Connect with us

Economy

CME explores nickel contract after LME trade chaos -sources

Published

on

2/2

© Reuters. FILE PHOTO: A worker displays nickel ore in a ferronickel smelter owned by state miner Aneka Tambang Tbk at Pomala district, Indonesia, March 30, 2011. REUTERS/Yusuf Ahmad

2/2

By Pratima Desai

LONDON (Reuters) -CME Group is talking to market participants about the idea of a cash-settled nickel contract for companies to hedge costs of the electric vehicle battery raw material, two sources with knowledge of the matter said.

Market participants say a viable alternative trading venue would give disgruntled users the opportunity to move away from the London Metal Exchange (LME) where nickel trading was thrown into chaos early in March.

Nickel prices on the LME doubled to a record above $100,000 a tonne within hours in March – as war in major producer Russia lit a fire under an already rallying market.

The spike was driven by expectations that Chinese stainless steel producer Tsingshan Holding Group and others would buy metal to cover substantial short positions.

The LME suspended nickel trade and cancelled deals worth billions of dollars, raising questions about its ability to run an orderly market.

The Shanghai Futures Exchange (ShFE) has a nickel contract, but using it is difficult for non-Chinese firms as they need to be affiliated with a local entity and because it is priced in yuan.

For now, there are no feasible alternatives for hedging or trading nickel, mostly used to make stainless steel. The CME is considering launching a nickel sulphate contract, possibly by the end of this year, the sources said.

Nickel trading volumes on the LME have dropped since the market’s suspension in March. In April the number was 819,108 lots or 4.91 million tonnes compared with more than 1.7 million lots or 10 million tonnes in February.

Both sources with knowledge of the matter said it was not possible to quantify how much volume a CME nickel contract could take from the LME’s contract.

Nickel sulphate is a chemical used to make the cathode component of the rechargeable lithium-ion batteries used to power electric vehicles.

“CME have been talking to market participants, looking at the opportunity and appetite for a nickel sulphate contract,” one source said.

“A financially settled nickel sulphate contract may work, electric vehicles are the future and the auto industry needs to be able to hedge the materials used to make them.”

CME declined to comment.

Benchmark Mineral Intelligence estimates nickel demand for electric vehicle batteries will rise to nearly 1.7 million tonnes in 2030, or 33% of the total, from around 350,000 tonnes or 12% of the total last year.

Industry sources say a cash-settled nickel sulphate future has a better chance of success than a physically deliverable nickel metal contract, which would require producers to deliver metal to CME warehouses.

The CME’s aluminium, zinc and lead contracts are physically deliverable and hampered by a lack of stock in its approved warehouses, industry sources say. The contracts are competing directly with already established LME products.

Volume for CME aluminium at nearly 460,000 tonnes in April is a fraction of the 95 million tonnes traded on the LME.

“The CME can’t offer what the physical market needs, being able to hedge days, weeks, months and years ahead,” a second source with knowledge of the matter said. “Copper is the only CME base metal contract that works and that’s because it’s popular with speculators.”

Some speculators prefer the CME’s copper contract as trades are settled as soon as they are closed, while those on the LME are settled on the third Wednesday of each month.

Economy

Australia’s Ruling Coalition Pledges Improved Budget in Costings

Published

on


© Reuters. Australia’s Ruling Coalition Pledges Improved Budget in Costings

(Bloomberg) — Australia’s ruling Liberal-National coalition said it will narrow the budget deficit by about A$1 billion ($700 million) via cuts to the bureaucracy as it announced costings for its election policies.

Treasurer Josh Frydenberg said Tuesday the government planned to increase an efficiency dividend for public service agencies to 2% from 1.5% over the next three years if re-elected on May 21. The measure will cover the costs of all the coalition’s election announcements while leaving the budget better off.

“It’s a responsible approach,” Frydenberg told reporters in Melbourne. “It ensures our budget bottom line actually improves over time.”

The opposition Labor party is due to release its policy commitment costings on Thursday ahead of Saturday’s ballot.

Australia’s books will remain deep in the red over the four-year horizon set out in this year’s budget, reflecting the hit to growth and vast fiscal spending deployed to support the economy through the pandemic. The center-right government, which is trailing in opinion polls, maintains Labor will increase taxes to pay for higher spending. 

