Aurelia Butler

Industrial metals have ripped higher since November on bets that China’s reopening will boost demand for raw materials.A group of “base metals” led by tin, zinc and copper have surged more than 20 per cent in three months, further supported by the US Federal Reserve signalling a slowdown in the pace of interest rate rises and a softening in the US dollar, which importers use to buy commodities.Star performer tin has rocketed almost 80 per cent to $32,262 per tonne, the highest level since June, while copper prices have rallied by a tenth this month to $9,329 per tonne on brighter prospects for China’s economy following the easing of its zero-Covid policies.Investors have largely shrugged off concerns about slowing manufacturing activity in the face of unprecedented coronavirus outbreaks in Asia’s largest economy. “At the beginning of the year everyone came in very nuanced, saying we were going to have a [global] recession, that copper would dip in the first quarter and then go higher, but we’ve done exactly the opposite,” said Al Munro, a broker at Marex. “Money flow is what has driven metals in 2023 thus far, and that’s about a China reopening story.”Mining industry executives say the current situation marks a stark reversal from only a few months earlier when sentiment was weak but physical buying from Chinese customers remained strong. “It has shifted between where we were that perceptions were bad and on-the-ground was good, to now perceptions are better but on-the-ground is uncertain,” said Richard Adkerson, chief executive of Freeport-McMoRan, one of the world’s largest copper producers.Jeremy Pearce, who leads market intelligence at the International Tin Association, said that much the same could be said of the metal used primarily to solder electronics.“The issue is all demand indicators are very negative as global manufacturing purchasing managers’ indices have been nosediving,” he said. “The demand picture is the opposite and disconnected from the price.”Further fuelling the rally for some base metals has been a spate of supply disruptions from protests roiling copper and tin producers in Peru and production snags in Chile, to Indonesia stalling export license renewals for tin smelters ahead of a mooted tin ingot export ban.The price of tin, which is becoming increasingly strategic because of its use in solar panels and microchips, has also been pushed higher by speculative buying by China, leading to a build in inventories.Despite weak demand, last year China swung from net exports of 9,000 tonnes in 2021 to net imports of 20,000 tonnes, according to Amalgamated Metal Trading, a metals brokerage.“To what extent is it traders or governments building the inventories up?” asks Daniel Smith, head of research at AMT. “If it’s the government then they may sit on it longer”, which would keep prices higher longer term. More

WASHINGTON (Reuters) – The U.S. Treasury Department’s top sanctions official on a trip to Turkey and the Middle East next week will warn countries and businesses that they could lose U.S. market access if they do business with entities subject to U.S. curbs as Washington cracks down on Russian attempts to evade sanctions imposed over its war in Ukraine.Brian Nelson, undersecretary for terrorism and financial intelligence, will travel to Oman, the United Arab Emirates and Turkey from Jan. 29 to Feb. 3 and meet with government officials as well as businesses and financial institutions to reiterate that Washington will continue to aggressively enforce its sanctions, a Treasury spokesperson told Reuters.”Individuals and institutions operating in permissive jurisdictions risk potentially losing access to U.S. markets on account of doing business with sanctioned entities or not conducting appropriate due diligence,” the spokesperson said.While in the region, Nelson will discuss Treasury’s efforts to crack down on Russian efforts to evade sanctions and export controls imposed over its brutal war against Ukraine, Iran’s destabilizing activity in the region, illicit finance risks undermining economic growth, and foreign investment. The trip marks the latest visit to Turkey by a senior Treasury official to discuss sanctions, following a string of warnings last year by Treasury and Commerce Department officials, as Washington ramped up pressure on Ankara to ensure enforcement of U.S. curbs on Russia.STRAINED RELATIONSNelson’s trip coincides with a period of strained ties between the United States and Turkey as the two NATO allies disagree over a host of issues.Most recently, Turkey’s refusal to green-light the NATO bids of Sweden and Finland has troubled Washington, while Ankara is frustrated that its request to buy F-16 fighter jets is increasingly linked to whether the two Nordic countries can join the alliance.Nelson will visit Ankara, the Turkish capital, and financial hub Istanbul on Feb. 2-3. He will warn businesses and banks that they should avoid transactions related to potential dual-use technology transfers, which could ultimately be used by Russia’s military, the spokesperson said.Dual-use items can have both commercial and military applications.Washington and its allies have imposed several rounds of sanctions targeting Moscow since the invasion, which has killed and wounded thousands and reduced Ukrainian cities to rubble.Turkey has condemned Russia’s invasion and sent armed drones to Ukraine. At the same time, it opposes Western sanctions on Russia and has close ties with both Moscow and Kyiv, its Black Sea neighbors.     It has also ramped up trade and tourism with Russia. Some Turkish firms have purchased or sought to buy Russian assets from Western partners pulling back due to the sanctions, while others maintain large assets in the country.    But Ankara has pledged that international sanctions will not be circumvented in Turkey.    Washington is also concerned about evasion of U.S. sanctions on Iran.The United States last month imposed sanctions on prominent Turkish businessman Sitki Ayan and his network of firms, accusing him of acting as a facilitator for oil sales and money laundering on behalf of Iran’s Revolutionary Guard Corps.While in the United Arab Emirates, Nelson will note the “poor sanctions compliance” in the country, the spokesperson said. Washington has imposed a series of sanctions on United Arab Emirates-based companies over Iran-related sanctions evasion and on Thursday designated a UAE-based aviation firm over support to Russian mercenary company the Wagner Group, which is fighting in Ukraine.(This story has been corrected to change headline to UAE, Turkey, not Middle East; adds Turkey in paragraph 1) More