October Inflation Report to Outline Latest Price Trends — Commodities Roundup
MARKET MOVEMENTS:
–Brent crude oil edged down 0.5% to $92.25 a barrel.
–European benchmark gas weakened 2.2% to EUR110.63 a megawatt-hour.
–Gold futures edged down 0.1% to $1,711.50 a troy ounce.
–LME copper edged down 0.2% to $8,069 a metric ton.
–Wheat futures edged up 0.3% to $8.09 a bushel.
TOP STORY:
October Inflation Report to Outline Latest Price Trends
The U.S. inflation report for October will show how consumer prices changed last month, signaling whether their rate of increase is easing as interest rates climb.
Strong and broad price pressures fueled rapid inflation in September, the Labor Department said last month. The consumer-price index rose 8.2% from a year earlier, down from annual increases of 8.3% in August and 8.5% in July. June’s 9.1% inflation rate was the highest in four decades.
So-called core CPI, which excludes volatile energy and food prices, rose 6.6% in the year through September-the biggest increase since 1982. That marked an acceleration from 6.3% in August and 5.9% in both June and July.
OTHER STORIES:
Carbon-Credit Proposal Is Facing Hurdles
The U.S. outlined a new carbon-credit plan that aims to pump billions of dollars into developing countries’ energy transition, while some businesses expressed caution over investing in the program.
On Wednesday, U.S. climate envoy John Kerry presented the program, called the Energy Transition Accelerator, at United Nations climate talks in Egypt. The program, he said, aims to enlist investors in efforts to reduce emissions across entire regions or countries by paying developing nations to shut down fossil-fuel energy sources and accelerate the construction of renewable energy.
The current $2 billion carbon-credit market is unregulated, leading to what critics consider low-quality projects that don’t yield durable emissions reductions. Some firms have pledged not to rely on carbon offsets, saying the credits shouldn’t substitute for more direct action to wean their operations off fossil fuels. U.S. officials aim to raise tens of billions of dollars in new funding through ETA.
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ArcelorMittal 3Q Profit Missed Views as Shipments Fell, Energy Costs Hit
ArcelorMittal on Thursday reported third-quarter net income that missed expectations as market conditions deteriorated, marked by lower shipments and higher energy costs.
The Luxembourg-based steelmaker said net income dropped by 78% to $993 million from $4.62 billion for the prior-year period, on sales that declined to $18.98 billion from $20.23 billion in the third quarter of 2021.
Earnings before interest, taxes, depreciation and amortization fell to $2.66 billion from $6.06 billion a year earlier.
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Tate & Lyle 1H Profit Rose, Backs 2022 Market Views; Cuts Dividend
Tate & Lyle PLC said Thursday pretax profit for the first half of fiscal 2023 rose, and said it expects to meet full-year market expectations.
The FTSE 250 provider of food-and-beverage ingredients said pretax profit for the half year ended Sept. 30 was 68 million pounds ($77.2 million) compared with GBP21 million for the first half of fiscal 2022. The company said its food and beverage unit delivered a strong half with broad-based growth across all regions.
