Thursday, July 29, 2021

Petra Diamonds finds 342-carat rough at Cullinan mine

 Petra Diamonds finds 342.92 carat rough at Cullinan mine

The 342.92-carat Type IIa white diamond. (Image courtesy of Petra Diamonds. 

South Africa’s Petra Diamonds (LON:PDL) has recovered a 342.92-carat Type IIa white rough at its iconic Cullinan mine.

The company said the diamond is “exceptional” quality, in terms of both its colour and clarity,  and that it will likely be sold at the September tender.

Petra fetched in March $12.2 million for a 299.3-carat Type IIA white diamond. That meant it obtained $40,701 per carat, which exceeds the $34,386/ct received for the 424.89-carat “Legacy of the Cullinan Diamond Mine” in May 2019. 

Type II diamonds are found less frequently and are more valuable than Type I diamonds, as they have no measurable nitrogen impurities. This gives them exceptional transparency and brilliance.

Cullinan is known as the birthplace of the famed 3,106-carat Cullinan diamond, which was cut to form the 530-carat Great Star of Africa.

The operation also yielded the 317-carat Second Star of Africa.

They are the two largest diamonds in the British Crown Jewels.

Cullinan is known as the world’s most important source of blue diamonds, such as the 39.34-carat stone Petra found in April and which sold for $40.2 million earlier this month. It was the company’s highest price ever for a single stone.

Wednesday, July 28, 2021

Copper price highest in 6 weeks as flooding in China raises supply concerns


Flooding has caused at least $10 billion in damage to central city of Zhengzhou (Credit: Screenshot from Al Jazeera via You tube 

Copper prices jumped on Monday as floods in China sparked demand hopes at a time when inventories are falling.

Copper for delivery in September rose 4.5% from Friday’s settlement price, touching $4.602 per pound ($10,120 per tonne) midday Monday on the Comex market in New York.

Benchmark copper on the London Metal Exchange was up 0.9% at $9,604.50 per tonne in official trading, after touching its highest since June 16 at $9,665 per tonne.

Click here for an interactive chart of copper prices

Floods in central China, especially in the industrial and transport hub city of Zhengzhou in Henan province, have raised supply concerns and demand for rebuilding damaged infrastructure.

Flooding has caused at least $10 billion in damage, according to state media.

“Sentiment has brightened again in the last few days, reflected in the copper price,” Commerzbank analyst Daniel Briesemann said, adding he believed copper was due for a correction.

A Singapore-based trader said the market was pricing in disruptions to output from floods in Henan and demand for reconstruction.

Related read: Are copper prices in a supercycle? A 120-year perspective.

Copper prices have been advancing after China revealed that will release fewer metals reserves than expected.

China will sell another 30,000 tonnes of copper, 90,000 tonnes of aluminum, and 50,000 tonnes of zinc at auction from its state reserves on July 29.

The auction will mark the second sale this month as the government aims to rein in skyrocketing commodity prices.

“It is slightly less than the market expected but it should be priced in already as it’s pretty well flagged,” said Anna Stablum, a commodities broker at Marex Spectron.

(With files from Reuters)

Tuesday, July 27, 2021

OPEC, Energy Industry Should Thank Saudi Arabia For Oil Price Recovery

OPEC—as well as the entire energy industry—should be thanking Saudi Arabia for its “magnificent” job in managing their production during the Covid-19 pandemic, according to Robert Yawger, executive director of Energy Futures at Mizuho Securities, in a Bloomberg TV interview this week.

Yawger added that the entire market would be best left in Saudi Arabia’s hands to manage.

The energy commentator made no mention of Saudi Arabia’s role in the oil price war that immediately preceded the coronavirus-inspired lockdowns. At that time, Saudi Arabia (and Russia) deliberately increased production and exports, flooding the world with oil and crashing prices.

Oil prices even fell below zero.

The demand loss that followed due to Covid-19 made it nearly impossible to recover from the deluge.

The market crash, Yawger said, “left a terrible scar on the industry. It rallied back under the management of the Saudis. The rest of OPEC has a lot to thank them for.”

Indeed, the Kingdom has been instrumental in managing the market in the months that followed the crash­–even if it was helping to mitigate some of the damage that Saudi Arabia inflicted.

Of all the OPEC members, Saudi Arabia has been perhaps the most conservative when it came to adding production back in as the OPEC group tried to thread the needle between prices and market share. A delicate balancing act that Saudi Arabia felt would be best served if erring on the side of oil prices.

In the process, Saudi Arabia did have to give up some market share. It also cut even more oil production than it agreed to, while other OPEC producers—whether due to lack of ability or inclination—overproduced nearly every month that the production cut agreement was in place. The largest overproducer throughout the production cut deal was Iraq, which finds it difficult to control oil output from the semi-autonomous Kurdistan region.

Now, after much internal haggling, OPEC has agreed to bring back 400,000 bpd starting in August. Another 400,000 bpd is set to be brought back online in September and every month that follows until the cuts have been rolled back entirely.

Meanwhile, analysts and industry groups feel the inventories have been reduced and that even more barrels should be brought online.

“In my opinion, it’s best to let the Saudis manage it; they’ve done an incredible job. As long as they don’t flood the market themselves,” Yawger added. 

