 billion bid to take over Anglo American (AAL.L) , opens new tab which rejected three proposed offers from its bigger rival over the course of six weeks. ($1 = 1.3854 Canadian dollars) Sign up here. https://www.reuters.com/markets/deals/bhp-lundin-mining-buy-filo-325-bln-2024-07-29/

2024-07-30 00:06

MELBOURNE, July 30 (Reuters) - Australian nickel and lithium producer IGO (IGO.AX) , opens new tab will slim down its executive team amid nickel writedowns as Chief Executive Ivan Vella reshapes the company to focus on improving lithium hydroxide production, it said on Tuesday. IGO has undertaken a strategy refresh since Vella joined late last year. Since it bought nickel miner Western Areas for A$1.1 billion ($720.7 million) in 2022, it has written down more than that value on its nickel businesses amid a slump in prices. Details of the refresh are set to be unveiled at the company's annual results on Aug. 29, IGO said, adding that changes in the meantime are expected to result in a smaller team over the coming months. "IGO has commenced a review of the size, structure and capability of its corporate and exploration teams," it said in its quarterly production report. As part of the restructure, IGO will focus on maximising value from its lithium business including its Greenbushes lithium mine, which it owns with China's Tianqi Lithium (002466.SZ) , opens new tab and Albemarle (ALB.N) , opens new tab. It will push for a better performance at its Kwinana hydroxide plant, for which its train 1 will undergo a major shutdown in the December quarter for improvement works, at a cost of A$80 million to A$100 million. It will also look to maximise cash from its nickel businesses which are transitioning to care and maintenance. The miner said it planned to raise production of lithium raw material spodumene by as much as 150,000 tonnes next financial year as it set production guidance at 1.35 million to 1.55 million tonnes. It did not give guidance for lithium hydroxide production. IGO's lithium business is held via a 49% stake in Tianqi Lithium Energy Australia (TLEA) where Tianqi Lithium owns 51%. TLEA owns 51% in the Greenbushes Lithium mine with Albemarle owning 49% and TLEA owns 100% of the lithium hydroxide refinery. ($1 = 1.5263 Australian dollars) Sign up here. https://www.reuters.com/markets/commodities/australias-igo-flags-job-cuts-nickel-price-slumps-2024-07-30/

2024-07-29 23:32

SANTIAGO, July 29 (Reuters) - Saudi Arabia's Manara Minerals is looking at opportunities to invest in lithium production in Chile, mining minister Bandar Alkhorayaf said on Monday during a visit to the South American country. Manara, a joint venture between state-owned miner Ma'aden and the Public Investment Fund (PIF), is "analyzing the different options," Alkhorayaf said in an interview. Saudi Arabia is working to secure access to lithium and other minerals as part of its goal to turn itself into a hub for battery and EV manufacturing as it aims to diversify its oil-dependent economy. Alkhorayaf, the Saudi Minister of Industry and Mineral Resources, said Manara had interest in Chile, the world's second-largest producer of the battery metal. "I think we can see something happening with Manara on the Chilean assets here. It makes a lot of sense," he said, adding that he saw "great commitment" from the Chilean government to help secure investment. He noted that he was not aware of specific discussions underway. Chile's state-run miner Codelco is currently seeking a partner for a major lithium project in the Maricunga salt flat, and the government recently opened a number of other lithium deposits to private investment. Alkhorayaf as well as Manara CEO Pierre Chenard participated in meetings on Monday with Chile's mining ministry in which Codelco participated. Alkhorayaf is also set to meet with Codelco Chairman Maximo Pacheco on Tuesday, as well as miners SQM (SQMA.SN) , opens new tab, Antofagasta (ANTO.L) , opens new tab and CAP (CAP.SN) , opens new tab. Alkhorayaf added that Saudi Arabia is interested in quickly securing supply of lithium, including from Chile, as it aims to produce EV batteries domestically. "We have a leadership that's very ambitious," he said. "We are serious to source it now ... as soon as possible." In a meeting with his Chilean counterpart Aurora Williams, the two discussed the minerals supply chain, water supply issues and lithium, according to Chile's mining ministry. Alkhorayaf also proposed setting up a group between both governments to explore possible collaboration, the ministry said in a statement. The ministry also noted that Chilean President Gabriel Boric is currently visiting the United Arab Emirates, where the two countries are seeking investment opportunities. (This story has been refiled to remove an extraneous word in the headline) Sign up here. https://www.reuters.com/markets/commodities/saudi-arabia-sees-lithium-investment-options-chile-mining-minister-2024-07-29/

