The latest Market Talks covering Basic Materials. Published exclusively on Dow Jones Newswires at 4:20 ET, 12:20 ET and 16:50 ET.
0447 GMT - Lithium miners are pressing ahead with expansions even as prices retreat. Outside of China, there's a feeling that "this is a short-term, sentiment-led dip that is not supported by fundamentals," says Benchmark's Adam Megginson. "The direction of travel right now is definitely toward supply expansion." For now, only the highest-cost suppliers--like those selling so-called direct shipping ore that is minimally processed and costly to transport--risk needing to cut back, he says. But he says others could face increased pressure if the price drop continues. Lithium carbonate is down by more than 20% since early September at $15,450 a metric ton, according to Benchmark. Spodumene concentrate is down by nearly 40% over the same period at $1,385 a ton. (rhiannon.hoyle@wsj.com; @RhiannonHoyle)
0421 GMT - A pause on underground operations at Rio Tinto's Oyu Tolgoi copper mine due to a seismic event is unlikely to have long-term impact on production there, says Jefferies. Yet "a core question that this event generates is: What is the long-term sustainable rate of cave propagation, and does it align with the targeted production rate?" the bank says. The Oyu Tolgoi underground uses block caving, a process that stresses the surrounding rock. Jefferies wonders whether such events could change the way investors value different mining techniques. "For those generalists not frightened from the sector by mining disruptions, we do think that we will start to see further premiums paid for lower-risk mining methods," it says. Rio is down 1.7% in Sydney at 147.09 Australian dollars, amid a broad decline in materials stocks. (rhiannon.hoyle@wsj.com; @RhiannonHoyle)
0242 GMT - Iron ore prices are lower in early Asian trade amid weak demand. China's molten iron production has dropped to relatively low levels and have limited room for near-term recovery due to a steel production control in northern China, Nanhua Futures says in a research note. Meanwhile, iron ore supply are abundant as shipment levels remain high, they say. The accumulation of iron ore stocks at Chinese ports is slow, providing some support for iron ore prices, they add. The most actively traded January iron ore contract on the Dalian Commodity Exchange is down 0.6% at CNY676.0 a ton. (sherry.qin@wsj.com)
0006 GMT - Gold declines in early Asian trade. Expectations of tighter monetary policy across major economies are supporting bond yields, says Infinox's Thadeu Dos Santos in a note. U.S. inflation is still above the Federal Reserve's 2% target and markets continue to price in a December interest rate hike and further tightening beyond the year-end, keeping yields supported and weighing on gold, he says. A firm dollar adds to the pressure, while stronger-than-expected U.S. data sustains the case for keeping monetary conditions restrictive, he adds. A higher interest-rate environment typically weighs on the non-yielding gold. Spot gold is down 0.3% at $4,008.64 an ounce. (megan.cheah@wsj.com)
1800 GMT - Precious metals futures settle lower following a stronger-than-expected U.S. GDP reading, which supports expectations of higher U.S. interest rates ahead. "Markets continue to price in a December interest-rate hike and further tightening beyond year-end, keeping yields supported and weighing on gold," Thadeu Dos Santos of Infinox says in a note. Geopolitical uncertainty adds pressure with the possibility of new military operations after the U.S. midterm election, he adds. "Elevated oil prices continue to fuel inflation, potentially reinforcing restrictive monetary policy." Front-month gold settles down 0.5% in New York at $4,017.70 a troy ounce. Silver falls 2.4% to $52.191 a troy ounce. (anthony.harrup@wsj.com)
1718 GMT - There was a lot to like in Air Liquide's third-quarter update, with the French supplier of industrial gases reporting a better-than-expected performance and bringing forward the start of its share buyback, Bernstein analysts say in a research note. The company's core gas-and-services segment beat expectations with comparable revenue growth of 3.6% and the business has now delivered three straight quarters of accelerating growth, the analysts say. Moreover, Air Liquide decided to start its buyback early, with a 1 billion-euro tranche beginning in the fourth quarter, and reported another increase in its order backlog to 6.2 billion euros, they add. While its 2026 guidance was reiterated, as expected, Air Liquide can keep the growth momentum next year, Bernstein says. (adria.calatayud@wsj.com)
1447 GMT - Precious metals futures lose ground with silver at a fresh 11-month low and gold holding just above the $4,000 level. The Fed's 10-2 decision to hold rates steady reinforces expectations that borrowing costs could remain high, bolstering the U.S. dollar and increasing the opportunity cost of holding non-yielding assets, Naeem Aslam of Zaye Capital Markets says in a note. High oil prices also complicate the inflation outlook, he says. "Silver's dual role as a monetary asset and an industrial commodity makes it particularly sensitive to this environment, as restrictive financing conditions can weaken investment demand while simultaneously increasing costs for manufacturers." December gold is down 0.3% in New York at $4,039.40 a troy ounce. Silver falls 2% to $52.58 a troy ounce. (anthony.harrup@wsj.com)
1103 GMT - Glencore's target for EBIT above $5 billion in its trading unit looks conservative given the disruption across commodity markets, RBC Capital Markets analyst Ben Davis writes. Davis expects $5.6 billion for the year. Glencore remains the bank's top pick in the mining sector, especially ahead of a potentially tough winter that could push thermal coal prices higher, he says. Shares fall 1.9% to 531.40 pence.(adam.whittaker@wsj.com)
0839 GMT - Henkel's third-quarter sales growth and raised outlook for the year are likely to lift shares, Bernstein analysts say in a note. Organic sales growth is ahead of consensus, with beats in both the consumer and adhesives divisions, according to Bernstein. The broad beat, outperformance in both segments and volumes above consensus despite a big increase in pricing are "strongly positive signs," the analysts say. The German consumer good company releases full 3Q results on Nov. 10. Shares trade 2.7% higher at 80 euros. (sarah.sloat@wsj.com)
0835 GMT - Gold could trade around $5,000 to $5,500 next year, Ole Hansen, head of commodity strategy at Saxo said at a media briefing. In the longer term, gold could rise even higher as central banks haven't finished accumulating the precious metal, which will take some time, he says. A key support level this year is $4,000, which may not hold if there is an escalation in energy prices and the inflationary outlook, Hansen said. If prices don't fall below $4,000, gold could approach $4,500 by year-end, he added. "I think gold should still be considered as a store of value, so one that beats inflation in the long run, and one that's good to have on a rainy day where something could potentially go wrong elsewhere," Hansen said.
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