2025-05-12 05:59

LONDON, May 9 (Reuters) - The price of gallium has been rising ever since China started restricting exports of the exotic metal in August 2023. This is not surprising since China has a near monopoly on global gallium production, just as it does across the critical materials spectrum. Sign up here. How much should we care that the price of something most people have never heard of is trading at 14-year highs? After all, global production last year was just 760 metric tons, according to the United States Geological Survey (USGS). Even at today's elevated prices the world market's nominal value is a modest $550 million. The metal is used in such tiny quantities that there is zero impact on the cost of a mobile phone or an electric vehicle. However, if you're in the semiconductor business it matters a lot. And it matters even more to U.S. defence planners, which is why China chose element number 31 as a metallic pressure point in the first place. THE MULTIPLIER EFFECT Because gallium is used in so many modern technological gadgets, there is a multiplier effect to the economic cost of China's export restrictions. The USGS estimates , opens new tab that a one-year suspension of Chinese gallium exports would translate into a $3.1 billion hit to the U.S. economy. Around half of the decrease would come from the semiconductor sector and the other half from a range of downstream industries such as printed circuit assembly, computers and electric vehicles. China hasn't totally suspended exports, although it has banned direct sales to the United States. But outbound flows have slowed since the dual-use regulations were introduced in 2023. Moreover, the USGS's projections were based on an assumption that the gallium price would rise by a factor of more than 2.5 in the event of a complete export halt. The reality is that the gallium price has more than doubled from $350 per kilogram in July 2023 to $725 and is still rising. The Chinese price, by contrast, is falling as more gallium stays in the domestic market. Physical arbitrage would at other times close the pricing gap but not with China's Ministry of Commerce guarding the gate. THE MILITARY ANGLE Gallium's significance to U.S. military planners is greater still. Indeed, it was the U.S. Defense Advanced Research Projects Agency (DARPA) that helped develop a compound called gallium arsenide, used in radar and precision-guided weapons, and more recently nurtured the next-generation gallium nitride semiconductor chip. The latter is "revolutionizing modern radar, allowing new radar modules to track smaller, faster, and more numerous threats from nearly double the distance," according to , opens new tab The Center for Strategic and International Studies, a non-profit policy research organisation. Gallium nitride-enhanced radars are being deployed in the U.S. Army's Lower-Tier Air and Missile Defense Sensor (LTAMDS), an integral part of Patriot missile defense units, and the F-35 Joint Strike Fighter. And there's probably a whole lot more that we don't know about. Gallium is typical of many critical metals in that its small market size belies an extraordinarily diverse array of applications, many of them at the cutting edge of semiconductor design. Which is why it's no coincidence that China announced its export controls in direct response to U.S. restrictions on next-generation semiconductor chips to China. THE CHINA CHALLENGE Can the West break China's grip on the gallium market? The solution is already at hand, or rather in the tailings pond. Gallium is not particularly rare in the earth's surface but only occurs in sufficient concentrations to extract as a by-product of other minerals, particularly bauxite. China's gallium supremacy has grown alongside its massive build-out of aluminium capacity. The country accounts for 60% of global aluminium output and all that metal needs alumina, which is processed from bauxite. China's alumina refineries aren't the only ones that can generate gallium. It's just that Western companies stopped doing so after China flooded the market at the start of the last decade. That's changing. Rio Tinto (RIO.L) , opens new tab and Indium Corporation have just announced , opens new tab the successful extraction of pure gallium from what was previously a waste stream at Rio's Vaudreuil alumina refinery in Quebec. The next stage will be a pilot plant with capacity of 3.5 tons per year. Greek aluminium producer METLEN (MYTr.AT) , opens new tab is planning to produce 50 tons per year by 2028 as part of a project to lift bauxite and alumina processing capacity. It is one of the European Union's 47 strategic minerals projects. There are two key takeaways here for other critical mineral markets being squeezed by Chinese export controls. Firstly, there is a good chance that the West is already producing many of them but has failed until now to appreciate the value of what was deemed part of the metals processing waste scheme. Rio Tinto, for example, has also started extracting scandium , opens new tab from its titanium operations in Quebec and tellurium , opens new tab from its Kennecott copper smelter in Utah. Both had been operating for many years without anyone thinking it worthwhile to separate out the critical metals in the waste stream. Secondly, it is clear that Western operators are having to learn, or in the case of gallium re-learn, the processing technology needed to separate and refine them. This will take time, particularly since China is in many instances also restricting exports of such technology. But the higher prices ensuing from China's export controls are providing the incentive for ever more Western companies to go back to metallurgy school. The opinions expressed here are those of the author, a columnist for Reuters https://www.reuters.com/markets/commodities/gallium-lens-chinas-minerals-dominance-how-break-it-andy-home-2025-05-09/

