MARKET MOVEMENTS:
--Brent crude oil fell 1.4% to $76.39 a barrel.
--European benchmark gas fell 1.1% to EUR36.06 a megawatt-hour.
--LME copper prices fell 1.2% to $8,508.50 a metric ton.
--Gold futures edged down 0.3% to $2,037.40 a troy ounce.
--Wheat futures declined 0.9% to $6.38 a bushel.
TOP STORY:
Indonesia Emerges as Second Largest Cobalt Producer, as Demand for the Battery Metal Rises
Indonesia is increasingly becoming a major supplier of cobalt to the global market, with the country now the world's second largest producer, as demand for the battery metal continues to climb amid increased electric vehicle uptake.
Indonesia, which produces cobalt as a byproduct from its nickel mining operations, now accounts for 5% of global cobalt output, according to a new report released Wednesday by the U.K.-based Cobalt Institute. And while it is still dwarfed by the Congo, which makes up 73% of supply, Indonesia has leap-frogged Australia and the Philippines in terms of minor producers.
Indonesian cobalt supply has the potential to grow by 10 times to 2030, and 14 times to 2040 on the back of a number of new nickel projects being announced in the country, according to the report, compiled by Benchmark Mineral Intelligence. In 2020, it produced just 1,000 metric tons of cobalt, while in 2022 it produced 9,500 tons, it said.
OTHER STORIES:
Lithium Companies Livent, Allkem to Merge in All-Stock Deal
Global lithium specialists Livent and Allkem will combine in an all-stock merger that values the combined entity at $10.6 billion, the companies said Wednesday.
Shareholders of U.S.-listed Livent will own about 44% of the merged company, with shareholders of Australia-listed Allkem holding the remainder, they said. Livent Chief Executive Paul Graves will be the company's CEO, while Peter Coleman, independent non-executive chairman of Allkem, will be chairman.
The deal, which is subject to approvals by regulators and shareholders, is expected to close by the end of the year.
---
Good News About Breakfast: Egg Prices Are Dropping
We'll get a taste of the latest inflation data later Wednesday-but first, some good news about eggs.
Wholesale prices for the breakfast staples, which soared in 2022, have plunged over 80% since the start of the year. Prices jumped last year in response to the deadliest-ever U.S. outbreak of highly pathogenic avian influenza, which according to government data has claimed nearly 59 million birds since last year.
Since then, the USDA says, consumer demand has slowed, allowing depleted supplies to rebuild. Inflation has hit grocery bills hard, according to Bureau of Labor Statistics data, with food prices remaining up 8.5% through March 2023 versus the same time last year. The government also said in an April report that HPAI detections are down substantially in the commercial sector.
In its latest weekly report, released Monday, the Agriculture Department said the combined regional price for large eggs-the average price for sellers receiving bulk orders to a warehouse- fell to just over a dollar a dozen, a fraction of the record $5.38 they were going for at the end of last year.
MARKET TALKS:
Palm Oil Prices Fall Amid Weaker Soybean Oil
1010 GMT - Crude palm oil prices fell in late trading, tracking weaker soybean oil on the Dalian Commodity Exchange, says a Kuala Lumpur-based trader. However, weaker supply of the oil could support prices in the medium term, he says. The latest Malaysian Palm Oil Board data showed that end-month stocks fell 11% on month in April, indicating tight supply. Data from cargo surveyor AmSpec showed that palm oil exports edged 1.7% higher on month over May 1-10. The Bursa Malaysia Derivatives contract for July delivery closed MYR106 lower at MYR3,701 a metric ton. (yiwei.wong@wsj.com)
---
Green Premiums on Battery Materials Unlikely
0811 GMT - Paying for a premium on battery materials with a higher ESG rating is unlikely to become the norm for buyers of raw materials, according to battery analysts. "There isn't any basis for a significant green premium but it's developing all the time," Harry Fisher, project manager for consultancy at Benchmark Mineral Intelligence, says in the Cobalt Congress in Istanbul. Fisher says that consumers of raw materials are unlikely to pay for a premium on a product that is seen as a higher standard by the industry, but adds that greener material might be preferred by buyers. Robert Searle, battery raw materials analyst at Fastmarkets, says that consumers are going into "self sanctioning mode." "Consumers and OEMs are already making this decision on what material they're willing to take," Searle says, adding that Australian and Canadian cobalt was being seen as more attractive for these reasons. (Yusuf.khan@wsj.com)
---
Copper Edges Lower Ahead of US CPI Data
0744 GMT - Copper prices weaken on demand concerns and as traders await U.S. CPI data. Three-month copper on the LME is down 0.6% at $8,560 a metric ton. Aluminum also declines 0.4% to $2,306 a ton and zinc falls 0.7% to $2,650 a ton. The demand outlook for copper is uncertain "as the West barrels towards a recession, pressuring demand for Chinese exports, while a period of destocking in China could see the nation's appetite for raw materials grow," TD Securities says in a note. U.S. CPI data due later Wednesday is hotly anticipated as traders look for clues about the Fed's plans for interest rates. (william.horner@wsj.com)
---
Short Term Headwinds to Remain for Cobalt Prices
0743 GMT - Cobalt prices have fallen sharply over the last year, and are likely to remain pressured in the short term, according to Robert Searle, battery raw materials analyst at Fastmarkets. Prices of cobalt hydroxide--one of the key materials used to make electric-vehicle batteries--fell below $15 a pound in recent days, having stood at over $30 a pound a year ago, Searle says at the Cobalt Congress in Istanbul. "There's been a perfect storm of mismatch between supply and demand," he adds. Searle pointed to pressure from battery producers aggressively destocking with fewer consumers looking to purchase EVs amid macroeconomic worries and China's recovery from Covid-19 lockdowns being slower than expected. In addition, increased supply from Indonesia and Congo is also weighing on prices, he notes. (yusuf.khan@wsj.com)
---
Oil Weakens After Inventory Data; US CPI Figures in Focus
0725 GMT - Oil prices edge lower following three days of gains after data pointed to a sharp drawdown in U.S. crude inventories. Brent crude oil is down 0.5% at $77.06 a barrel while WTI is down 0.5% at $73.35 a barrel. U.S. oil stocks climbed by 3.6 million barrels last week while gasoline stocks added 400,000 barrels. The market was expecting a 2.5 million barrel drawdown in crude stocks, according to ING. U.S. CPI figures due later Wednesday will be a key macroeconomic focus for commodities. The data is expected to show inflation at 0.4% on month and 5% on year. (william.horner@wsj.com)
---
Spot Gold May Rise Further Toward $2,100/oz
0650 GMT - Spot gold may rise further toward the top of an ascending and broadening wedge, which is now near $2,100/oz, based on the daily chart, says Quek Ser Leang, markets strategist at UOB Global Economics & Markets Research, in a research report. Price movements for past several weeks seem to be forming this wedge pattern, the strategist notes. As long as the bottom of the wedge, which is currently near $2,020/oz, isn't broken in the next month or two, there's scope for spot gold to rise to $2,100/oz before the likelihood of a reversal increases, the strategist says. Spot gold is down 0.2% at $2,030.56/oz. (ronnie.harui@wsj.com)
Write to Barcelona Editors at barcelonaeditors@dowjones.com
(END) Dow Jones Newswires
05-10-23 0648ET