©2022 Bloomberg L.P.

Continue Reading

Economy

ECB to hike deposit rate 25 bps in July, ditch negative rates by end-September: Reuters poll

Published

on


© Reuters. FILE PHOTO: European Central Bank (ECB) headquarters building is seen in Frankfurt, Germany, March 7, 2018. REUTERS/Ralph Orlowski

By Swathi Nair

BENGALURU (Reuters) – The European Central Bank is expected to raise the deposit rate for the first time in over a decade in July and bring it out of negative territory at its following meeting in September, despite a 30% chance of recession within a year, a Reuters poll of economists showed.

With inflation hitting a multi-decade high of 7.5% in April and almost every other major central bank having already raised interest rates, ECB President Christine Lagarde backed calls for an early rate hike by policymakers last week.

The bank is now expected to end its bond purchases programme in July and follow that with a 25 basis-point deposit rate hike a few weeks later, according to a majority of economists polled from May 10 to 16.

Until recently, forecasters were expecting the ECB to wait until the final quarter of the year to raise the deposit rate, currently at -0.50%.

Of the 46 of 48 economists who expect the deposit rate to rise in the third quarter, 26 said rates would rise by 50 basis points by the end of the period, implying quarter-point moves at both the July and September meetings.

Another 18 respondents said the deposit rate would only rise 25 basis points in Q3 and two said it would only climb 10 basis points to -0.40% by the end of the quarter.

An even clearer majority expect rates to no longer be negative by the end of the year. About 90% of economists, or 43 of 48, said the deposit rate would be 0% or higher by then, with 44%, or 21 of 48, saying it would be at 0.25% by then and 8%, or 4 of 48, saying it would be at 0.50%.

“There is widespread support for ending negative interest rate policy at the ECB, but they will take a very cautious approach to policy normalisation, in light of substantial macro uncertainty and concerns about a growth slowdown,” said Jens Eisenschmidt, chief European economist at Morgan Stanley (NYSE:MS).

“This will be the first time in over a decade that the ECB is lifting rates – with no support from asset purchases – so taking smaller steps would allow the ECB to observe the reaction in markets, with a possible fragmentation of financing conditions in the euro area likely a key concern”.

The latest poll results are still lagging rate futures, which are pricing in a cumulative 90 basis points of rate increases for the rest of the year or between three and four 25 basis-point moves.

Even that would leave the ECB well behind the U.S. Federal Reserve, which is currently expected to have its federal funds rate around 2.00-2.25% by the end of this year. [ECILT/US]

However, the poll also found the time window to raise rates is closing for the ECB, with a steady median 30% probability of a recession in the next 12 months, as the war in Ukraine pushes energy prices higher and saps consumer spending power.

The bloc’s economy was expected to grow 0.3%, 0.5% and 0.6%, in the second, third and fourth quarters. This is a downgrade from 0.4%, 0.6% and 0.6% predicted last month.

On an annual basis, it was expected to grow 2.7% this year, down from 2.9% and 2.3% next, the same as predicted last month.

The European Commission cut its growth forecast for the euro zone this year to 2.7% from 4.0% projected in February, and upgraded its inflation forecasts to 6.0% this year from 3.5%.

Rising inflationary pressures, driven by a persistent surge in food and energy prices, have deepened the cost of living crisis in the euro zone.

Prices are set to rise 7.7% this quarter, over three times the ECB’s 2.0% target and higher than the 7.3% prediction given last month. It will ease gradually over coming quarters but medians did not show it at target through next year, the forecast horizon.

Asked what impact the cost of living crisis would have on growth, 19 of 25 economists said it would be severe and two said very severe. Only four said it would be mild.

It will be over six months before the crisis eases significantly according to 90% of the respondents to another question.

Despite recession risks, unemployment in the single currency bloc is expected to remain near record low levels at 6.9% and 6.8% this year and next.

Meanwhile, average wage growth was expected to be 3.0% this year, the poll median showed.

“While current dynamics are triggering higher wage demands, companies are still being cautious due to the weakening outlook,” said Bas van Geffen of Rabobank.

