Saudi Aramco Profit Falls on Lower Oil Prices, Volumes — Commodities Roundup

–Gold futures are down 0.9% at $1,970.40 a troy ounce

–LME three-month copper futures are down 1.2% to $8,149 a metric ton

–Wheat futures are down 0.9% to $5.71 a bushel

TOP STORY:

Saudi Aramco Profit Falls on Lower Oil Prices, Volumes

Saudi Arabia’s national oil company reported a fall in quarterly profit due to lower energy prices and volumes sold in the period, but kept its payout to shareholders at the previous-quarter’s level.

Saudi Arabian Oil Co., known as Aramco, said Tuesday that net profit came to $32.58 billion in the three months ended in September, down 23% from $42.43 billion a year earlier, when it benefited from soaring energy prices following Russia’s invasion of Ukraine.

Aramco said it would pay its shareholders a base dividend of $19.51 billion for the third quarter–in line with the previous quarter–and a performance-linked dividend of $9.87 billion, for a total of $29.38 billion.

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OTHER STORIES:

EV Makers Turn to Discounts to Combat Waning Demand

Buyers looking to get a bargain on a new car might want to consider an electric vehicle.

As sales growth has slowed for battery-powered models, auto makers and dealers are slashing prices and piling on discounts to clear out unsold inventory.

Some auto makers, such as Hyundai Motor and Ford Motor, are this month offering cash rebates as high as $7,500 on some models. Others are resorting to aggressive lease deals that offer cheaper monthly payments or shorter contract lengths to attract buyers. Many car companies are offering low-interest-rate promotions in an attempt to make pricey EVs more affordable.

Market leader Tesla has slashed prices this year across its lineup, reducing the starting price of some models by roughly a third. Ford Motor has also marked down its Mustang Mach-E SUV at least two times this year.

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It May Be Too Late to Fend Off China’s Battery Giants

Having charged up in their massive home market, Chinese electric-vehicle-battery firms are becoming major export players, too. The West’s efforts to protect its own markets might prove too little, too late.

Chinese firms are also eyeing big new factory expansions in Europe itself, and in U.S. free trade partners, as a way to sidestep current and future import restrictions-much like Japanese car makers did in the U.S. in the 1980s.

Sales of new-energy vehicles, which include plug-in hybrids, surged 37% year over year in China in the first nine months of 2023, according to the China Association of Automobile Manufacturers. But exports have also jumped sharply: China is now the world’s top exporter of EVs.

And that, in turn, is helping China’s battery industry. Contemporary Amperex Technology, or CATL, and car maker BYD are already the top two producers of EV batteries in the world.

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MARKET TALKS:

Palm Oil Ends Lower, Reversing Earlier Gains

1010 GMT – Palm-oil prices closed lower, reversing earlier gains. The commodity’s current price levels reflect bearish fundamentals and high supply, Sathia Varqa from Palm Oil Analytics says. In focus for market participants is Malaysian Palm Oil Board demand and supply data for October due this week, he adds. Varqa thinks the figures will show a rise in stockpiles since production has been increasing. The Bursa Malaysia Derivatives contract for January delivery fell MYR34 to MYR3,719 a ton. ([email protected]; @ivy_jiahuihuang)

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Oil Prices Slip Despite Stronger Chinese Import Data

0842 GMT – Oil prices move lower as a stronger dollar and weak macro sentiment outweigh more positive data from China. Brent crude is 1.5% lower at $83.86 a barrel while WTI is 1.6% lower at $79.60 a barrel–the first time it has dropped below $80 since late August. Chinese trade data shows that oil imports rose in October to 49 million metric tons, according to ANZ Research. “The risk of rising oil prices and additional import quotas for the year encouraged refiners to buy more oil,” ANZ said. Despite the positive data, the dollar is up 0.2%, with the market now pricing the chance of another rate hike from the Federal Reserve at 16%, up from 11% Friday, according to Deutsche Bank. ([email protected])

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Metals Fall as Macro Sentiment Weakens

0829 GMT – Metal prices are falling in early trading, with the wave of positive macroeconomic sentiment seen at the start of the week fading. Three-month copper is down 0.7% to $8,187.50 a metric ton while aluminum is 0.6% lower at $2,273 a ton. Gold meanwhile is down 0.7% to $1,975 a troy ounce. “The macro environment has lost some bullish momentum ahead of a quiet data week,” Peak Trading Research says in a note. “Last week’s dovish Fed and softer U.S. job numbers pushed interest rates lower and weakened the U.S. dollar but investors are now waiting to see more inflation and employment statistics before pushing macro indices in either direction,” Peak added. ([email protected])

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Posco Holdings’ Steel Shipments Could Start to Rebound in 1Q

0810 GMT – Posco Holdings’ steel shipments could start to rebound in 1Q 2024, Meritz Securities analyst Jang Jae-hyeok says in a research note. The South Korean steelmaker’ steel-product sales could recover next year on the Chinese government’s increased infrastructure investment, which should lead Chinese steelmakers to raise product prices and thus raise overall average selling prices for steel goods, Jang notes. However, the company’s lithium segment could be pressured by falling metal prices, he says. Meritz trims the stock’s target by 3.1% to KRW630,000 to reflect the lowered valuation for the lithium business but keeps a buy rating. Shares ended 11% lower at KRW464,500. ([email protected])

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Iron Ore Prices Flat; Sentiment Remains Positive

0326 GMT – Iron ore prices are flat in early Asian trade after earlier gains on the back of stronger demand. However, market sentiment is still positive toward iron ore after the Chinese government approved an additional $1 trillion in sovereign bonds to support infrastructure investment, Huatai Futures analysts say. Low steel inventories and the shortage of scrap steel supply are also supporting iron ore prices, the analysts add. Steel inventories at major Chinese steel mills fell to 13.8 million tons in late October, down 16.6% from mid-October, according to the China Iron and Steel Association. The most actively traded January iron ore contract on the Dalian Commodity Exchange is flat at CNY928.0 a ton. ([email protected]; @ivy_jiahuihuang)