Base Metal Markets – August the 23rd

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Wednesday, the 23rd of august – Top 5 things to be aware of:

  1. Trump’s policy focusing on different fronts
  2. Worldwide manufacturing data shows resilience; U.S. in focus
  3. Mario Draghi avoids policy indication ahead of Jackson Hole
  4. Risk interested wavers standing in front of Central Bankers
  5. Oil prices trading lower

 

Volatility of Metals

Metal prices are following some very inspiring movement these days. The early morning trade on LME today went this way:  

We are speaking about morning trade:

This comes after yesterday’s split performance.

When lead led the gains with a 3.2% rally, nickel prices closed up 1% and copper closed up 0.2%. The rest were led lower by a 0.8% decline in tin prices. (Fast Markets data in numbers)

Speaking about precious metals, the prices are up across the board this morning by an average of 0.3%. Inspired by a 0.4% rise in silver prices, spot gold prices are up 0.2% at $1,285.86 per oz. This follows a down day on Tuesday when the complex closed off 0.6% on average, led by a 1% fall in palladium prices. (FM)

 

SHFE today 

Observing the morning trade on the SHFE, the base metals complex is for the most part weaker with prices off an average of 0.4%. Led by a 1.7% drop in tin prices, aluminium and zinc prices are off 1.1% and copper prices are off by 0.1%. 

 

Pointing at 51,570 yuan ($7,739) per tonne. 

Bucking the trend are lead and nickel prices, up by 1.5% and 0.1%, respectively.

Other metals in China are showing some down movement. SHFE rebar prices are down 4.9% and iron ore prices on the Dalian Commodity exchange are down 3.7% at 580 yuan per tonne on the January 2018 contract. The gold and silver prices on SHFE are both down 0.4%.

 

International Markets

In international markets, spot Brent crude oil prices are up by 0.2% at $51.71 per barrel. The income on US ten-year treasuries is firmer at 2.21%, and the German ten-year bund yield is at 0.40%

 

Indexes 

In the end, observing the Indexes and their market movement:

Firstly, the Hang Seng Index is up (+0.9%), the Nikkei (+0.2%), the CSI 300 (0.1%). All of these are higher, while the ASX 200 is off 0.3% and the Kospi is off 0.1%. In the USA, the Dow Jones closed up 0.9% at 21,799.89 and in Europe, the Euro Stoxx 50 closed up 0.94% at 3,455.59.

(Exact Numbers in the Article coming from the Fast Markets.)

 

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New Mining deals: Indonesian government & PT Freeport Indonesia

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Intro

Indonesian Energy Minister announced on Tuesday that Indonesia highly expects to conclude the deals with Freeport McMoRan Inc. About operating in one of their biggest copper mines in Papua. The cooperation should take place in the upcoming decades.

The country’s mining and energy minister announced these ideas.

Speaking about the U.S. deals with Indonesia, the country’s mining giant was in a slight quarrel with Indonesia over the rights at Grasberg mine. This dispute is making huge costs for both sides, and these are estimated at hundreds of millions of dollars.

When reporters asked Minister Ignasius Jonan about the status of current deals & negotiations, he said:

“I expect to have a conclusion this month!” (Jonan says for Reuters) 

 

Mining Permits 

In July this year, Richard Adkerson (FPT CEO) said he for sure expects to conclude this special mining permit before October this year.

“Jonan said, when they finalize the agreement,  and allow Freeport all the needed permits.. They could apply for two 10-year permit extensions to mine at Grasberg beyond 2021.” (Reuters)

Regarding the new rules in Indonesia: Miners have to divest 51% stake, pay taxes and royalties. And in the end they have to relinquish arbitration rights. Freeport insists on all participants to follow these rules.

Reporters asked Mr Jonan did Freeport accepted these 51% divestment, and he said:

“Well if they don’t, they can go. We don’t negotiate that.” (Jonan for Reuters)

 

Real Inside Relations

With the beginning of current year Freeport said talks are in blind alley, and reminded they could do lots of damage for both sides. Then The government explained that they could solve this subject even in court if necessary.