“Anecdotal evidence is therefore also pointing to shorter wage agreements so that there’s flexibility to adjust next year, either higher or lower, depending on inflation. So, so far it still seems to be mostly catch-up wage growth rather than forward-looking”.

(For other stories from the Reuters global economic poll:)

Continue Reading

Economy

Japan’s Nomura targets up to 90% jump in core pretax income in 3 years

Published

on


© Reuters. FILE PHOTO: A logo of Nomura Holdings is pictured in Tokyo, Japan, December 1, 2015. REUTERS/Toru Hanai

TOKYO (Reuters) -Nomura Holdings Inc, Japan’s biggest brokerage and investment bank, said on Tuesday it is targetting an up to 90% jump in pretax income in three years as it plans to beef up digital and advisory services.

Setting out guidance in a mid-term presentation, Nomura said it would target annual pretax income of between 350 billion yen and 390 billion yen ($2.7 billion and $3.0 billion) for its three core divisions in the year to end-March 2025.

That compared to 205.2 billion yen it posted for the year ended in March 2022.

Nomura also said it will create a new digital asset company later this year that will allow institutional investors to trade products linked to cryptocurrencies, stablecoins, decentralized finance and non-fungible tokens.

($1 = 128.9100 yen)

Continue Reading

News

Economy13 mins ago

Australia’s Ruling Coalition Pledges Improved Budget in Costings

© Reuters. Australia’s Ruling Coalition Pledges Improved Budget in Costings (Bloomberg) — Australia’s ruling Liberal-National coalition said it will narrow...

Economy13 mins ago

ECB to hike deposit rate 25 bps in July, ditch negative rates by end-September: Reuters poll

© Reuters. FILE PHOTO: European Central Bank (ECB) headquarters building is seen in Frankfurt, Germany, March 7, 2018. REUTERS/Ralph Orlowski...

Stock Markets13 mins ago

Musk suggests that he could seek to cut price for Twitter buy

© Reuters. FILE PHOTO: A 3D-printed Twitter logo on non-3D printed Twitter logos is seen in this picture illustration taken...

World42 mins ago

U.S. to allow baby formula imports amid nationwide shortage

© Reuters. FILE PHOTO: Empty shelves show a shortage of baby formula at CVS in San Antonio, Texas, U.S. May...

World42 mins ago

Ukrainian troops evacuate from Mariupol, ceding control to Russia

6/6 © Reuters. A bus carrying wounded service members of Ukrainian forces from the besieged Azovstal steel mill in Mariupol...

World43 mins ago

U.S. Air force says it conducted successful hypersonic weapon test

WASHINGTON (Reuters) – The U.S. Air Force said on Monday it had conducted a successful test of a hypersonic weapon,...

Commodities43 mins ago

Oil prices open lower as EU struggles to seal Russia import ban

© Reuters. FILE PHOTO: Oil pump jacks are seen at the Vaca Muerta shale oil and gas deposit in the...

Economy43 mins ago

Japan’s Nomura targets up to 90% jump in core pretax income in 3 years

© Reuters. FILE PHOTO: A logo of Nomura Holdings is pictured in Tokyo, Japan, December 1, 2015. REUTERS/Toru Hanai TOKYO...

Stock Markets1 hour ago

Iraq balks at greater Chinese control of its oilfields

© Reuters. FILE PHOTO: Iraqi Oil Minister Ihsan Abdul Jabbar walks during a Lukoil energy event, in Baghdad, Iraq November...

Stock Markets2 hours ago

Walmart stores expected to post high shopper traffic amid deepening inflation pain

3/3 © Reuters. FILE PHOTO: A worker and a shopper are seen wearing masks at a Walmart store, in North...

World2 hours ago

U.S. Rep. Liz Cheney blasts fellow Republicans after ‘great replacement’ mass shooting

© Reuters. FILE PHOTO: U.S. Representative Liz Cheney (R-WY) testifies before the House Rules Committee in Washington, U.S., December 14,...

Economy2 hours ago

Analysis-Alarmed by Solomon Islands-China pact, NZ finds its voice on security

© Reuters. FILE PHOTO: A car with a New Zealand flag waits for New Zealand Prime Minister Jacinda Ardern outside...

