Copper price on the rise

Copper prices rose on Monday as a softer USD spurred modest purchases, but gains were capped by concerns over price curbs on industrial metals in top consumer China. Benchmark copper on the London Metal Exchange (LME) was up 0.3% at US$9,916 a ton at 1014 GMT.

However, prices of the metal used widely in the power and construction industries are down 8% since touching a record high of US$10,747.50 a ton earlier this month.

“The USD is giving some support to copper, but overall the mood is negative,” one metals trader said. “Still, the market did need a breather and consolidation.”

China’s market regulators warned industrial metal companies to maintain “normal market order” during talks on the significant gains in metals prices this year.

China’s government also said last week that it would manage “unreasonable” price increases for commodities such as copper, coal, steel and iron ore.

Some concern about supplies on the LME market has narrowed the discount for cash copper over the three-month contract to about US$14 a ton from US$28 last week.

Supporting copper is political uncertainty in Peru and top producer Chile. An overhaul of Chile’s market-orientated constitution is under way and the country is debating whether to increase royalties on miners.

Peru, the No. 2 producer, is heading for a polarized June presidential election. Leading in the polls is a little-known socialist who wants to redistribute mining wealth.

A likely surge in reviewable energy demand, particularly windmills is set to drive a surge in copper demand. It is estimated that the quantity of copper required per wind turbine is staggering at 63,000 pounds.

A week ago, price of the basic metal surged to a record high because of supply chain disruptions. By the end of the week it had cooled off on efforts by China to rein in the commodity market rally.

Now copper price is on the way up again, and this is likely to be a steady trend. The reason for this is renewable energy—and more specifically wind energy. Offshore wind turbines require 8 tons of copper for every megawatt of generation capacity. According to data from the International Energy Agency, “An average turbine of 3.6MW will contain close to 29 tons of copper.”

This upward trend in demand for copper will only intensify in the coming years as the world expands its renewable power generation capacity. It is likely to be supported by the constant threat of a supply disruption like the one in Chile that spurred the latest reversal in copper’s fortunes.

Earlier, copper price rebounded by concerns of supply disruptions in Chile and signs that Chinese demand is picking up.

Workers at BHP Group’s remote operations center in Santiago rejected the company’s final wage offer, with almost 97% of the union’s members opting to strike. Under Chilean labor rules, BHP now has the right to call for five days of government mediation. Meanwhile, demand in top user China is recovering after prices retreated, Jinrui Futures Co. said in a note, pointing to a spike in the domestic spot premium.

Bets on tight supplies and rising use have fueled a year-long rally in copper, which touched an all-time high before gains ebbed. The risk of a strike poses an added threat to output from the top copper-mining country, which already faces a potential giant tax hike. A proposal to tax Chilean copper sales at rates of as high as 75% is rippling all the way to Peru, where the leading presidential candidate wants to impose a similar measure.

“LME metals have started the new week on a firmer footing amid a slew of news stories,” Ed Meir, an analyst at ED&F Man Capital Markets, said in a note. “We are watching copper in particular; we learned that a union representing workers at BHP’s Escondida and Spence mines rejected an offer on a future contract, raising the risk of a strike at these sizable facilities.”

Israelis march in Tel Aviv for peace and coexistence

Thousands of Israelis marched in Tel Aviv on Saturday evening in a show of support for peace and coexistence between Jews and Arabs after two weeks of intense violent riots across the country. 

Protesters also voiced support for the recent ceasefire between Israel and Hamas that came into effect early Friday, called on the government to take immediate action to end Israeli occupation in the West Bank and to reach peace with the Palestinians.   

The mass march was organized by the "Standing Together" and "Breaking the Silence" movements. It left Rabin Square in Tel Aviv and made its way toward Habima Square.

Speakers included well-known Israeli novelist and left-wing activist David Grossman, author ʻAwdah Bishārāt, Joint List leader Ayman Odeh and MK Tamar Zandberg (Meretz).

"I hear politicians and security officials speak about another round of fighting in a few months or years, while being blind to the 7 million Palestinians living between the [Jordan] river and the [Mediterranean] sea," Odeh said. "There are two peoples living here and both deserve the right for self-determination." 

"These past few days have shown us how life in this country can look like - a nightmare," Zandberg added. "We don't want to start waiting for the next war, but to change direction toward peace - to live together in true partnership."

A similar protest took place last Saturday at Habima Square, which was one of several protests attended by Jews and Arabs across the country that called for peace and for coexistence amid the nationwide riots and the military operation in Gaza.

Jews and Arabs gathered daily during Operation Guardians of the Walls on bridges and intersections along the country and protested against the ongoing violence.

Also on Saturday, hundreds gathered outside the Prime Minister's Residence in Jerusalem, calling on Prime Minister Benjamin Netanyahu to resign and blaming him for the escalation in Gaza and claiming that he deliberately extended the operation for no reason but personal interest.

Earlier Saturday, about 200 people marched along the streets of the mixed city of Jaffa, voicing support for coexistence between Arabs and Jews while visiting small local businesses.

 

What could be likely impact of Gaza crisis on South Asia?

While some analysts may say South Asia is not a party to the Gaza conflict, the region is still vulnerable to its potentially destabilizing effects. It poses security risks within the region, including violent protests and terrorist attacks.