“We will listen. We will accommodate as much as we can, but we cannot accommodate something that is clearly written in the law.” (Jonan for Reuters)

Clearly he wanted to emphasize their willingness to cooperate, but only in the possibilities of legal deals.

Riza Pratama (FT spokesman) said the negotiations with the government are ongoing. And they will soon be concluded clearly if both sides respect the main point.

“(The) four issues in the negotiations are one package deal. Divestment is one of the four issues.”

Real effects

Is he concerned that these happenings could result with some agitated movement inside Papua mine… Pratama says: “I don’t think so … it’s an internal labor issue inside Freeport’s operations.”

 

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Elliott’s BHP acquisition: Dividends Yes; Total Victory – Not yet;

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Who lightened the area?

Firstly, if we observe the subject closely, it is inviting to consider BHP Billiton as the one who gouged into demands by Elliott Advisors. As well they seem to have together agreed about selling BHP’s U.S. onshore oil & gas business.

The main thing to mention is that in an official letter from April, Elliott had 3 major points. Two of which were depriving the U.S. shale assets and pushing up the shareholder returns.

But the thing we ask ourselves is, whether the BHP’s decision was firmly inspired by Elliott.. Or it would have happened either way.

Observing the dividends, it is clear that BHP would follow it’s bigger fellow Rio Tinto moves. Trying to return as much cash as possible to their investors. In particular the huge boost of free cash flow coming from higher prices of their base: Iron ore and Coal.

 

Overview

Last Tuesday BHP said that it would triple its final dividend to $0.43 a share. Which is slightly below the expectations of analysts.

”The world’s largest mining company also posted a five-fold rise in annual underlying profit to $6.7 billion for the year to June 30, which was below the market consensus for earnings of around $7.4 billion. (Reuters)”

It could be argued the increase in the dividend was generous.

Second thing worth mentioning, is that BHP decided to pay down net debt. The debt was at the beggining reduced at $10 billion, and this move is definitely to strengthen the company’s balance sheet.

Furthermore, it is possible that Elliott would have preferred the FCF being generated by BHP & used for a share buyback. Makes it much more effective than being used in cutting debt.

“We have determined that our onshore U.S. assets are non-core.”

“We are actively pursuing options to exit these assets for value.” BHP said in its results presentation (Reuters)

Elliott definitely deserves credits for finding a way to enter BHP’s underperforming assets. It is also clear that at some point they saw that $20 investment in shale, made 6 years ago, was not the greatest move they made.

 

Investors Aims

What is likely to be of more relevance to Elliott, and other investors, is how sustainable are BHP’s increased dividends.

When making a commentary, the company was very cautious. Stating that Crude Oil prices will trend higher. Steel demand will slightly grow. While the cost curve for the iron ore is going to continue flattening.

BHP is seeing a slight uncertainty in China’s metallurgical coal; but the outlook for overseas market is in all positive.

In tanto, it seems that BHP isn’t expecting the prices of its major commodities to rally strong. But, it equally it is not forecasting any important declines.

In conclusion, the company should remain a strong generator of cash.  Adding & assuming it remains committed to capital discipline. Returns to main shareholders can increase. But, it’s highly unlikely that the massive jump in dividends, as the one from June 30th will repeat soon…

 

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Base Metal Market News, August the 21st

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Top 5 things to know today – global markets:

  1. War games start on Korean peninsula
  2. Renewed U.S.-North Korea tensions causing global stocks slide
  3. Dollar still remains defensive on U.S. political tensions
  4. Oil started the week a few percents lower
  5. Maersk sells oil unit to Total for $7.5B as M&A heats up

For detailed info on these subjects visit: http://www.investing.com

Some useful analysis: https://www.reuters.com/article/global-metals-idUSL8N1L22ES

 

Last Three months – overview:

Lately, there has been some really crazy movement happening in the base metal markets. Observing the All-along summer period, we see few metals hitting their highest level in a decade.