Monday, July 26, 2021

Iran gears up to use new oil exports terminal 

Oil has arrived at Iran's new exports facility off the Sea of Oman and is ready for loading as scheduled within three days, the National Iranian Oil Co. said July 19.

The Jask Oil Exports Terminal is ready to load the first batch of crude, the company said, adding that President Hassan Rouhani has ordered the operation to start on July 22.

The new terminal, whose construction took six years, walks around the chock point of Strait of Hormuz. Iran's main exports terminal is on the Kharg island in the Persian Gulf.

It marks the first phase of the Jask terminal project with a loading capacity of 350,000 b/d.

"The oil tanker has been attached to the SPM no. 1 and trial loading is being carried out," said an NIOC video from Jask port. A 1,000 km pipeline has brought oil from Goureh pump stations and Petro Omid Oil Storage Tanks [in the Bushehr province] to the Jask Terminal in the Hormozgan province.

Friday, July 23, 2021

Iron ore price rises on disappointing figures by top producers

 Iron ore price rise on disappointing figures by top producers

Iron ore has been in a bull market for more than two years, and it’s not about to end soon, according to Goldman Sachs. (Stock Image) 

The iron ore price rose on Tuesday, boosted by disappointing figures by the world’s biggest producers.

Vale churned out 75.7 million tonnes in the second quarter, compared to the 78 million tonnes average estimate among analysts tracked by Bloomberg.

The company maintained its full-year guidance of 315 million to 335 million tonnes and said it achieved an annual output capacity of 330 million tonnes.

“Full-year iron ore production guidance of 315-335 million tonnes is maintained, but hitting even the bottom end of this range would require a strong second half of the year,” Christopher LaFemina, an analyst at Jefferies told the Financial Times.

“Doable, but risk is to the downside.”

BHP said it would start a “major maintenance” campaign over the next three months at Port Hedland, its key iron ore loading facility in Western Australia.

Lower than expected supply growth has helped prop up prices, which at more than $220 a tonne on Tuesday are delivering huge profits for iron ore producers.

Singapore ore futures have surged to historic highs this year.

Rio Tinto said last week that its shipments fell 2% on the previous quarter and flagged annual exports could come in at the low end of its forecast, partly because of heavier than normal rain.

Bull market

Iron ore has been in a bull market for more than two years, and it is not about to end soon, say Goldman Sachs analysts.

“It would be wrong to say that the bull market for iron ore, you know, is on the cusp of ending,” said Nicholas Snowdon, Goldman’s head of base metals and bulks research, as CNBC reported.

According to Snowdon, the market will likely only return to a “comfortable position” from 2023 on.

Prices are being supported by strong demand from top steel producer China.

“Even as China shows some signs of decelerating in … steel demand growth rate in the second half of the year and into 2022, the rest of the world and (developed market) steel demand dynamics are incredibly strong,” Snowdon was quoted at the Singapore Iron Ore Forum.

“For now, it looks like a very tight market with a very strong underpin from supply demand, and still robust demand growth rates.”

“The Australian producers have almost maxed out their infrastructure availability, so they can’t expand at any pace,” said Rohan Kendall during a separate panel discussion.

“I think prices over $200 a tonne are unsustainable, but we’re likely to see prices stay around $150 a tonne,” predicted Erik Hedborg, principal analyst at CRU.

(With files from Reuters and Bloomberg)

Wednesday, July 21, 2021

Battle for Venezuelan gold starts at UK’s top court

 Battle for Venezuelan gold starts at UK’s top court

UK Supreme Court. Credit: Wikimedia Commons 

The question of who controls more than $1 billion of Venezuelan gold stored in the Bank of England’s vaults took another twist after the British government said that it continues to recognize the leadership of opposition figure Juan Guaido.

A U.K. Supreme Court hearing that started Monday will decide whether the BOE must release the bullion to the Venezuelan central bank, controlled by the government of Nicolas Maduro. The long-running legal battle has reached the top court after judges questioned whether the U.K.’s previous recognition of Guaido was clear and ignored Maduro’s effective control in Caracas.

But the U.K.’s foreign secretary, Dominic Raab, rejected the earlier ruling, saying that his government has formally recognized Guaido as interim president in all respects since early 2019 and continues to do so, according to documents prepared for the four-day hearing. That recognition came after Maduro was inaugurated for a second term following an election that the U.S. and others said was rigged.

The U.K. statement comes as Guaido himself faces threats from government security officials ahead of planned local and state elections in November.

The Supreme Court case is being heard after a lower court gave Maduro another shot at gaining control of the gold, saying that the U.K.’s recognition of Guaido as interim president was “ambiguous.”

The central bank argued that previous statements of recognition had ignored the reality on the ground in Venezuela where British diplomats maintained relations with Maduro officials.

“This is about sovereignty and power in Venezuela,” Nicholas Vineall told the court.

Venezuela’s central bank sued the BOE for access to the bullion that it says is urgently needed in a joint effort with the United Nations Development Fund to fight the Covid-19 pandemic.

The opposition has said that if it gets control of the bullion, it plans to safeguard the gold for the time being, as part of Guaido’s efforts to secure Venezuela’s financial assets abroad.

The Maduro government was attempting to “dance on the head of a pin” by arguing that the U.K’s recognition was limited, Guaido’s lawyer Timothy Otty said in court Monday.

“It’s always been our submission that there wasn’t a lot to argue about,” he said.

(By Jonathan Browning)