2025-05-12 05:12

U.S. and China agree to 90-day pause on tariffs Saudi Aramco expects oil demand to remain resilient this year Iraq oil exports on track to decline in May and June NEW YORK, May 12 (Reuters) - Oil prices rose about 1.5% to settle at a two-week high on Monday, after the U.S. and China agreed to temporarily slash tariffs, raising hopes of an end to the trade war between the world's two biggest economies. Brent crude futures rose $1.05, or 1.6%, to settle at $64.96 a barrel. U.S. West Texas Intermediate (WTI) crude gained 93 cents, or 1.5%, to settle at $61.95. Sign up here. Both benchmarks notched their highest settlements since April 28. The U.S. and China tapped the brakes on tariffs, sending Wall Street stocks, the U.S. dollar and crude prices sharply higher on hopes the world's two biggest oil consumers can end a trade war that has stoked fears of recession. "This was a larger-than-expected de-escalation and represents an upgrade to the outlook, though the negotiation process will likely remain challenging," analysts at bank ING said in a note. U.S. Federal Reserve Governor Adriana Kugler said the trade deal could make it less necessary for the Fed to cut interest rates to stimulate the economy. This pressured oil prices in early trading, since lower rates can boost oil demand. In April, oil prices fell to a four-year low as investors worried the U.S.-China trade war could depress economic growth and oil demand. Also, the Organization of the Petroleum Exporting Countries (OPEC) decided to boost oil output by more than previously expected. In Saudi Arabia, the biggest producer in OPEC, oil giant Aramco (2222.SE) , opens new tab said it expects oil demand to remain resilient this year and sees further upside if the U.S. and China resolve their trade dispute. In Iraq, OPEC's No. 2 producer, crude exports were on track to decline to around 3.2 million barrels per day (bpd) in May and June, which would be a significant reduction from previous months. Oil prices gained support after Norwegian energy firm Equinor (EQNR.OL) , opens new tab said it temporarily halted output from the Johan Castberg oilfield in the Arctic Barents Sea to make repairs. In the Black Sea, Black Sea CPC Blend exports via the Caspian Pipeline Consortium system were on track to ease to 1.5 million bpd in May from 1.6 million bpd in April. In Mexico, PMI, trading arm of state-owned energy company Pemex, anticipates a reduction in crude exports this year as more will be sent to local refineries, especially the new Olmeca refinery. LOTS OF TALKS Ongoing talks between the U.S. and Iran over Tehran's nuclear program could pressure crude prices, since Iran is OPEC's No. 3 producer and any nuclear deal could reduce sanctions on Iran's exports. Russian crude supply could also increase on global markets if U.S.-brokered talks result in peace between Russia and Ukraine. Ukrainian President Volodymyr Zelenskiy said he was ready to meet Russia's Vladimir Putin in Turkey on Thursday after U.S. President Donald Trump told him publicly to immediately accept the Kremlin leader's proposal of direct talks. Trump raised the prospect of joining talks between Russia and Ukraine in Turkey. Russia was the world's No. 2 oil producer in 2024, according to data from the U.S. Energy Information Administration. A deal between Russia and Ukraine could reduce sanctions on Moscow and boost the amount of oil Russia can export. In India, Prime Minister Narendra Modi warned Pakistan that New Delhi would target "terrorist hideouts" across the border again if there were new attacks on India and would not be deterred by what he called Islamabad's "nuclear blackmail". India is the world's third biggest consumer of oil. https://www.reuters.com/markets/commodities/oil-prices-rise-us-china-trade-talks-soothe-market-jitters-2025-05-12/