Firstly we must pay our attention to the period of may/juni/july/august 2017. During the whole  summer period, base metal markets trade showed some astonishing positive trends.

Secondly, along with the huge volatility which took place in july, the base metal prices now are hitting the great record levels.

Current prices :

Today, the Zinc price is peaking to the level of 3180.50 ! These levels were not seen since the far 2007.

Furthermore, observing the copper and aluminium prices.. Due to cutted supply in energy markets, their prices are hitting the highest prices since 2014 and 2015. This is definitely a very positive incline in all the base metal prices. Which also makes investors confident about further buying\selling steps.

All of this rallies are happening due to tightened supply. And certainly growing demand in the markets. Global demand is supporting the price rallies and this is spreading fast.

 

China’s demand:

Despite China’s industry showing a slight fade in the metal demand in July, the IMF made average growth forecast for period regarding 2018-2020. As China’s zinc production fell in July, lead output rose by couple percent in this period. Currently Chinese infrastructure now is developing and is kept at solid activity showing strength. 

Aluminium output in China fell 8.2 percent in July as capacity cuts started to take their actions. China makes more than half the world’s aluminium, and it is obviously putting China in the most important world’s suppliers.

 

Copper price movements:

Observing the copper prices and their movement, we also notice the important inclines. From may’s high of about 5786, to august’s high of 6596. Freeport power plant in Indonesia was currently hardly affected by floods taking place there. Due to these floods, one of the workers is missing.

Benchmark copper finished 2.4 percent higher in Friday the 18th of august, at $6,532 having touched $6,576.50, the highest since November 2014.

 

Nickel & lead:

Nickel is currently trading at $11,305,  which is the record level regarding the whole summer period, which is then the highest ever since 2014!

Observing the current lead prices, it is trading at $2376.

In all, having observed the summer 2017 period, we can bring the fine conclusion that base metal markets are quiet recovering.

“Momentum funds are buying the strength, piling in as the price rises.” (Reuters)

“The rallies had been supported by expectations of strong global demand and tight supplies.” (Reuters)

 

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Gazprom’s concessions – possibly improved after today’s meeting

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Asian markets trade today

Major markets are closed today, due to holiday. Asian markets were moving flat, after the North Korea’s latest ballistic missile.

North Korea tested the ninth missile this year. It has fired the missile near the country’s cost. It landed in the Sea of Japan. Before landing, the missile was in the air for 6 minutes. The North Korea is constantly facing pressure from U.S. and its historical ally China.

Japan’s benchmark Nikkei 225 index edged higher by 0.13 percent. Observing the South Korea’s Kospi, it added 0.33 percent. This is the seventh straight session of gains for the Kospi.

Later, the S&P/ASX 200 declined after trading flat during early trade. It was edging lower by 0.44 percent. The financials sub-index inspired this fall. It has tumbled 1.16 percent.

Hong Kong’s Hang Seng Index added 0.19 percent. Markets in mainland China are closed for a public holiday today.

Stateside, Wall Street will be closed for Memorial Day. After closing mixed last Friday following the release of the second reading of Q1 GDP numbers. Markets in the U.K. will also be closed for the spring bank holiday.

 

Gazprom

EU antitrust chief Margrethe Vestager will today meet Gazprom’s deputy chief executive. They might possibly discuss the Russian giant Gazprom to improve its concessions. Those contracts aim to end a six year investigation.

Gazprom supplies one third of the Europe’s gas. The state-controled company offered in March to scrap business practices as well as the pricing policy. Because the European Commission sees it as anti-competitive.

These ideas also include exporting its gas to other countries. Investing money in new pipelines, reconsidering monopoly pricing in the Baltic states, Bulgaria and Poland.

Current Gazprom’s concessions are letting clients to renegotiate their decades-long contracts. With prices in it, which are linked to benchmarks. For example, to the European gas market hubs and border prices. Including in Germany as well.

The competition companies seek feedback from Gazprom’s clients and rivals.They are many among those who do not agree that Gazprom should reconsider its policies and invest in new capacities. Also it shouldn’t be refreshing the concessions. Most noteworthy, the Polish state-run company said Gazprom should be punished with a tough finish.

