EU Plans Critical Minerals Stockpile to Counter China

King Ten

Energy

Remarks of Officials

Economic

Commodity

Political

Summary:

The EU, led by France, Germany, and Italy, is establishing a critical raw materials stockpile to counter China's supply leverage.

The European Union is advancing a plan to build a strategic stockpile of critical raw materials, with France, Germany, and Italy slated to spearhead the effort. This move is designed to slash the bloc's heavy reliance on China for resources essential to its industrial and defense sectors.

The initiative, known as RESourceEU, was introduced in December to create a joint reserve of key materials and manage the export of reusable metal scrap and rare earth waste. While the European Commission has not yet released full details, the plan is a direct response to growing supply chain vulnerabilities.

Why Europe Needs a Strategic Minerals Reserve

China's position as the world's top producer of industrial metals gives it significant leverage over global supply chains. Since 2023, Beijing's export controls on materials such as gallium, germanium, tungsten, and heavy rare earths like dysprosium have created significant disruptions for manufacturers outside the country.

With limited domestic refining capacity and long timelines required to develop new supply sources, Europe sees a strategic stockpile as a critical buffer. Such a reserve is considered one of the few immediate tools available to:

• Protect the European economy from sudden supply shocks.

• Safeguard production for its defense and aerospace industries.

• Secure the raw materials needed for its green and digital transitions.

EU's Stockpiling Plan: France, Germany, and Italy Take the Lead

Sources familiar with the matter confirm that concrete roles are being defined for the EU's largest economies. Following a December meeting with EU officials, an agreement was reached for a clear division of labor:

• France will manage the financing for purchasing the minerals.

• Germany will be responsible for sourcing the materials from producers.

• Italy will oversee the logistics and storage of the stockpile.

This collaboration builds on an existing pledge between Italy and Germany to work together on securing vital raw material supply chains for their industries.

Progress and Hurdles in Building the Stockpile

A European Commission spokesperson confirmed that a pilot project is underway with 10 member states. "The European Commission is working closely with several member states on a pilot project to strengthen the EU's stockpiling of critical raw materials," the spokesperson stated.

These countries have been organized into working groups to assess the required mineral volumes, logistical frameworks, and financing needed to cover long-term costs. The December meeting specifically discussed potential storage facilities, including those operated by Italy-based Pacorini Global Services and Netherlands-based C. Steinweg. Both companies declined to comment.

However, not everyone is satisfied with the pace. One source expressed frustration over slow progress, noting that while there are many working groups and discussions, concrete action is lacking. Details on which banks France is consulting or which producers Germany has approached have not been made public.

An Italian source confirmed the country was in "coordination talks with the Commission, and, at a technical level, with other member states, including Germany and France."

Beyond Stockpiling: Diversifying Global Supply Chains

The EU's strategy extends beyond creating a reserve. The bloc has identified 34 critical raw materials, designating 17 of them as "Strategic" due to their importance for green technology, digital infrastructure, defense, and aerospace.

To reduce its long-term dependency, the EU is also actively pursuing international partnerships. In October, Commission President Ursula von der Leyen announced plans to accelerate raw materials agreements with countries including Australia, Canada, Chile, Greenland, Kazakhstan, Uzbekistan, and Ukraine.

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

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James Riley

Economic

Remarks of Officials

Political

European Union lawmakers are restarting work on a trade deal with the United States after halting the process in protest of President Donald Trump’s comments about acquiring Greenland and his related threats of new tariffs.

The European Parliament's trade committee is now set to resume its efforts to implement the agreement, which aims to lower many EU import duties on American goods.

Why the Trade Deal Was Paused

The deal, originally struck with Trump in July, also includes maintaining zero duties on U.S. lobsters, a provision agreed upon in 2020. However, a key vote was suspended last month after Trump threatened new tariffs against European countries that opposed his goal of annexing Greenland, a semi-autonomous territory of Denmark.

The tariff threat was withdrawn after several days, but the pause in negotiations highlighted the tense political backdrop. A significant delay from the European side could have provoked a reaction from the U.S. president, who recently threatened to raise tariffs on South Korean exports over what he described as a failure to implement its side of a trade agreement.

New Safeguards and Next Steps

Work on the trade deal will now resume, with the committee potentially voting on February 24, according to Social Democrat lawmaker Bernd Lange, who chairs the trade committee.

To protect against future volatility, Lange confirmed that EU lawmakers would support new conditions to the agreement, including:

• A Suspension Clause: This would allow the EU to suspend the deal if the United States threatens the security or territorial integrity of any member state. It would also apply in the case of new U.S. tariff threats.

