Commodities - General News 04 (May 18 - Dec 26)

[winston]

Metals traders lose at least one billion yuan as ‘Hat’ flees China

Chinese metals traders have racked up losses totalling at least one billion yuan (S$183 million) after one of their counterparties fled the country, leaving deals unfinished, alarming top regulators worried about hidden financial risks.

At the heart of the crisis is a trading network facilitated by Xu Maohua, a metals dealer nicknamed The Hat.

State-backed SDIC Commodities was the highest-profile participant.

Regulators have been particularly bothered by so-called circular trading, where companies buy and sell the same asset among themselves to create the illusion that revenue has been generated.

SDIC Commodities is a trading unit of State Development & Investment, a government conglomerate with annual sales of nearly 200 billion yuan.

Source: Bloomberg

https://www.businesstimes.com.sg/intern ... lees-china

[behappyalways]

Trump Launches $12 Billion Strategic Mineral Stockpile To Counter China; Rare Earth Stocks Jump
https://www.zerohedge.com/markets/trump ... hares-jump

[behappyalways]

we are at a crossroad where the most insane technological breakthrough of our generation will require massive amounts of raw materials for the buildout, at a time where mining industry has been under invested in for decades. you cant reverse decades of underinvestment by having a few good years.
https://x.com/Bluntz_Capital/status/2023179853491745017

[winston]

How the Iran war set off a global scramble for strategic metals

High-intensity warfare has rapidly depleted inventories of rare metals among combatants

The price of tungsten, a metal used in armour-piercing gear and missile counterweights, has surged, with its European benchmark hitting a record US$2,250 per tonne, up 557 per cent over the past year.

Germanium used in thermal imaging systems, antimony needed for infrared detector chips, and the strategic metals tantalum and niobium – have also jumped.

By 2040 global lithium demand could increase fivefold, while demand for graphite and nickel could double.

Demand for cobalt and rare earth elements is projected to rise 50 per cent to 60 per cent, and copper demand is expected to grow about 30 per cent.

In October 2025, the Department of Defense sought to procure as much as US$1 billion in key minerals, including up to US$500 million in cobalt, US$245 million in antimony, US$100 million in tantalum and about US$45 million in scandium as part of a global reserve initiative.

The accelerated integration of artificial intelligence and drones into combat systems, boosting demand for tungsten and rare earths.

China’s smelters handle 60 to 70 per cent of the world’s antimony, 80 per cent of its tungsten, and over 90 per cent of its gallium. The country also refines 70-80 per cent of global cobalt, 65 to 70 per cent of its lithium, and about 90 per cent of rare earths.

Source: Caixin Global

https://www.businesstimes.com.sg/intern ... gic-metals

[winston]

Why it is commodities’ turn to shine
The asset class has risen 17% year to date

Brent crude futures prices are averaging north of US$100 per barrel since the escalation, versus a five-year average of US$81 per barrel.

by Wayne Gordon

Within power and resources, we favour high-quality companies with resilient and defensive growth profiles.

While industrial metals could be hurt by growth downgrades, we see a recovery ahead, thanks to supply constraints and structural demand for electricity infrastructure.

we believe that selling volatility is an attractive strategy to capitalise on limited price downside for silver and platinum and generally elevated option volatility.

The outlook for agriculture remains constructive, as geopolitical risks and uncertainty in crop input markets keep upward pressure on prices.

Source: Business Times

https://www.businesstimes.com.sg/wealth ... turn-shine

[winston]

Fears of recession, demand destruction in industrial metals loom as US-Iran war drags on

Analysts note that Asia is most vulnerable to volatility in base metals due to a lack of buffers

by Benicia Tan

China alone consumes 54 per cent of the world’s copper and 57 per cent of aluminium.

South-east Asian exporters such as Vietnam, Malaysia and Thailand face a “double squeeze” resulting from higher input costs and war-risk surcharges on the shipping routes they depend on, he added.

In comparison, Europe’s pain is concentrated mainly in the supply of aluminium from Gulf smelters, and North America has partial insulation from domestic production and reshoring. These are buffers which Asia lacks.

Rising metal prices could lead to cost inflation, which affects both upstream processing and downstream manufacturing of electric vehicles, electronics and construction.

Real estate, infrastructure and cars are likely to be badly hit as a result of the rise in aluminium prices.

Source: Business Times

https://www.businesstimes.com.sg/compan ... -war-drags

[winston]

The commodities supercycle is here. How might investors participate?

By TAOSHA WANG

Within the S&P 500, energy and materials together account for only about 6% of the index, compared with more than 30% for the Magnificent Seven tech giants.

While physical commodities primarily respond to current and near-term supply-demand imbalances, commodity-related equities are impacted by a host of other factors, including each company’s hedging policy, capital allocation decisions, project pipelines, position in the commodity value chain, location and even geological issues.

Source: The Star

https://www.thestar.com.my/business/ins ... articipate