It is worth exploring what the crisis means for South Asia, which does not have common border with the Middle East. India and Nepal have long-standing links to Israel and Bhutan normalized ties in December 2020. As against this Pakistan fully support the Palestinian cause.

India has strengthened its ties with Israel significantly. Relations between the two countries have grown stronger under Indian Prime Minister Narendra Modi. He became the first sitting Indian prime minister to visit Israel. India has supported the Palestinian cause in the past. In 2018, Modi became the first Indian prime minister to visit the Palestinian territories too.

India’s ambassador to the United Nations issued a bit confusing statement on the conflict. He condemned Palestinian violence and described Israel’s use of force as retaliatory, but in the same breath affirmed India’s strong support for the Palestinian cause and two-state solution.

As against this, Pakistan has put to rest all lingering speculation that it could be one of the next countries normalizing ties with Israel. Pakistan made it clear that it will only recognize Israel when a Palestinian state is established.

Some analysts say the current conflict also poses security risks for South Asia. It could spark pro-Palestinian protests that could lead to violence. They also fear that some non-state actors or miscreants hiding in Afghanistan may enter Kashmir and try to put the valley inferno.

Washington must actively manage Israel-Palestine conflict it can’t end

The administration of US President Joe Biden entered office expecting to take a less proactive approach to the Israeli-Palestinian conflict than many of its predecessors. Four days into the recent war between Israel and Hamas this approach was evident. 

Biden responded to a question,“I have spoken to Israeli Prime Minister Benjamin Netanyahu. Israel had a right to defend itself, and that he hoped the fighting would be over sooner rather than later.”

The conflict requires management, because conditions simply do not exist for its resolution. Sadly, Biden administration has not yet put an ambassador in Israel (even an interim one) or a consul general in Jerusalem to deal with the Palestinians. Instead, management was left to one poorly staffed, midlevel official in the State Department. The Biden administration deserves credit for intervening at a higher level to get Netanyahu to stop the evictions, marches, and Israeli police violence in East Jerusalem.

Before the outbreak of this latest conflict, there was hope that a new government would be formed in Israel that would put an end to Netanyahu’s rule. Yair Lapid (the head of the Yesh Atid party) and Naftali Bennett (the head of the Yamina party) were about to cobble together a left-center-right coalition that would depend on the support of Arab parties to scrape together a majority vote of confidence.

Then a shocking spate of mob violence broke out between Jews and Arabs, spreading from Jerusalem to other Israeli cities. This severely complicated the task of building a government. Even if a unity government emerges, its first prime minister will be Naftali Bennett. Among Israel’s leaders, he is the most dedicated opponent of an independent Palestinian state and the most dedicated proponent of annexing the West Bank.

In the coming days, once the IDF has completed its destruction of Hamas’s infrastructure and eliminated as many of the leaders of its armed wing as it can find, Netanyahu will likely be willing, too. Usually cautious, he will not want to go into a fifth election with a war raging. Already, he is being blamed for the disruption to Israeli life. 

The world has seen Israel-Hamas wars before—the last one was in 2014. This time it is alleged that Hamas, with the assistance Iranian-backed Palestinian Islamic Jihad, fired rockets indiscriminately. Israel retaliated disproportionately. The United States supports Israel's right to defend itself. Europe wags its finger at Israel. Hamas eventually decides it has made its point. Qatar and Egypt mediate a cease-fire based on the usual “quiet for quiet” deal. Both sides bury their dead, clear the rubble, and go back to business as usual while the Israel Defense Forces (IDF) and Hamas’s Ezzedeen al-Qassam Brigades prepare for the next round.

The Biden administration’s approach suggests that Washington will be comfortable with another ceasefire, as it has other priorities. These include pandemic, economic recovery, climate change, China’s rise and Iran’s nuclear ambitions, to mention a few. The president’s deference to Netanyahu’s timetable is indicative of this change in approach, in which the parties are left to deal with the conflict.

Every crisis creates an opportunity. Could the circumstances this time create an opportunity for Washington to step up its engagement? Could the United States progress toward its avowed goal of a two-state solution to the Israeli-Palestinian conflict?

The answer, unfortunately, is no. The status quo actually suits both sides quite well and neither has an interest in changing it. Hamas was upset by the cancellation of Palestinian elections, in which it hoped to extend its influence to the West Bank. In exchange for that it took advantage of a confluence of Jewish-Arab confrontations in East Jerusalem to extend its influence there. It fired rockets toward Jerusalem. That in turn enraged Netanyahu, who was content to have Hamas rule in Gaza but not in the West Bank, and certainly not in East Jerusalem.

Hamas hopes to enhance its standing among Palestinians; Israel hopes to reestablish its deterrence against Hamas’s attacks on its citizens. Neither side is interested in having the United States broker a two-state solution. Hamas is dedicated to a one-state solution in which Israel does not exist; Netanyahu is committed to a three-state solution in which Hamas rules in Gaza and the Palestinian Authority presides over West Bank enclaves.

The third party to this conflict—Abu Mazen—would love to see the United States re-engage, because that would help make him relevant again. But American negotiators have had enough experience with Abu Mazen and believe that he is in no position to accept the compromises necessary to achieve a two-state solution. He fears, he will be denounced as a traitor by Hamas for any concession he makes to Israel, Abu Mazen intends to go into the history books as the leader who refused to compromise Palestinian rights.