2025-05-12 04:33

A look at the day ahead in European and global markets from Wayne Cole. Take your pick from "substantial progress", "constructive", "an important first step", "reached important consensus", "good news for the world", and easily the best: "As we say back in China, if the dishes are delicious, the timing doesn't matter". Sign up here. All were uttered by negotiators during the U.S.-China trade talks over the weekend in Geneva, and they do sound like progress compared with the jingoistic war of words that marked the initial announcement of President Trump's 145% tariffs. What was lacking was specifics, and it was notable that neither team mentioned actual tariff levels at all over the weekend. A joint statement is expected later on Monday, which may offer more detail, though markets doubt the White House take that a "deal" is being done. It's an odd world where investors trust the word of a communist one-party state over the United States. Anyway, markets are relieved that weapons weren't drawn during the talks and have pushed S&P 500 futures up 1.4% and Nasdaq futures almost 2%. European stock futures have gained 0.8% or so. The dollar is up modestly on safe havens and Treasuries have suffered knee-jerk selling as the market further trims its expectations on the pace of future Fed rate cuts. The odds for a June easing are now priced at just 17%, with July at 59%. Futures imply 63 basis points of cuts this year, compared with more than 110 bps in mid-April. Helping the mood was the fragile ceasefire holding between India and Pakistan, while Ukrainian President Volodymyr Zelenskiy said he was ready to meet Vladimir Putin in Turkey on Thursday for talks. As for the economic diary, U.S. CPI on Tuesday might hint at price rises to come, although analysts assume the first clear impact of tariffs will show in the May report. Retail sales are forecast to be flat for April, with the risk likely to the downside given the chilling effect that the announcement of import levies had on consumer sentiment. One assumes tariffs won't be applied to the gold-decked 747 Trump plans to accept from the Qatari royal family. Membership has its privileges, it seems. Key developments that could influence markets on Monday: - Eurogroup meeting includes ECB board members Cipollone and Buch; appearances by BoE Deputy Governor Lombardelli and policymakers Greene, Mann and Taylor. - Fed Board Governor Kugler speaks on the economic outlook https://www.reuters.com/markets/europe/global-markets-view-europe-2025-05-12/

