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Mid East Info
30-04-2025
- Business
- Mid East Info
Copper navigates energy transition, supply shocks, and market turmoil – Saxo Bank MENA - Middle East Business News and Information
Ole Hansen, Head of Commodity Strategy, Saxo Bank The combination of increased power demand for cooling and data centres, as well as the transition to cleaner energy sources and the push to mitigate climate change, will reshape commodity markets in the coming years. Governments and corporations around the world are currently investing heavily in renewable energy infrastructure, electric vehicles, and energy-efficient technologies—driving demand for key transition metals such as: Copper, essential for electrical grids, EVs, and battery storage Aluminium, widely used in lightweight transportation and solar panel frames Lithium, cobalt, and nickel, crucial for battery technologies Silver and rare earth elements, vital for solar panels, wind turbines, and advanced electronics Platinum, used in hydrogen fuel cells, electrolysers for hydrogen production, catalytic converters, and advanced battery technologies Rising global temperatures are increasing the demand for cooling technologies, such as air conditioning—with the recent heatwave across the Southern Hemisphere a stark reminder. Together with growing power demand from data centres handling AI and cloud computing, and industrial electrification, these developments will further boost power consumption. This will increase demand for copper due to its excellent electrical conductivity, making it ideal for wiring and components crucial to efficient power transmission and distribution—an increasingly important factor as renewable energy sources are integrated into the grid. However, for now, global financial markets have been unsettled by Trump's aggressive trade policies, sparking threats of retaliation and a broad selloff on concerns that a global trade war at the current scale and magnitude will drive an economic slowdown—not least in the US, where inflation forecasts have spiked, and consumer and business sentiment has fallen sharply in recent months. These concerns are reflected in the copper–gold ratio, which has slumped to a multi-year low. Investors have rushed into gold amid concerns over economic growth, inflation, and financial stability—driving up its price. Meanwhile, copper, despite its long-term bullish potential, has struggled in the face of stagflation risks in some regions. These are only partly offset by continued strong demand from the energy transition. The ratio is likely to bounce eventually, but not until solutions are found to the many major challenges the world currently faces, both from a geopolical and economical perspective. Returning to the present situation in the copper market, fears of US tariffs on copper imports remain a key factor setting the agenda in recent months. Since January, the New York-traded High Grade copper future has risen strongly relative to the global benchmark price set in London, as traders attempt to anticipate the eventual level of tariffs, with the premium currently trading around 13–15%. Put simply, the current premium in New York is not due to strong end-user demand, but rather major stockpile shifts to the US. While this creates a windfall for traders able to source and ship copper to the US, these flows—most of which will remain in the US until consumed—will exacerbate an already tight global market in the second half of 2025. Goldman Sachs in a recent report estimated that 45-60% of global reported copper inventoreis could end up in the US by Q3 2025, and with the US only accounting for 6% of global refined demand, the rest of the world could be left with very low stocks of this important transition metal. The recent rush to ship copper to the US has triggered a sharp reduction in warehouse stocks monitored by futures exchanges in London and, notably, Shanghai. China's inventories fell by almost 55,000 tonnes last week—the biggest weekly drop on record. With the LME seeing a 10,000-tonne decline, these were only partly offset by an 8,000-tonne increase at COMEX. The reduction is only partly explained by continued flows towards the US ahead of an expected tariff announcement, with more copper currently at sea expected to reach US warehouses in the coming weeks. In fact, Mercuria, the commodities trading house, recently told the Financial Times that China's copper stockpiles could dwindle to nothing in just a few months. The market is undergoing 'one of the greatest tightening shocks' in its history due to fears of US tariffs. At the same time, traders in China are reporting a surge in domestic demand, driving up the premium for imported copper. This suggests that, despite concerns over economic growth, price support will likely persist in the short term—and especially over the long term—as global electrification continues to drive ever-increasing copper demand. A report from the International Energy Forum published last May stated that meeting the world's electrification goals will require 115% more copper to be mined over the next 30 years than has been mined in all of history. Exploration spending from miners reached a decade high in 2024; however, the sector faces long-term supply constraints due to a lack of new discoveries, longer development timelines, declining ore quality, and average discovery costs now four times higher than two decades ago. While mining companies extracting precious metals—especially gold—have seen strong year-on-year gains (e.g. a 41% increase in the VanEck Gold Miners ETF, which tracks a basket of major mining companies), copper-focused miners have experienced more muted performance, given the aforementioned challenges. However, with demand and prices expected to remain robust despite current global growth worries, the sector probably deserves renewed attention—or at least a place on the radar for potential investment.
