Oil prices rebounded on Monday, despite ongoing global uncertainty triggered by U.S. President Donald Trump's announcement of new tariffs on steel and aluminum. These proposed tariffs could significantly affect the global economy and demand for energy resources.
According to recent data, Brent crude oil futures rose by 40 cents, or 0.5%, reaching $75.06 per barrel. Similarly, West Texas Intermediate (WTI) crude increased by 38 cents, or 0.5%, to $71.38 per barrel. It is noteworthy that last week marked the third consecutive week of declining prices, driven by fears of a potential global trade war.
U.S. Policy and the Global Market
On Monday, shares of the Australian steel manufacturer, BlueScope Steel $BSL.AX, reached their highest level in over two months. This market behavior is linked to expectations that the company's American operations will benefit from potential new tariffs on steel imports to the US.
As of 02:34 GMT, BlueScope Steel shares were up by 4%, hitting their highest level since December 2, 2024. During this period, many other stocks within the S&P/ASX 200 index (AXJO) showed a decline of 0.4%.
US Trade Policy
Ahead of this week's shareholders' meeting, Australian company Global Lithium Resources $GL1.AX has urged the government to intervene in what it suspects is a takeover attempt by Chinese investors of its primary asset — the Manna project in Western Australia. This call for action follows the National Takeovers Panel's refusal to investigate what Global Lithium claims might be an unlawful union of China-related shareholders looking to control the project.
Global Lithium Resources believes that the actions by Chinese shareholders might be in breach of takeover and mergers regulations. The company now seeks governmental intervention to protect national interests and ensure market fairness. This scenario unfolds amidst Australia's growing focus on developing projects for critical mineral resources.
Impact on Policy and Economy
For the week ending February 4, asset managers significantly increased their net long position on Chicago Board of Trade (CBOT) corn futures and options to 364,217 contracts, up from 350,721 contracts the previous week. This increase in positions marks the most optimistic outlook for corn since April 2022.
The seven-week continuous bullish trend in corn has garnered significant attention, as it is the second time in the past four years that funds have been net buyers of corn for such an extended period. The last occurrence was in September 2022, although the number of contracts was noticeably smaller then.
Historical Comparison and Current Records
In January, Brazil's trade surplus experienced a significant drop of 65.1% compared to the same month last year. This decline was attributed to a robust increase in imports alongside a drop in exports, highlighting key dynamics in the country's trade landscape.
According to the Ministry of Development, Industry, Trade, and Services, Brazil's surplus amounted to $2.2 billion this January, a stark contrast to the $6.2 billion surplus recorded the previous year. Economists surveyed by Reuters had predicted a surplus of $3 billion, reflecting a surprising deviation from expectations.
Export Trends
Venture Global $VG, a prominent American LNG producer, has taken a pivotal step by proposing the construction of the CP2 export facility in Louisiana. This development holds significant implications for the global LNG market and the strategic positioning of the United States in energy exports.
In 2023, the United States emerged as the world’s largest LNG supplier, surpassing previous leaders Australia and Qatar. This shift was fueled by several factors:
1. Increased Global Prices: The rise in LNG prices has spurred greater demand for exports.
2. New Projects: Initiatives by Venture Global and other companies contributed to the growth of LNG export capacity.
Anduril Industries, a defense technology startup leveraging artificial intelligence, is in discussions for a new funding round that could increase its valuation to an impressive $28 billion. Founded by Palmer Luckey, the company is garnering substantial attention from investors, underlining its rapid growth in the defense sector.
Sources indicate that the upcoming funding round is headed by the Founders Fund, a tech investment firm associated with billionaire Peter Thiel. Key points include:
1. Investment Size: The round could reach up to $2.5 billion, signaling strong investor confidence.
2. Recent Valuation Surge: Just a few months ago, in August, Anduril secured $1.5 billion, raising its valuation to $14 billion.
On the heels of a recent agreement between Malaysia's state-owned energy company Petronas and the government of Sarawak regarding the distribution of local gas resources, market analysts have provided detailed insights into the potential financial and strategic repercussions. This accord, which has significant implications for Petronas' operations and profitability, has drawn considerable attention from industry stakeholders.
Financial Impact
- Profit Reduction Estimates: According to research firm CreditSights, the agreement is expected to reduce Petronas' profits by a maximum of 11%, which is below previous market expectations. This estimation is crucial as it underscores the limited financial dent on Petronas despite the redistribution of local gas reserves.
- Revenue Breakdown: CreditSights highlighted that most of Petronas' revenue stems from liquefied natural gas (LNG) rather than local gas distribution. With the LNG operations in Sarawak accounting for 73% of Petronas' total LNG sales, the primary financial flow remains unaffected by the redistribution deal.
SK Innovation Co Ltd $096770.KS, the South Korean conglomerate that owns the country’s largest oil refinery through its subsidiary SK Energy, has projected steady refining profitability through 2025. This outlook is largely driven by the anticipated growth in demand for jet fuel, despite increased refinery outputs in countries such as the United States and Canada. The company’s positive forecast aligns with both market dynamics and geopolitical factors shaping the energy sector, while it also addresses the evolving landscape of electric vehicle (EV) markets.
Key Drivers of Refining Profitability
With industrial activity rebounding globally and air travel demand steadily climbing, refiners like SK Innovation are witnessing renewed momentum in fuel consumption. Several critical factors are contributing to the sustained profitability of oil refining operations:
Pandora A/S $PNDORA.CO, a renowned jewelry manufacturer known for its popular charm bracelets, has shown resilience in a challenging trade environment. The impact of U.S. tariffs on Chinese imports has been limited for the company, as stated on Wednesday, when it unveiled its fourth-quarter financial results.
Pandora has successfully adapted to these changes by implementing a forward-thinking strategy. Anticipating potential risks linked to U.S. trade policies concerning China, the company took proactive steps to minimize their impact on its key market in the United States.
1. Optimization of Production Facilities. Pandora owns two factories in Thailand, which have become central to its strategy for bypassing tariffs. This move significantly reduced its reliance on imports from China while maintaining a strong presence in the U.S. market.
In 2024, the global demand for gold $GOLDUSD reached unprecedented levels, increasing by 1% to a record 4,974.5 metric tons. This surge was driven by increased investments in gold and heightened interest from central banks in purchasing during the fourth quarter, according to the World Gold Council (WGC).
Gold Price Surge and Its Causes
The year 2024 was marked by a significant surge in gold prices, growing by 27%, the highest increase since 2010. Several factors contributed to this price escalation:
The recent tariffs introduced by President Donald Trump targeting countries like China, Canada, and Mexico have acted as a catalyst for the decline in metal prices.
Decline in Metal Prices on the Market
In the face of uncertainty, copper, often referred to as the "red metal," fell by 1.5% on the London Metal Exchange. This drop highlights the significance of metals as indicators of economic health and resilience.
Similarly, aluminum prices also decreased by a similar margin. The price movement of aluminum is closely linked to global economic fluctuations and demand in various industries. Notably, companies such as Alcoa $AA and Rio Tinto $RIO might be affected due to their involvement in aluminum production and export.
