The U.S. Federal Reserve raised its key interest rate by 25 basis points to between 1% and 1.25% — the second rate hike this year — sending the gold price down US$13 per oz., or 1.03%, to finish at US$1,253.40 per ounce. The Dow Jones Industrial Average rose 0.53% to 21,384.28 and the S&P 500 Index was up 0.06% to 2,433.15. The Philadelphia Gold & Silver Index fell 5.52% to 79.91 and West Texas Intermediate crude was down 2.55% to US$45 per barrel.
Teck Resources dropped US$3 to US$14.94 per share. The company expects a second-quarter average realized price for steelmaking coal between US$160 and US$165 per tonne. However, the second-quarter 2017 price for steelmaking coal sold under quarterly contracts, based on an average of three assessments, is US$190 per tonne. The pricing mechanism is effective from April 1. Teck said the differential between the quarterly benchmark price and its own average realized price for the second quarter was “larger than usual,” and that “after steel mills filled their prompt requirements immediately following the Queensland cyclone, there were very few prime hard-coking coal spot sales during the four-week period from mid-April.” Steelmaking coal sales volumes for the second quarter “are expected to be between 6.8 and 7 million tonnes,” and “final quarterly sales will depend on timing of shipments.”
Shares of Rio Tinto fell US$2.43 to US$39.30. The company said on June 9 that it had received a proposal from Glencore to acquire its Australian subsidiary, Coal & Allied Industries Ltd., for US$2.5 billion. Glencore’s offer follows a US$2.5-billion bid for the thermal coal assets in January from Yancoal. On June 20, Rio Tinto’s board said it preferred a revised offer from Yancoal because it “removes the deferred payment structure, can meet the timeline we have set for the transaction and has given us certainty regarding outstanding regulatory approvals required.”
Vale’s shares fell US43¢ to US$7.88. The company announced a US$2-billion revolving credit facility with a syndicate of 18 banks. The credit line unveiled on June 8 replaces a five-year, US$2-billion line signed in 2013, which has been cancelled. Vale’s total revolving credit facilities remain at US$5 billion.