• A Sunset Clause: Lawmakers also agreed to add a clause that would set an expiration date for the deal, although the exact time frame has not yet been determined.

Following the committee vote, the proposals must be approved by the full European Parliament and EU governments. This process involves negotiating a common text, which means final approval is likely still one to two months away.

Lingering Concerns Over a 'Lopsided' Agreement

Even before the recent political friction, many EU lawmakers had expressed concerns that the trade deal was unbalanced. Critics point out that the agreement requires the EU to cut most of its import duties while the U.S. largely maintains a broad tariff rate of 15%. Despite these reservations, lawmakers had previously appeared willing to accept the deal with certain conditions attached.

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

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Michael Ross

Economic

Traders' Opinions

Central Bank

Data Interpretation

Nomura Holdings Inc. predicts Turkey's central bank will need to pause its cycle of interest rate cuts at its next meeting, citing stubbornly high inflation that limits the room for further monetary easing.

According to Nomura economist Zumrut Imamoglu, elevated core inflation and a high headline figure are key reasons for the central bank to hold rates steady.

Stubborn Inflation Defies Expectations

Recent data showed that Turkey's annual consumer price growth slowed only marginally to 30.7% from 30.9% the previous month. This figure was higher than analyst forecasts, which had anticipated a rate just below 30%.

The persistence of high prices prompted Nomura to become the first major bank to call for an end to the rate-cutting cycle that began in July of last year. In its most recent move, the monetary authority reduced its policy rate by 100 basis points to 37% in January.

This view contrasts with other market participants. JPMorgan Chase & Co. economist Fatih Akcelik, for example, still anticipates another 100-basis-point cut in March.

Revised Forecasts Signal Higher Inflation Ahead

Imamoglu noted that annual inflation is likely to increase in February, as the month coincides with Ramadan, a period when food prices typically rise.

Reflecting this outlook, Nomura has adjusted its economic projections for Turkey:

• Year-end inflation forecast: Raised to 23% from a previous estimate of 21.5%.

• Central bank target: This compares to the official target of 16%.

• Year-end policy rate forecast: Increased by 100 basis points to 29%.

Despite the call for an immediate pause, Nomura anticipates that the central bank could resume easing later in the year. "We think that food prices will ease in May-June and services inflation will be softer over the summer, allowing the Turkish central bank to increase the pace of its rate cuts," Imamoglu said.

The call for caution follows a sharp acceleration in monthly inflation, which hit 4.8% in January, up from 0.9% the prior month. Driven by food prices and seasonal wage adjustments, this was the highest monthly rate recorded in a year.

To stay updated on all economic events of today, please check out our Economic calendar

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James Riley

China–U.S. Trade War

Remarks of Officials

Economic

Commodity

Political

The Trump administration is pushing to establish a critical minerals trading bloc with allied nations, using tariffs to set price floors and counter China's dominance over the global supply chain.

The plan aims to prevent China from flooding the market with low-cost materials to undermine potential competitors, a tactic highlighted during the recent trade war.

A New Alliance to Secure High-Tech Resources

U.S. Vice President JD Vance articulated the strategy at a State Department meeting, emphasizing the goal of creating a resilient and cooperative supply zone.

"We want members to form a trading bloc among allies and partners, one that guarantees American access to American industrial might while also expanding production across the entire zone," Vance said. "What is before all of us is an opportunity at self-reliance that we never have to rely on anybody else except for each other."

Critical minerals are essential components in everything from smartphones to jet engines. The trade disputes over the past year exposed how heavily most economies depend on these materials, a market overwhelmingly controlled by China.

"I think a lot of us have learned the hard way... how much our economies depend on these critical minerals," Vance stated at the meeting, which Secretary of State Marco Rubio hosted for officials from dozens of nations.

Project Vault: Building a Strategic Stockpile

This initiative follows President Donald Trump's recent announcement of "Project Vault," a plan to create a national stockpile of rare earth elements. The project is backed by a $10 billion loan from the U.S. Export-Import Bank and nearly $1.67 billion in private capital.

The administration's assertive move comes after China, which controls 70% of the world's rare earths mining and 90% of its processing, restricted supplies in response to U.S. tariffs. While Trump and Chinese President Xi Jinping agreed to a one-year truce in October, China's export limits remain tighter than before the trade conflict began.

"We don't want to ever go through what we went through a year ago," Trump said when announcing the project.