 

The meeting

 

Vestager could possibly demand the slight changes to Gazprom’s concessions at the meeting with Alexander Medvedev.

The Commission confirmed the meeting, but they did not give the specific details. The EU executive is not likely to bow to pressure from Gazprom’s foes and scrap the deal, underlying the thaw in business ties between the bloc and Russia despite tensions over Ukraine and Syria.

For now, Vestager’s line with Gazprom is pretty flexible. Which questions her tough approach towards other giants. For example Alphabet Google, and many others… It puts her attitude in a sharp contrast.

The results of this meeting will be familiar soon. Gazprom may change its concessions, and the new ‘pipeline canals’ may soon be on the way.

 

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The Week Ahead: Crude Oil futures

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Short recollection:

This Friday, oil futures leveled higher. Recovering from the previous 5% drop which was the consequence of higher market expectations related to OPEC. Currently, traders are trying to refresh their attitude about Oil market and OPEC’s further steps.

The U.S. West Texas Intermediate crude July contract came on 90 cents. In percentage, that would be around 1.9%. Later it ended at $49.80 a barrel by close of trade Friday. It touched a two-week low of $48.18 earlier in the session.

U.S. benchmark cut the losses to fewer than 2%. Observing the first 4 days of the week it was slightly oscillating, then it plummeted for 4.8% on Thursday.

Following, on the ICE Futures Exchange in London, Brent oil for July delivery added 69 cents to settle at $52.15 a barrel by close of trade. Before that it was hitting a daily trough of $50.71. This level was not seen since May 12.

OPEC and non-OPEC countries decided on Thursday, in Vienna, to prolong the output cuts. Numbers are the same, million barrels per day until the end of the first quarter of 2018.

The agreement was globally accepted. But some of the market participants were still expecting the deeper cuts. In order for global market re-balance to be achieved sooner.

 

Next OPEC meeting

The next OPEC meeting is scheduled for November this year.

By now, the further production cuts did not have important impact on global inventory levels. Because the countries who are not participating in these output cuts are drilling bigger amounts of their oil. Such as Nigeria, Libya. And of course, the huge U.S. shale outputs.

Baker Hughes on Friday came out with data about U.S. shale drillers. They added rigs for 19th week in a row.

The U.S. rig count rose to the highest levels since April 2015. Declaring that further production gains in their production are ahead.

In order to bring financial markets closer to stability, the deal between OPEC countries and U.S. would be necessary. The constant amounts of Crude oil which are coming from the U.S. shale can only disturb every OPEC’s idea connected with market re-balance.

That definitely won’t be achieved easily, but if achieved would be of a huge value for the global markets.

In the following week, oil traders are going to face weekly information on U.S. stockpiles of crude and refined products on Wednesday and Thursday. In order  to track the real strength of demand in the United States.

Having in mind that Monday is a Memorial Day, the reports on these data will come out one day later than the usual.

Important Events to take place in the upcoming week:

Monday, May 29

Markets in the U.S. are closed for Memorial Day.

Wednesday, May 31

The American Petroleum Institute will publish the weekly report on U.S. oil supplies.

Thursday, June 1

The U.S. Energy Information Administration is to release weekly data on oil and gasoline stockpiles.

The U.S. government is also set to produce a weekly report on natural gas supplies in storage.

Friday, June 2

Baker Hughes will release weekly data on the U.S. oil rig count.

 

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Will OPEC make it to co-exist with U.S. shale oil ?

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At the beginning , they ignored each other. After a while, they went into a bruising fight. Now, finally, they are talking, although with opposing agendas.

The evolution of the relationship between OPEC and the United States oil industry now lasts for about 5 years. 5 years ago, OPEC discovered it has a rival emerging in a core Oil market.

Officials of the U.S. shale bankers were present this week in Vienna, when OPEC held a meeting. After what happened, OPEC is preparing a trip for its officials. Aiming to visit Texas in order to check if it is possible for two industries to co-exist. Because if some new co-existing spirit is suffocated, the major future fights are near.