2025-05-12 04:08

China registered some 67,000 bpd of mixed bitumen imports from Brazil since July worth $1.2 bln Shippers tamper with the tankers' signal to make them look like departing from Brazil Apart from shortening voyages, the practice helps secure bank financing SINGAPORE, May 12 (Reuters) - Traders have rebranded more than $1 billion of Venezuelan oil shipments to China as Brazilian crude over the past year, according to two tanker tracking firms, company documents and four traders, helping buyers to cut logistics costs and circumvent U.S. sanctions. Independent refiners in China are the main buyers of seaborne oil shipments from countries sanctioned by the United States, with offshore Malaysia serving as a key trans-shipment hub for Venezuelan and Iranian crude. Sign up here. Since July 2024, however, traders have also rebranded Venezuelan oil as from Brazil. This has enabled tankers to sail directly from Venezuela to China, skipping the stop-over in waters off Malaysia and shortening the voyage by about four days. Washington has imposed sanctions on Venezuelan energy exports since 2019 to reduce the oil export revenue that funds the government of President Nicolas Maduro, who has held power for more than a decade with elections that observers say were fraudulent. Maduro and his government have rejected sanctions by the United States and others, saying they are illegitimate measures that amount to "economic war" and are designed to cripple Venezuela. Since sanctions have been in place, oil traders have transferred oil from one ship to another at sea to disguise the origin of Venezuelan crude before it is shipped to China, which is the world's biggest crude importer. More recently, shippers have tampered with the tankers' location signal to make it look like vessels are departing from Brazilian ports when they are actually sailing from Venezuela, according to maritime data, satellite imagery and shoreside photos compiled and analysed by monitoring service TankerTrackers.com. This practice is known as spoofing. According to Chinese customs data, China imported about 2.7 million metric tons, or 67,000 barrels per day (bpd), of mixed bitumen from Brazil between July 2024 and March 2025, worth $1.2 billion. Chinese refiners regularly buy Brazilian crude but Brazil rarely exports any bitumen blend, according to state oil company Petrobras (PETR4.SA) , opens new tab. Brazilian customs data records no export of bitumen blend to China since at least 2023. Mixed bitumen, or bitumen blend, is a tar-like residue for processing into asphalt. However, Brazil's typical crude grades for export are classified as medium-sweet oil from its prolific offshore fields known as pre-salt. "What we export to China is mainly crude oil from the pre-salt, it's not bitumen," Petrobras CEO Magda Chambriard told reporters on the sidelines of a conference in Houston last week. Many crude cargoes entering China branded as Brazilian bitumen actually contain Venezuela's Merey, the flagship heavy crude typically bought by China's independent refiners from Venezuela's state-run PDVSA through intermediaries, according to the trading sources, tanker tracker Vortexa Analytics and internal PDVSA documents reviewed by Reuters. Traders have long branded Merey as bitumen blend, Chinese traders have said, because refiners do not need government crude oil import quotas to bring in the tar-like oil. To effect the switch, dealers change the documentation of the shipments to Brazilian origin by providing a new certificate of origin for the oil, without sending vessels near Brazil or going through any ship-to-ship operations, three of the traders said. This year, several vessels chartered by an intermediary of Venezuelan crude, Hangzhou Energy, have "spoofed" their signals - artificially placing them in Brazil while loading in Venezuela, according to PDVSA documents and the data compiled by TankerTrackers.com. Reuters was unable to locate a contact for Hangzhou Energy, which according to the PDVSA documents has loaded crude from Venezuela as an intermediary since 2021. The Liberia-flagged tanker Karina loaded 1.8 million barrels of Venezuelan Merey 16 crude for Hangzhou Energy in February under the name "Katelyn", according to one of the documents and TankerTrackers.com. It spoofed its signal while in Venezuela, making it appear that it had departed from Brazil. It discharged at China's Yangpu port in early April, according to TankerTrackers.com. China's customs agency did not immediately respond to a request for comment. PDVSA, Venezuela's oil ministry and Brazil's government did not reply to requests for comment. COST SAVER Apart from shortening the voyage and saving the ship-to-ship costs, passing cargoes off as Brazilian helps to secure bank financing, said one of the traders, a regular dealer of Venezuelan oil. "The savings on the freight front are not much, but it helps securing financing, relieving traders' financing pressure throughout the two-month-long voyages," the person said. The traders declined to be named due to the sensitivity of the subject. China, like Venezuela, has repeatedly said it opposes unilateral sanctions. China is the main destination for Venezuela's crude exports. Venezuela sent some 351,000 bpd of oil and heavy fuel to China last year. Volumes increased to 463,000 bpd in the first four months of 2025, according to PDVSA documents and shipping data compiled by Reuters. Most of China's imports of Venezuelan oil are still declared as Malaysian, either as Malaysian crude or mixed bitumen, traders have said, with less than 10% officially reported as Venezuelan. https://www.reuters.com/business/energy/traders-rebrand-venezuelan-oil-china-brazilian-sources-tanker-trackers-say-2025-05-12/