Khaleej Times
31-03-2025
- Business
- Khaleej Times
Commodity prices show strength in the first quarter
The commodities sector has emerged as one of the best-performing asset classes this year, research shows. The Bloomberg Commodities Index, which tracks the total return of 24 major futures markets, spread close to evenly between energy, metals, and agriculture, has traded up 12.2 per cent in the past twelve months, with the bulk of that gain being achieved within the last three months. The year-to-date return shows a 7.9 per cent gain, well above the return seen on some of the major equity market indices. On a sector level, precious and industrial metals stand out, having delivered returns this quarter of 15.2 per cent and 12.5 per cent, respectively, while the 12-month performance is even more impressive at 37.6 per cent and 18.1 per cent. This has been driven by continued haven demand for gold (+14.7 per cent) and silver (+16.7 per cent) amid ongoing demand from investors seeking protection in tangible assets against geopolitical and economic uncertainties, as well as central bank purchases of gold to reduce their dependency on fiat currencies, especially the dollar. The industrial metals sector shows a clear distinction between New York-traded HG copper and those traded and tracked by futures contracts on the London Metal Exchange. The HG copper contract has surged to a record high on speculation that Trump may implement tariffs on imports within weeks. The premium HG copper trades over London has reached 17 per cent, helping to explain the major contribution of industrial metals to the BCOMTR — a sector that otherwise would struggle amid global growth concerns. The energy sector has mostly been a story about natural gas strength, with a total return so far this year of around 25.5 per cent, while crude and fuel products have struggled amid a tug-of-war between economic growth concerns impacting demand and the increased threat of sanctions potentially reducing supply from Iran and Venezuela. 'This has, in turn, offset a planned OPEC+ production increase from next month,' Ole Hansen, Head of Commodity Strategy, Saxo Bank, wrote in a report. Finally, the agriculture sector has delivered a small return of 2.2 per cent, with broad losses across an amply supplied grain and soybean complex partly offsetting gains in softs and livestock. Standout performances have come from Arabica coffee and sugar and, to a certain extent, live cattle. Looking at the performances and individual weights, it can be seen that gold, copper, and natural gas have delivered close to 75 per cent of the total return, despite the three contracts only carrying a total index weight of 27.5 per cent. 'This highlights the advantage of holding broad exposure to commodities instead of trying to pick individual winners,' Hansen said. Hansen identifies seven megatrends that are likely to push the commodities market this year upwards: ● Deglobalisation: The US-China rivalry is reshaping supply chains, prioritising security over cost, and increasing demand for critical resources. ● Defence: Rising geopolitical tensions are fuelling record military spending and stockpiling of key materials. ● Decarbonisation and power demand: Investments in renewables, EVs, AI, and data centers are driving demand for metals and energy. ● De-dollarisation: A shift from US dollar reliance is boosting gold purchases as a financial hedge. ● Debt and fiscal risks: High global debt and deficits are increasing demand for hard assets like gold and silver. ● Demographics & urbanisation: Ageing Western populations and growing emerging economies are driving resource demand. ● Climate change: Higher power needs for cooling, food security concerns, and protectionism 'So far this millennium, we have witnessed three major commodities bull cycles, the biggest being the China-led rally from 2002 to 2008, followed by the pandemic- and Ukraine war-led spike between 2020 and 2022. In the past three years, the index has traded mostly sideways before making a renewed upside attempt within the past couple of months,' Hansen said.