“We have to coexist,” said Khalid al-Falih,

 

Output Cuts

OPEC now realizes that agreed supply cuts and higher prices only make it easier for the U.S. shale industry to deliver higher profit. While it is aware that shale industry has  found ways of slashing costs. It happened three years ago, when Saudi Arabia ”turned up the taps”.

Permian Basin – the largest U.S. oilfield. Parsley Energy Inc, Diamondback Energy Inc, and others are pumping at the highest rate in years. Now taking advantage of new technology, low costs and steady oil prices to harvest profits at OPEC’s cost.

OPEC’s latest idea is to make certain co-agreements, and hold the prices below $60 per barrel. Meanwhile it is aware of the U.S. shale power, but aims to hinder its growth.

“All shale companies in the U.S. are small companies.” (Noureddine Boutarfa)

“The reality is that at $50 to $60 a barrel, (the U.S. oil industry) can’t break beyond 10 million barrels per day.”

“For all OPEC members, $55 (per barrel) and a maximum of $60 is the goal at this stage.” said Iran’s oil minister.

“So is that price level not high enough to encourage too much shale? It seems it is good for both.”

“We had a discussion on (shale) and how much that has an impact,” said Ecuador Oil Minister Carlos Pérez.

“But we have no control over what the U.S. does and it’s up to them to decide to continue or not.”

OPEC delegates asked Mark Papa, chief executive of Permian oil, to say more about the shale’s potential. He diplomatically did not open the cards.

“In terms of the threat, we still don’t know how much (U.S. shale) will be producing in the near future.” Nelson Martinez, Venezuela’s oil minister said after the talk. (Reuters)

 

Opinions On Shale

UAE Energy Minister Suhail bin Mohammed al-Mazroui, admittedhe didn’t believe U.S. oil production would rise by 1 million bpd next year.

Some of OPEC’s customers are indeed content to see an alternative for their Oil sources. For example India, the world’s third-largest oil consumer, currently said it is looking to the United States for greater supply.

“The new normal has to be accepted.” Dharmendra Pradhan, India’s energy minister said this week at the OPEC meeting.

OPEC will meet again in November. Aiming to reconsider output policy and check if everything was going as planned. While most in the group now seem to believe that shale has to be accommodated, there are still those in OPEC who think another fight is close.

 

 

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Short Overview of main Weekly deals & economic events

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United States

Nasdaq and S&P 500 overcame the last week’s losses. They were at the record levels on Friday’s closing, observing the period of two weeks. Strongly supported by the surge in tech stocks, as well as the political unrest which is taking place in U.S. these days.

 

OPEC & Oil

OPEC and non-OPEC countries have made a deal to extend production cuts for a period of nine months, until March. The deal was made on Thursday. The idea of extending the glut came after the output cuts agreed in November last year failed to rein in the glut in supply. Which has pressured oil prices for nearly three years.

Most of the market participants were expecting deeper cuts. So when the meeting started, prices sharply fell right away, which did not leave the traders impressed. The expectations on Cartel were a bit firmer & OPEC was expected to announce deeper cuts.

However, in order to rebalance the market, OPEC must take wise further steps. Also, observing it relations with with non-member countries, they should become closer.

 

Base Metals

 

Firstly, copper prices on LME closed the day on Friday May 26 below their previous closing prices. They have fallen back from three-week highs earlier.

Three-month copper closed the day at $5,657 per tonne. Coming from its previous closing price of $5,724.

Secondly, copper prices rose earlier on news of the escalating 2 month long strike at the Grasberg mine – the world’s second largest for copper. Where strikes are set to roll into a second month over June. But prices fell back again by the close.

Thirdly, aluminium prices traded loosely flat throughout the day. They dipped at the close to $1,951 per tonne after closing the day on Thursday at $1,960. Aluminium stocks saw a 31,975-tonne injection in South Korea on Friday. Such a move could see prices trade lower, despite the spectre of Chinese cuts hanging over the market.