Economy2 hours ago

After delay, U.S. Senate edges toward passing $40 billion Ukraine war aid

© Reuters. FILE PHOTO: Military aid, delivered as part of the United States’ security assistance to Ukraine, is unloaded from...

Stock Markets2 hours ago

India’s Life Insurance Corp set for lacklustre market debut, analysts say

© Reuters. FILE PHOTO: Life Insurance Corporation of India (LIC) logo is seen displayed on a smartphone in this illustration...

Stock Markets2 hours ago

Trump’s social media app may raise up to $50 million before deal closes -filing says

2/2 © Reuters. FILE PHOTO: The Truth social network logo is seen displayed behind a woman holding a smartphone in...

Stock Markets2 hours ago

Abbott, FDA reach agreement to reopen baby formula facility in Michigan

2/2 © Reuters. FILE PHOTO: Abbott Laboratories logo is displayed on a screen at the New York Stock Exchange (NYSE)...

Stock Markets2 hours ago

Dow Futures Little Changed After Mixed Session

© Reuters. By Oliver Gray  Investing.com – U.S. stock futures remained little changed in Monday’s evening trade, after a mixed...

Stock Markets2 hours ago

Third Point’s Loeb turns back on Disney, cools on Amazon in first quarter

3/3 © Reuters. FILE PHOTO: A screen shows the logo and a ticker symbol for The Walt Disney Company on...

Stock Markets2 hours ago

Buffett-backed Nubank beats revenue estimates on strong client additions

© Reuters. FILE PHOTO: A banner for Nubank, the Brazilian FinTech startup, hangs on the facade at the New York...

Cryptocurrency2 hours ago

US federal judge approves of Justice Dept criminal complaint on using crypto to evade sanctions

US federal judge approves of Justice Dept criminal complaint on using crypto to evade sanctions The United States Department of...

World2 hours ago

An oasis in underserved Buffalo neighborhood became killing field

© Reuters. Mourners react while attending a vigil for victims of the shooting at a TOPS supermarket in Buffalo, New...

Stock Markets2 hours ago

GTA publisher Take-Two signals drop in demand from pandemic highs

© Reuters. FILE PHOTO: NBA 2K22 and Grand Theft Auto 5 by Take-Two Interactive Software Inc are seen for sale...

Stock Markets2 hours ago

Intel shareholders reject compensation packages for top executives

2/2 © Reuters. FILE PHOTO: Intel’s logo is pictured during preparations at the CeBit computer fair, which will open its...

Stock Markets3 hours ago

Tencent Music’s Q1 revenue underwhelms as competition heats up

© Reuters. FILE PHOTO: The logo of China’s Tencent Music Entertainment Group is seen next to an earphone in this...

Stock Markets3 hours ago

Tiger Global raised stakes in some tech names battered by year’s rout -filing

4/4 © Reuters. FILE PHOTO: A trader works on the trading floor at the New York Stock Exchange (NYSE) in...

World3 hours ago

Suspect in Buffalo supermarket massacre visited city in March, police say

© Reuters. A Buffalo Police officer stands at the scene of a shooting at a TOPS supermarket in Buffalo, New...

World3 hours ago

U.S. revises Cuba policy, eases restrictions on remittances, travel

2/2 © Reuters. FILE PHOTO: Emigres wave American and Cuban flags outside Versailles restaurant, in reaction to reports of protests...

Cryptocurrency3 hours ago

BIFI gains 100%+ after Beefy Finance adds new vaults and stablecoin liquidity pools

BIFI gains 100%+ after Beefy Finance adds new vaults and stablecoin liquidity pools Winston Churchill’s statement to “never let a...

Commodities3 hours ago

Oil settles higher on demand optimism, gasoline strength

© Reuters. FILE PHOTO: An aerial view shows an Idemitsu Kosan Co. oil facility in Ichihara, east of Tokyo, Japan...

Stock Markets3 hours ago

Rocket Lab USA Shares Gain 5% on Q1 Earnings Beat and Raise

© Reuters. Rocket Lab USA Shares Gain 5% on Q1 Earnings Beat and Raise Rocket Lab USA, Inc. (RKLB) shares...

Trending