MARKET TALKS:
Aluminum Prices Likely to Stay Low Through to 1Q 2023
0900 GMT – Aluminum prices are likely to be held down through to the first quarter of 2023 amid Covid-19 lockdowns in China and weak Western demand, Fitch Solutions says in a note. Fitch expects prices to average $2,725 a metric ton in the final quarter of this year, from its previous expectation of $2,800 a ton, “in light of weaker than expected growth and demand led by the slowdown in Mainland China, an emerging recession in the eurozone, and evidence of market oversupply based on stocks data.” A strong dollar and rising interest rates have acted as further downside risks for aluminum, Fitch says as it lowers its 2023 forecast to $2,600 a ton from $2,700 a ton. Prices on the LME sit at $2,301 a ton on Thursday. (yusuf.khan@wsj.com)
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Oil Selloff Pauses With US CPI Data in Focus
0855 GMT – Oil prices are steady ahead of the U.S. inflation data after tumbling over three days on fears about rising Chinese Covid-19 cases. Brent crude oil is down 0.2% at $92.50 a barrel. Rising Covid-19 cases in China have undone any optimism that Beijing might ease its lockdown measures sooner than expected, and have seen Brent fall 6% this week. Fears about a selloff in cryptocurrencies are further dragging on risk assets while investors await the U.S. CPI print at 1330 GMT, says SPI Asset Management. “Adding to the oil spill, broad-based risk de-grossing, and a sturdy U.S. dollar ahead of the hotly anticipated U.S. CPI data is not helping matters for many oil investors,” the firm says in a note. (xavier.fontdegloria@wsj.com)
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Metals Higher Amid Optimism of a China Covid-19 Policy Relaxation
0833 GMT – Base metals are moving higher as optimism grows among traders that China’s zero-Covid-19 policy will end in the new year. Three-month copper is up 0.1% to $8,085 a metric ton while nickel is up 1% to $25,000 a ton. Nicholas Snowdon, analyst at Goldman Sachs, says in a note that stronger activity in China would be a diversifier for commodities demand “at a time when western demand is slowing but inventories remain critically tight.” Marex’s Zenon Ho added that nickel demand was rising in China on short covering, after a white paper presented at the China International Lithium Battery Industry Conference in Suining on battery supply and demand showed that global battery demand will reach 490 gigawatt hours this year and 1,406 Gwh by 2025. (yusuf.khan@wsj.com)
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Palm Oil Prices Rise, Tracking Soybean Oil
0252 GMT – Palm oil prices rise, tracking gains in CBOT soybean oil, says Low York Hong, AmInvestment Bank head of dealing in futures broking. He thinks there is limited upside for crude palm oil futures amid bearish expectations for Malaysian Palm Oil Board data because of high stockpiles. He pegs crude palm oil futures support at MYR4,160 and resistance at MYR4,497. The MPOB data for October is due at noon. The benchmark Bursa Malaysia Derivatives contract for January delivery is MYR12 higher at MYR4,210 a ton. (yingxian.wong@wsj.com)
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Copper Prices Drop; China Demand Worries Weigh
0246 GMT – Copper prices are lower in morning Asian trade, in line with broad losses in base metals. ANZ Research analysts reckon the decline is likely a result of weak economic data from China, which has raised demand worries. China’s producer prices fell for the first time in almost two years, while the October auto sales data also showed a sequential drop. “Such data suggest growth is anaemic,” the analysts say. Sentiment is likely further dragged by calls from Chinese copper smelters to regulate capacity, which may further pressure demand, they add. The LME three-month contract is down by 0.2% to $8,091.50 a ton. (yifan.wang@wsj.com)
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Chinese Iron Ore Declines; Upside Looks Limited
0233 GMT – Chinese iron-ore prices are lower in early trade, pulling back from a broad rally so far this month amid investors’ rising hopes for looser Covid curbs in China. Yongan Futures analysts point out that the steel-making raw material has likely hit its upper limit after strong gains in recent days. Given iron ore’s current elevated price level, steel producers’ buying sentiment may be turning softer, the brokerage says. Expectations of steel production restrictions in the winter further weigh on demand sentiment, Yongan adds. The most-traded January contract is down 1.8% at CNY673.0 a ton. (yifan.wang@wsj.com)
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Iron Ore Recovery Hinges on Improvement in China’s Steel Demand
0006 GMT – Macquarie closes an August bearish call on iron ore, but with a caveat: “We stress that real signs of improving activity on the ground in China are needed for a sustained rally in ferrous markets to take place.” In a note from its sales desk, Macquarie says the balance of risks for iron-ore prices is starting to shift as some miners cut output. Still, it’s watching for a clear improvement in property sales, construction activity and steelmaking margins. “We are skeptical on China’s ability to ease its Covid-19 policies ahead of Chinese New Year and remain cautious on any rally until we see substantiated signs of improving steel demand,” Macquarie says. Spot iron ore was most recently at $89.55/ton, versus more than $110/ton in early August, according to S&P Global Commodity Insights. (rhiannon.hoyle@wsj.com; @RhiannonHoyle)
Write to Barcelona Editors at barcelonaeditors@dowjones.com
(END) Dow Jones Newswires
11-10-22 0817ET