“While questions remain around the efficacy of proposed Chinese capacity cuts, with the bears pointing to high semi exports as signs that production has actually increased, there is no questioning the buy momentum,” (Alastair Munro)

At friday’s close, the three-month prices of base metals were:
Nickel closed the day at $9,080 per tonne, from its previous closing price of $9,040. Zinc closed at $2,640 per tonne, up from $2,633. Lead closed the day higher at $2,122 per tonne, from $2,084. Tin prices closed at $20,425 per tonne, from $20,400 in Thursday.

 

Brazil’s Vale plans to diversify

 

Fabio Schvartsman, CEO of Vale SA, said that world’s largest iron ore miner plans to resume growth with diversification. And some acquisitions also.

Reporters and market analysts explained that Friday said Schvartsman means to avoid keeping “all eggs in one basket.” Speaking about the firm’s strong reliance on iron ore.

The company is doing a detailed analysis to decide on which operations to expand. For example, its nickel business is not gaining enough profit returns.

Schvartsman has set up working groups in Company, to find out the risks and returns which every of these units gain. The first assessment is to happen in 60 days.

For advises on cost-cutting efforts, Vale has also found a solution. It hired Brazilian consultancy firm Falconi to advise them and help them deal with cost-reduction.

 

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China’s Crude Oil Imports (Current & Forecasts)

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Top 5 things in Today’s Market:

  1. Upward revision in U.S. growth expected, eyes on durable goods
  2. Pound under pressure on election jitters
  3. Oil recovers slightly after brutal OPEC induced sell off
  4. Japanese CPI increases for 4th straight month; China eyes yuan fixing
  5. Global stocks mixed ahead of U.S. holiday weekend

For further info on these subjects: http://www.investing.com

 

After OPEC has brought the decision on extending the output cuts, China’s refiners now have to slow their purchases of oil, for the next 2 months.

China is the world’s top Oil buyer. Interesting fact is that country’s appetite for crude oil fell. Leveling the 8.4 million bpd in April. While in March it reached the top of 9.2 bpd. This will also impact the country’s demand.

Shandong’s individual and independent refiners are facing pressure to cut their production because profit margins are now lower. This is happening due to Beijing’s custody. Beijing aims to refresh taxes and shifting policies, and balance the country’s economy this way.

Some of the refiners have even begun the seasonal work.

 

State Oil majors

China’s state Oil majors plan to put up new refining capacities till the end of this year. This way they aim to replace some import losses.

However, the lower country’s appetite and the demand which is slightly losing its upward momentum lead to a certain conclusion: China’s oil market is possibly slowing the movement.  

“There will be more shutdowns in June, July and possibly August. It’s seasonal but also because the market is not doing well and stocks are plentiful.” (Said manager of one Independent refining company.)

These independent refiners participate in China’s crude demand with 12 %. Since 2015, when they won the rights to import oil – they have been enjoying high profits. Doing so by selling diesel and gasoline throughout Asia. And at the same time expanding domestic sales in unique competition with state firms.

In January this year, Beijing put a ban on all the independents possibilities to export the fuel. This way it was openly  favoring the big state-owned refiners. And it squeezed margins for independents. Beijing  tensed custody on tax practices.

“Some refineries had rushed to buy crude in the first quarter, worried that they could be penalized for slow use of import permits.”

“There were some over-purchases of crude earlier as (plants) were unsure of the quota policy. Now inventories are high everywhere.” (Wang)

 

Further Imports

“Policy headwinds, domestic competition from SOEs (state-owned enterprises) and insufficient storage infrastructure at major port cities will cap imports.”

Observing the inventories in Shandong, diesel’s were pretty high compared to gasoline. Wang (official of one independent refinery) has said that his plant has plans to shut the 90,000 bpd crude units. All of that through July, aiming to improve the current situation.

 

CNPC and CNOOC

China’s state oil companies plan to strengthen the crude oil imports from August onward. Doing so by activating new refineries in Yunnan and Huizhou with combined capacity of 460,000 bpd.