Mid East Info
27-03-2025
- Business
- Mid East Info
Commodities show strength in Q1, led by a select few – Saxo Bank MENA - Middle East Business News and Information
Ole Hansen, Head of Commodity Strategy, Saxo Bank The commodities sector has emerged as one of the best-performing asset classes this year, and as the first quarter moves to a close, and a 2nd April tariff announcement from the Trump administration looms, let's take a look at the winners and losers so far. In order to do so, we focus on our preferred index, the Bloomberg Commodities Index, which tracks the total return of 24 major futures markets, spread close to evenly between energy, metals, and agriculture. The index, which is tracked by several major ETFs, trades up 12.2% in the past twelve months, with the bulk of that gain being achieved within the last three months. The year-to-date return shows a 7.9% gain, well above the return seen on some of the major equity market indices. Metals: The standout performers On a sector level, precious and industrial metals stand out, having delivered returns this quarter of 15.2% and 12.5%, respectively, while the 12-month performance is even more impressive at 37.6% and 18.1%. This has been driven by continued haven demand for gold (+14.7%) and silver (+16.7%) amid ongoing demand from investors seeking protection in tangible assets against geopolitical and economic uncertainties, as well as central bank purchases of gold to reduce their dependency on fiat currencies, especially the USD. The industrial metals sector shows a clear distinction between New York-traded HG copper and those traded and tracked by futures contracts on the London Metal Exchange. The HG copper contract has surged to a record high on speculation that Trump may implement tariffs on imports within weeks. The premium HG copper trades over London has reached 17%, helping to explain the major contribution of industrial metals to the BCOMTR—a sector that otherwise would struggle amid global growth concerns. Energy: Natural gas takes the lead The energy sector has mostly been a story about natural gas strength, with a total return so far this year of around 25.5%, while crude and fuel products have struggled amid a tug-of-war between economic growth concerns impacting demand and the increased threat of sanctions potentially reducing supply from Iran and Venezuela. This has, in turn, offset a planned OPEC+ production increase from next month. Agriculture: Modest gains with mixed results Finally, the agriculture sector has delivered a small return of 2.2%, with broad losses across an amply supplied grain and soybean complex partly offsetting gains in softs and livestock. Standout performances have come from Arabica coffee and sugar and, to a certain extent, live cattle. Key takeaways: The power of broad exposure Looking at the performances and individual weights, we find that gold, copper, and natural gas have delivered close to 75% of the total return, despite the three contracts only carrying a total index weight of 27.5%. This highlights the advantage of holding broad exposure to commodities instead of trying to pick individual winners. Mega-trends to drive long-term gains In our opinion, the long-term trend for key commodities remains upward, driven by several major themes or mega-trends, and they highlight why we believe a broad approach is the best option for long-term gains: Deglobalisation: The US-China rivalry is reshaping supply chains, prioritising security over cost, and increasing demand for critical resources. Defence: Rising geopolitical tensions are fuelling record military spending and stockpiling of key materials. Decarbonisation and power demand: Investments in renewables, EVs, AI, and data centers are driving demand for metals and energy. De-dollarisation: A shift from US dollar reliance is boosting gold purchases as a financial hedge. Debt and fiscal risks: High global debt and deficits are increasing demand for hard assets like gold and silver. Demographics & urbanisation: Ageing Western populations and growing emerging economies are driving resource demand. Climate change: Higher power needs for cooling, food security concerns, and protectionism So far this millennium, we have witnessed three major commodities bull cycles, the biggest being the China-led rally from 2002 to 2008, followed by the pandemic- and Ukraine war-led spike between 2020 and 2022. In the past three years, the index has traded mostly sideways before making a renewed upside attempt within the past couple of months. For more information, please visit .
Nahar Net
21-02-2025
- Business
- Nahar Net
China's Alibaba sees revenue surge on back of artificial intelligence, e-commerce
by Naharnet Newsdesk 21 February 2025, 14:34 Chinese e-commerce firm Alibaba Group Holding posted its fastest revenue growth in more than a year, beating analyst expectations as it capitalizes on the artificial intelligence boom in China. Alibaba said Thursday that its revenue for the quarter ended December grew 8% to 280.2 billion yuan ($38.38 billion) compared to the same period last year. Net income surged to 48.9 billion yuan ($6.71 billion). Alibaba's New York-traded stock was up over 12% following the earnings results. In an earnings call, Alibaba CEO Eddie Wu said that Alibaba plans to "aggressively invest" in artificial intelligence and cloud computing infrastructure in the coming three years, with upcoming spending expected to exceed what the firm has already invested over the past decade. "This quarter's results demonstrated substantial progress in our 'user first, AI-driven' strategies and the re-accelerated growth of our core businesses," Wu said. He said that Alibaba's artificial intelligence strategy was to pursue artificial general intelligence (AGI), which is artificial