The Era of Ultracheap Stuff Is Under Threat -- Commodities Roundup

MARKET MOVEMENTS:

--Brent crude oil is down 0.9% at $85.48 a barrel.

--European benchmark gas is up 4.3% at EUR30.10 a megawatt hour.

--Gold futures are down 0.3% to $1,969.40 a troy ounce.

--LME three-month copper futures are down 0.1% at $8,543 a metric ton.

--Wheat futures are up 2% to $6.46 a bushel.

TOP STORY:

The Era of Ultracheap Stuff Is Under Threat

The workplace features floor-to-ceiling windows and a cafe serving matcha tea, as well as free yoga and dance classes. Every month, workers gather at team-building sessions to drink beer, drive go-karts and go bowling.

This isn't Google. It's a garment factory in Vietnam.

Asia, the world's factory floor and the source of much of the stuff Americans buy, is running into a big problem: Its young people, by and large, don't want to work in factories.

That's why the garment factory is trying to make its manufacturing floor more enticing, and why alarm bells are ringing at Western companies that rely on the region's inexpensive labor to churn out affordable consumer goods.

The twilight of ultracheap Asian factory labor is emerging as the latest test of the globalized manufacturing model, which over the past three decades has delivered a vast array of inexpensively produced goods to consumers around the world. Americans accustomed to bargain-rate fashion and flat-screen TVs might soon be reckoning with higher prices.

OTHER STORIES:

Big Oil's Talent Crisis: High Salaries Are No Longer Enough

Good news from the oil patch: Jobs are plentiful and salaries are soaring.

The bad news is that young people still aren't interested.

Even as oil-and-gas companies post record profits, the industry is facing a worsening talent drought.

At U.S. colleges, the pool of new entrants for petroleum-engineering programs has shrunk to its smallest size since before the fracking boom began more than a decade ago. European universities, which have historically provided many of the engineers for companies with operations across the Middle East and Asia, are seeing similar trends.

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Saudi Aramco Profit Falls on Lower Crude Prices

Saudi Arabia's national oil company reported a fall in quarterly profit due to lower crude oil prices and weaker refining and chemical margins.

Saudi Arabian Oil Co., known as Aramco, said Monday that net profit fell to $30.08 billion in the three months ended June 30 from $48.44 billion in the year-earlier period, when it benefited from soaring oil prices following Russia's invasion of Ukraine.

The company said it intends to distribute performance-linked dividends over six quarters, with the first distribution of around $9.9 billion in the third quarter. A quarterly dividend of $19.5 billion will be paid for the second quarter.

MARKET TALKS:

Oil Muted After Ukraine Attacks Russian Oil Tanker

0747 GMT - Oil prices hovered close to their highest level since mid-April as investors weighed the impact of a Ukrainian attack on a Russian-flagged oil tanker. Brent crude oil inches down less than 0.1% to $86.20 a barrel while WTI declines 0.8% to $82.75 a barrel. Over the weekend, a Ukrainian naval drone damaged an oil tanker that had been sanctioned by the U.S. for working with the Russian military while Ukrainian officials said that Russian Black Sea ports should be considered subject to "military threat." The attacks could threaten a new risk to Black Sea commodity flows and boost shipping insurance rates in the region. ([e-mail])

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Metals Mixed as Weak Demand Meets Tight Supply

0742 GMT - Metal prices are mixed, with worries over demand keeping prices low, though tight supply is likely providing a floor to prices. Three-month copper is down 0.1% to $8,544 a metric ton while nickel is flat at $21,285 a ton. Gold meanwhile is down 0.2% to $1,971.90 a troy ounce. Marex in a note said that metals have had a messy start to August with a third of the sharp gains made in July erased last week on poor demand signals from China. However, Goldman Sachs also highlighted that stocks for goods like copper are low. Goldman said that the latest weekly data showed onshore social and bonded stocks at just 150,000 metric tons, which would represent just four days of inventory cover. ([e-mail])

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Wheat Pushes Higher Amid Uncertainty Over Black Sea Trade

0723 GMT - Wheat prices are rising as uncertainty over the war in Ukraine and trade in the Black Sea mount. Wheat futures are up 2.3% to $6.48 a bushel during morning trade in Europe. The latest developments in the war, which includes Ukraine striking a Russian oil tanker over the weekend, are bullish for both crude oil and wheat, Peak Trading Research says. "Grains are still flowing out of Ukraine, but retaliatory attacks from both sides are escalating and there remains significant Black Sea supply risk," Peak Trading says. ([e-mail])

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Gold Prices Fall; Analysts See Limited Upward Momentum

0308 GMT - Gold prices are lower in Asian trade. Analysts at Galaxy Futures reckon the precious metal is likely to remain in a range-bound pattern in the near term. There are growing investor expectations for less aggressive Fed tightening at the central bank's September meeting after the latest release of weaker-than-expected U.S. jobs data, the analysts note, adding this could offer some relief for gold prices. But still, technical analysis points to continued pressure for the metal, especially given continued strength in the dollar, which makes the safe-haven commodity less attractive, the Galaxy analysts say. Spot gold is down 0.1% at $1,940.76 an ounce. ([e-mail])

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Iron-Ore Falls Amid Worries of Likely Policy Intervention

0235 GMT - Iron-ore futures decline in early China trade as a selloff continues on fading optimism over China's stimulus and worries of production curbs being imposed by the government. "Amidst the broad industrial metals post-Politburo fade, the most significant sell-off has been in iron ore," Goldman Sachs analysts say in a research note. The catalyst has been related to the increasing risk of China policy intervention impacting steel production and in turn iron-ore demand, the analysts add. The most traded September contract on the Dalian Commodity Exchange is 0.9% lower at CNY813.5 a ton. ([e-mail])

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(END) Dow Jones Newswires

08-07-23 0634ET