2025-05-12 00:10

Dollar rallies as US, China reach deal to cut tariffs Safe-haven currencies yen, Swiss franc weaken US inflation, retail sales data in focus this week India-Pakistan ceasefire helps support risk sentiment NEW YORK, May 12 (Reuters) - The dollar surged on Monday as the United States and China reached a deal to temporarily cut reciprocal tariffs and tamped down concerns that a trade war between the world's two biggest economies could lead to a global recession. The U.S. will reduce extra tariffs it imposed on Chinese imports in April to 30% from 145% and Chinese duties on U.S. imports will fall to 10% from 125%, effective for 90 days. The de-escalation surpassed investor expectations, with many expecting an introductory round of talks with few, if any, agreements. Sign up here. "It's 90 days and so this basically buys some more time, I sort of think the U.S. blinked," said Marc Chandler, chief market strategist at Bannockburn Global Forex in New York. "I'm not a big fan of the tariffs in the first place, but once they were in place, the U.S. seemed to back down without getting much in exchange. That is, we stopped with our reciprocal tariffs on China and so they unwind their reciprocal tariffs on us, but we're still back at square one," Chandler said. The dollar index , which measures the greenback against a basket of currencies including the yen and the euro, rose 1.5% to 101.91, with the euro down 1.54% at $1.1074 and on track for its biggest one-day decline since November 6. The risk-on mood propelled U.S. stocks sharply higher, with the S&P 500 up more than 3%, and weighed on safe-haven currencies, with the dollar up 2.19% against the Japanese yen to 148.50 after reaching 148.64, its highest level since April 3. Against the Swiss franc , the dollar rose 1.86% to 0.847 after reaching 0.8475, its highest since April 10. Sterling weakened 1.07% to $1.3162 and was on track for its biggest daily drop since April 7. While the greenback has strengthened for three straight weeks on growing optimism over potential trade deals, the dollar is still down 2.2% since April 2, when Trump announced sweeping tariffs as his uneven rollout of policies and exemptions shook confidence in U.S. assets. The focus this week will also be on U.S. Consumer Price Index (CPI) figures on Tuesday and on April retail sales due on Thursday for indications of how the global trade conflict has impacted the economy and expectations for further interest rate cuts by the U.S. Federal Reserve. Traders on Monday dialed back on rate cut expectations by the Fed and European Central Bank as economic prospects improved after the Sino-U.S. trade deal. Markets now see the first cut of at least 25 basis points (bps) from the Fed as likely to come at the central bank's September meeting, compared with the July view last week. Analysts at Wells Fargo said the deal supports the firm's near-term view for U.S. dollar strength, buttressed by a Fed that would be slow to cut rates. The Chinese yuan strengthened 0.52% against the greenback to 7.201 per dollar. Meanwhile, geopolitical tensions also appeared to ease over the weekend, further buoying risk sentiment. India and Pakistan announced a ceasefire following four days of fighting between the nuclear powers which had rattled markets. Ukrainian President Volodymyr Zelenskiy said he was ready to meet Russian leader Vladimir Putin in Turkey on Thursday for direct talks. That would be the first negotiations between the two countries since the early months of Russia's 2022 invasion. https://www.reuters.com/world/china/dollar-gains-versus-yen-us-china-trade-optimism-kiwi-climbs-2025-05-12/