2024-07-29 23:00

LONDON, July 29 (Reuters) - Funds have slashed their long positions on the copper market as high and rising inventories cause a collective re-think of the market's short-term prospects. Investors rushed to buy copper during the second quarter, betting the metal would benefit from a turn in the economic cycle and a green energy demand booster. The bull narrative was spiced with concern that supply simply wouldn't keep up, creating yawning deficits and potentially explosive higher prices. The reality has turned out slightly different. China, still the engine room of global copper demand, shows no signs of escaping its property drag. Copper stocks in the country are unseasonally high. Worse, Chinese smelters have been exporting large volumes to London Metal Exchange (LME) warehouses. LME inventory last week touched a three-year peak. The LME three-month price has retreated from its record high of $1,104.50 per metric ton in May to the current $9,000. The bull party is on hold. For now at least. The consensus remains for higher prices later this year. BULL RETREAT Money managers have slashed long positions on the CME copper contract over the course of June and July. Bets on higher prices peaked at 141,204 contracts in May, when the U.S. market was in the grips of a ferocious squeeze. Money managers have since scrambled to get out just as fast they rushed to get in. Long positions have shrunk by 80% to 78,790 contracts. There has been little change in fund positions on the short side, suggesting the action has been a combination of profit-taking by the fortunate and stop-loss selling by the less fortunate on the price retreat. Funds are still collectively net long of CME copper, but net length has been cut from a May peak of 75,342 contracts to just 19,515 as of the close of business last Tuesday. The London market has seen a similar fund exodus, with the collective net long position contracting from a May peak of 71,899 contracts to 29,694 as of the July 22 close. TOO MUCH COPPER Rising copper inventory has undermined a bull narrative of scarcity. Shanghai Futures Exchange (ShFE) stocks this year broke with a seasonal pattern of rapid declines after the lunar new year holidays. They have edged lower in recent weeks but remain above 300,000 tons, a level last seen in 2020 when China was reeling from the first round of its COVID-19 lockdown. A sharp jump in exports, unusual for the world's largest buyer, has added to concerns China's giant manufacturing sector is still struggling to offset demand weakness from the troubled property market. Outbound shipments totalled 231,611 tons in May and June, breaking all previous records. Much of that metal has been shipped to LME warehouses in South Korea and Taiwan, which have seen inflows of 65,050 and 71,600 tons, respectively, since the start of June. Chinese brands represented more than 45% of LME on-warrant stocks at the end of June, up from less than 1% at the start of the year. Copper has also started arriving at CME warehouses, where stocks shrank to just 8,117 tons in July, fuelling the squeeze across the front part of the forward curve. CME inventory has been rebuilt to 12,618 tons with inflows at CME warehouses in Detroit and New Orleans. The relatively modest pace of rebuild reflects the limited delivery options available to shorts. The Chinese metal washing up in the LME system, for example, is not registered for CME delivery. SUMMERTIME BLUES Copper inventories often rise over the Northern Hemisphere summer months, but the combination of stubbornly high stocks in Shanghai and China's recent exports have sapped bullish spirits. The lack of any detailed announcements from China's third plenum has added to the sense of disappointment. Investors, it appears, jumped the gun on copper, causing prices to rise too fast and too soon. Analysts at Citi think "copper prices will struggle for direction in the weeks ahead". But the bank forecasts , opens new tab prices to rise to $9,500 per ton within three months and to touch $11,000 early next year. It's not alone. The median forecast of the latest Reuters quarterly poll of analysts was for the cash LME price to recover from $9,737.50 in the third quarter to $10,000 in the fourth quarter. The lowest forecast for the current quarter was $9,200 and that for the next quarter was $9,000. The price is already there. Analysts evidently aren't looking for much more downside with a solid consensus that the bull rally will resume after the summertime blues. Just as long as not too much more Chinese metal turns up in LME warehouses over the next couple of months. The opinions expressed here are those of the author, a columnist for Reuters. Sign up here. https://www.reuters.com/markets/commodities/funds-dump-copper-rising-stocks-dampen-bull-spirits-2024-07-29/

2024-07-29 22:14

July 30 (Reuters) - Air New Zealand (AIR.NZ) , opens new tab said on Tuesday it would drop its 2030 carbon intensity reduction target, marking a big shift as global airlines struggle to cope with aircraft shortages and tight supply of sustainable aviation fuel. Global conflicts are leading to airlines taking longer routes, raising concerns if the aviation industry could meet the target for net-zero carbon emissions by 2050 that the global trade body International Air Transport Association (IATA) adopted in 2021. "It is possible the airline may need to retain its existing fleet for longer than planned due to global manufacturing and supply chain issues that could potentially slow the introduction of newer, more fuel-efficient aircraft into the fleet", Air New Zealand's CEO Greg Foran said in a statement. The country's flagship carrier said it was considering a new near-term carbon emissions reduction target, adding it remained committed to its 2050 net-zero carbon emissions goal. Sign up here. https://www.reuters.com/business/aerospace-defense/air-nz-dumps-2030-carbon-intensity-reduction-target-2024-07-29/