intelligence that can match or surpass human intelligence and can self-teach. He added that such an opportunity for industry transformation is something that comes along "once every several decades" and said that AGI was Alibaba's primary goal. Alibaba's plan to go big on artificial intelligence comes as rivalry in the AI space heats up between U.S. and China. Chinese AI firm DeepSeek recently rattled the U.S. AI industry after its AI model appeared to rival those of leading U.S. companies while being trained on cheaper hardware. The Hangzhou-headquartered firm is one of many technology firms in China who are racing to get ahead in the AI space. In January, it unveiled its latest Qwen AI models that have performed well in benchmark tests, placing Alibaba among the leading companies in China's AI industry. Alibaba is working with Apple to incorporate its AI technology into Chinese iPhones, the firm said earlier this month. Alibaba has already implemented AI technology into its cloud products, with its cloud business unit generating 13% revenue growth compared to the same time last year – the fastest pace in about two years. Its international commerce unit, which includes platforms such as AliExpress and Lazada, saw revenue growth of 32% driven by "strong performance of cross-border businesses." Alibaba was one of several prominent Chinese technology companies which suffered the brunt of a regulatory crackdown on the technology industry in 2020, when authorities scuppered the initial public offering of its financial affiliate Ant Group. The company was later fined a record $2.8 billion for violating anti-monopoly laws. Jack Ma, one of Alibaba's cofounders, disappeared from public view and the company's stock price slumped for several years. But Beijing appears to have shifted gears towards the technology industry as it pursues technology supremacy and self-sufficiency amid deteriorating U.S.-China relations. Chinese President Xi Jinping recently held a private symposium, meeting with prominent entrepreneurs including Ma. The meeting, coupled with DeepSeek's AI advancements, were among the factors that sparked renewed interest in the Chinese technology industry, sending technology stocks soaring in recent weeks. Alibaba's stock price is up more than 60% this year. Its U.S.-listed shares rose 8.5% in morning trading, to $136.58.
Euronews
21-02-2025
- Business
- Euronews
China's Alibaba sees revenue surge on back of e-commerce and AI
Alibaba said Thursday that its revenue for the quarter ended December grew some 8% to 280.2 billion yuan (€36.65bn) compared to the same period last year. Net income surged to 48.9 billion yuan (€6.41bn). Alibaba's New York-traded stock was up by more than 12% following the earnings results. In an earnings call, Alibaba CEO Eddie Wu said that Alibaba plans to 'aggressively invest' in artificial intelligence and cloud computing infrastructure in the coming three years, with upcoming spending expected to exceed what the firm has already invested over the past decade. 'This quarter's results demonstrated substantial progress in our 'user first, AI-driven' strategies and the re-accelerated growth of our core businesses,' Wu said. AGI seen as key to company's future growth He said that Alibaba's artificial intelligence strategy was to pursue artificial general intelligence (AGI), which is artificial intelligence that can match or surpass human intelligence and can self-teach. He added that such an opportunity for industry transformation is something that comes along 'once every several decades' and said that AGI was Alibaba's primary goal. Alibaba's plan to go big on artificial intelligence comes as rivalry in the AI space heats up between the U.S. and China. Chinese AI firm DeepSeek recently rattled the U.S. AI industry after its AI model appeared to rival those of leading U.S. companies while being trained on cheaper hardware. The Hangzhou-headquartered firm is one of many technology firms in China who are racing to get ahead in the AI space. In January, it unveiled its latest Qwen AI models that have performed well in benchmark tests, placing Alibaba among the leading companies in China's AI industry. Alibaba is working with Apple to incorporate its AI technology into Chinese iPhones, the firm said earlier this month. Alibaba has already implemented AI technology into its cloud products, with its cloud business unit generating 13% revenue growth compared to the same time last year – the fastest pace in about two years. Its international commerce unit, which includes platforms such as AliExpress and Lazada, saw revenue growth of 32% driven by 'strong performance of cross-border businesses.' Firm faced crackdown by Chinese authorities in the past Alibaba was one of several prominent Chinese technology companies which suffered the brunt of a regulatory crackdown on the technology industry in 2020, when authorities scuppered the initial public offering of its financial affiliate Ant Group. The company was later fined a record $2.8bn (€2.67bn) for violating anti-monopoly laws. Jack Ma, one of Alibaba's cofounders, disappeared from public view and the company's stock price slumped for several years. But Beijing appears to have shifted gears towards the technology industry as it pursues technology supremacy and self-sufficiency amid deteriorating U.S.-China relations. Chinese President Xi Jinping recently held a private symposium, meeting with prominent entrepreneurs including Ma. The meeting, coupled with DeepSeek's AI advancements, were among the factors that sparked renewed interest in the Chinese technology industry, sending technology stocks soaring in recent weeks. Alibaba's stock price is up by more than 60% this year. Its U.S.-listed shares rose 8.5% in morning trading, to $136.58 (€130.41).