2025-05-11 23:38

Geneva talks hailed as 'substantial progress' China says important consensus reached USTR Greer describes result as 'a deal we struck' Bessent, Greer to announce details on China talks on Monday No mention of tariff reductions from US officials, White House GENEVA, May 11 (Reuters) - The U.S. and China ended high-stakes trade talks on a positive note on Sunday, with U.S. officials touting a "deal" to reduce the U.S. trade deficit, while Chinese officials said the sides had reached "important consensus" and agreed to launch another new economic dialogue forum. Neither side released details after they wrapped up two days of talks in Switzerland. Chinese Vice Premier He Lifeng said a joint statement would be released in Geneva on Monday. Vice Commerce Minister Li Chenggang said it would contain "good news for the world." Sign up here. U.S. Treasury Secretary Scott Bessent and Trade Representative Jamieson Greer described "substantial progress" and also said details would be announced on Monday. In separate briefings with reporters, neither side mentioned any agreement to cut U.S. tariffs of 145% on Chinese goods and China's 125% tariffs on U.S. goods. Greer and Bessent took no questions from reporters. The U.S. Treasury chief has said previously that these duties amount to a trade embargo between the world's two largest economies and need to be "de-escalated." Financial markets have been on edge for signs of a thaw in a bitter U.S.-China trade war that has already begun to disrupt supply chains, prompt layoffs and raise wholesale prices. Greer described the Geneva meetings' conclusion as "a deal we struck with our Chinese partners" that will help reduce the $1.2 trillion U.S. global goods trade deficit. "And this was, as the secretary pointed out, a very constructive two days," Greer said. "It's important to understand how quickly we were able to come to agreement, which reflects that perhaps the differences were not so large as maybe thought," Greer said. The U.S. trade chief called He, Li and Vice Finance Minister Liao Min "tough negotiators." Vice Premier He, speaking to reporters at China's mission to World Trade Organization, described the talks as "candid, in-depth and constructive" on issues of concern to both countries. "The meeting achieved substantial progress, and reached important consensus," He said, drawing applause from a large audience of Chinese officials present at the WTO office. He also met with WTO Director General Ngozi Okonjo-Iweala, who said she was "pleased with the positive outcome" of the talks and urged the two countries to build on momentum to mitigate trade tensions. The WTO has ruled against Trump's past tariffs on Chinese goods, but the cases have been stalled in the WTO's paralysed appellate body due to the U.S. blocking judge appointments. NEW CONSULTATION PLATFORM The U.S. and China agreed to establish a new consultation mechanism for trade and economic issues, with relevant details to be finalized as soon as possible, He added. China and the U.S. have convened numerous consultation bodies to try to resolve trade and economic differences in recent decades, including the Economic Working Group that former president Joe Biden's Treasury secretary, Janet Yellen, established with Vice Premier He in 2023. These dialogues have provided forums for airing bilateral grievances, but have done little to advance Washington's longstanding goal to shift China's state dominated, export-driven economic model toward one driven by consumer spending. FIRST MEETING The meeting was the first face-to-face interaction between senior U.S. and Chinese economic officials since Trump took office and launched a global tariff blitz, declaring a national emergency over the U.S. fentanyl crisis and imposing a 20% tariff on Chinese goods in February. Trump followed with a 34% "reciprocal" duty on Chinese imports in April, and subsequent rounds pushed the rates into triple digits, bringing nearly $600 billion in two-way trade to a standstill. China had insisted that tariffs be lowered in any talks. Trump said on Friday that an 80% tariff on Chinese goods "seems right," suggesting for the first time a specific reduction target. Greer said there was a lot of groundwork done before the Geneva meetings on Saturday and Sunday, and that the result would address the national emergency that Trump declared over growing U.S. trade deficits. "We’re confident that the deal we struck with our Chinese partners will help us to work toward resolving that national emergency," Greer said. A White House press release that simply repeated Bessent's and Greer's brief comments with no details ran the headline: "U.S. announces China trade deal in Geneva." MORE TARIFF DEALS Earlier on Sunday, White House economic adviser Kevin Hassett said the Chinese were "very, very eager" to engage in discussions and rebalance trade relations with the U.S. Hassett also told Fox News' Sunday Morning Futures program that more foreign trade deals could be coming with other countries as soon as this week. Last week's limited trade deal with Britain left 10% U.S. duties in place on many UK products. Hassett said he had been briefed by U.S. Commerce Secretary Howard Lutnick on two dozen pending deals in development with USTR Greer. "They all look a little bit like the UK deal but each one is bespoke," Hassett said. Overnight, Trump gave a positive reading of the talks, saying on his Truth Social media platform that the two sides had negotiated "a total reset... in a friendly, but constructive, manner." GATED VILLA The teams met at the gated villa of Switzerland's U.N. ambassador, overlooking Lake Geneva in the leafy suburb of Cologny. Black Mercedes vans with sirens shuttled to and from the venue, bathed in bright sunshine. Neutral Switzerland was chosen as the venue following approaches by Swiss politicians on recent visits to China and the U.S. Washington is seeking to reduce its $295 billion goods trade deficit with Beijing and persuade China to renounce what Washington calls a mercantilist economic model, a shift that would require politically sensitive domestic reforms. https://www.reuters.com/world/us-bessent-hails-substantial-progress-trade-talks-with-china-2025-05-11/