There are some other Country’s projects which will stimulate the crude oil imports in middle-term.

Towards April and May, Beijing has gave permissions for 6 independent refiners to import crude oil. Total permits were around about 280,000 bpd. Some of these approvals are still preliminary, but worth mentioning is that they had the influence over market.

Harry Liu, an analyst at consultancy IHS Markit, estimated China’s total imports have fallen to around 8 million bpd at present, but could climb back to around 8.5 million bpd from around August. (Reuters)

“CNPC and CNOOC will contribute the bulk of the increases in refinery runs later this year. Teapots’ contribution will be smaller as the environment for them to grow has got much tougher this year.” Liu said.

 

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Oil price drops; Base Metals down

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Main economic events in Market Today:

  • U.S. Core Durable Goods Orders (MoM)(Apr) fell to actual -0.2% while forecast was 0.4%
  • U.S. Gross Domestic Product (GDP) QoQ fell to actual 0.7% while forecast was 1.2%
  • U.S. GDP Price Index QoQ rose to actual 2.2% while forecast was 2.0%
  • U.S. Michigan Consumer Expectations came to actual 88.1 while the forecast was 87.0
  • European Central Bank Coeure Speaks

 

Base metals were mostly lower during Asian morning trade today. The Oil price impacted even the base metals movement, and it put a cap on copper price.

“On Thursday, base metals prices had rallied then dropped after the OPEC [Organization of the Petroleum Exporting Countries] announcement and after the dollar strengthened. LME copper prices were supported by issues at Grasberg but gains were checked by concerns over Chinese demand.” (Mailyard Futures, China)
SHFE copper prices will probably continue fluctuating around 46,000 yuan per tonne.

OPEC countries agreed on May 25th about extending the output cuts. However, this had a huge fast impact on Oil prices in negative way. The hedge funds reacted right away, and the global oil price went lower than predicted.
“Since May 15, when the Saudis and Russians announced their intention to extend the cuts for nine months rather than six, prices gained more than $2 in anticipation of an agreement today. Now, prices have roughly returned to May 15 levels,” SG added.

The Brent crude oil price dipped as low as $51 per barrel on Thursday, the lowest since May 15.

Grasberg copper mine strike

Freeport McMoRan Inc said Thursday that mining and milling rates at its Grasberg mine are affected by the extended strike. Also by a “large number” of approximately 4,000 absentee workers. Who were deemed to have resigned.

Increasing labor tension is a further disruption for Freeport. Involved in a long dispute with Indonesia over rights to the giant mine, which has cost both sides hundreds of millions of dollars.

Copper prices leveled three-week highs yesterday.  Concerns about extended disruptions at Grasberg triggered these movements.

“As a result, a large number of these workers were deemed to have resigned, consistent with agreed industrial relations guidelines and prevailing law…”

”When asked to comment, the Union officials were not available.” (Reuters)

The most of Freeport’s 30,000-strong Indonesian workforce is “productively and safely” working.

On May 15, Freeport said the strike is not legal and “voluntary resignation is the consequence” for workers ignoring demands to return to work. The workers who were absent for five consecutive days. (Reuters)

Workers now considered “resigned” are in addition to an estimated 2,000-3,000 workers Freeport placed on absence as of mid-April. At that time, approximately 10 percent of its 32,000 member workforce was “demobilized” under aims to cut the costs

The SHFE September nickel contract fell down for 700 yuan or 0.9% to 75,220 yuan per tonne. It happened  due to concerns over escalating nickel ore exports from the Philippines and Indonesia. And slower demand from the Chinese stainless steel sector.

 

Other base metals lower

Firstly,  July aluminium contract fell 10 yuan or 0.1% to 14,080 yuan per tonne. Secondly, The SHFE July zinc price slipped 40 yuan or 0.2% to 22,205 yuan per tonne.  Following, the SHFE July lead price increased 50 yuan or 0.3% to 15,980 yuan per tonne.

Finishing, the SHFE September tin price decreased 510 yuan or 0.3% to 145,490 yuan per tonne.

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