Pini Althaus, founder of USA Rare Earth, believes other Western nations will join the effort, having recognized their vulnerability to China's supply chain leverage.

Public-Private Partnerships Drive the Strategy

To jumpstart domestic production, the U.S. government has begun making direct investments in American producers. Last week, it extended $1.6 billion to USA Rare Earth in exchange for stock and a repayment plan.

Althaus noted that securing government funding has become as rigorous as meeting with private equity investors, with officials demanding terms that ensure a financial return for taxpayers.

Meanwhile, the U.S. Export-Import Bank's board approved the $10 billion loan—the largest in its history—to help establish the U.S. Strategic Critical Minerals Reserve. The reserve is designed to guarantee access for key manufacturers, including:

• Battery maker Clarios

• Energy firm GE Vernova

• Digital storage company Western Digital

• Aerospace giant Boeing

Bank President John Jovanovic described the project as a public-private partnership where "there are no free riders." He explained that manufacturers who benefit most are making long-term financial commitments, while the government's loan helps attract private investment.

Reshaping the Global Market

Industry experts believe the stockpile strategy could foster a "more organic" pricing model that operates independently of China. Wade Senti, president of magnet company AML, said this would directly counter Beijing's practice of using its market dominance to squeeze out competitors with artificially low prices.

The Trump administration is also injecting public funds elsewhere. The Pentagon has spent nearly $5 billion over the past year to secure its own access to critical materials after the trade war exposed the nation's dependence on China.

Bipartisan Support and Long-Term Hurdles

The administration's focus on mineral supply chains has garnered support across the political aisle. A bipartisan group of lawmakers last month proposed creating a new agency with a $2.5 billion budget to spur domestic production of rare earths and other critical minerals.

"It's a clear sign that there is bipartisan support for securing a robust domestic supply of critical minerals," Senators Jeanne Shaheen and Todd Young said in a joint statement.

However, experts caution that success will not be immediate. David Abraham, a rare earths specialist and author of "The Elements of Power," said building up a sufficient stockpile will be a long-term effort, especially while China's export restrictions keep materials scarce.

Abraham also pointed to a potential contradiction in the administration's policy. While working to secure the supply of critical minerals, it has simultaneously cut incentives for electric vehicles and wind turbines—key sectors that drive demand for these very elements in the United States.

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

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Adam

Cryptocurrency

Bitcoin has stabilized after a sharp selloff, but weakening momentum below key support levels has left it and the broader crypto market vulnerable to further downside, experts warn.

The stable level finds Bitcoin “above $74,500,” but price action “remains fragile,” with momentum that “continues to point lower,” analysts at crypto trading firm QCP Capital noted this week.

The desk added that “upside remains constrained near recent resistance levels,” leaving broader markets “exposed to further liquidation-driven moves.”

QCP said the next few sessions will be key, warning that a sustained drop below $74,000 could open the door to a deeper slide across crypto, while a move back above $80,000 may offer short-term relief.

It also said traders are watching for signs of institutional buying near $76,000, along with easing geopolitical tensions and more dovish signals from the Federal Reserve.

Bitcoin has pared back losses seen during the U.S. trading session when it dipped to as low as $73,100. It remains down 1.7% on the day to $76,400, according to CoinGecko data.

Outside of crypto, the same caution flagged by QCP is being echoed.

Michael Burry, best known for his role in The Big Short, flagged tightening liquidity conditions and renewed fragility across risk assets, warning that recent moves reflect structural pressure.

"Sickening scenarios have now come within reach," Burry said as cited by Business Insider, outlining three other consequences in particular he believed were possible if bitcoin continued its free-fall.

Burry noted a slide below $70,000 for Bitcoin could force heavy losses across those institutions holding the crypto, tighten capital access for Strategy, and prompt more aggressive risk management, while deeper moves approaching $60,000 could trigger a crisis for Michael Saylor’s firm.

A drop toward $50,000 could push Bitcoin miners into bankruptcy, unleash forced selling of reserves, and spill over into severe dislocations in tokenized and physical metals markets, the analyst said.

"Tokenized metals futures would collapse into a black hole with no buyer. Physical metals may break from the trend on safe haven demand," Burry warned.

Converging factors

QCP’s outlook “aligns with what we’re seeing in market structure,” Trantor, who leads Linea-based decentralized exchange Etherex, told Decrypt.

“Centralized exchanges (CEX) remain dominant holders, while leveraged traders continue to amplify short-term volatility as they push prices in both directions.”

Until such time leverage becomes “meaningfully flushed from the system and spot buyers regain control,” Bitcoin would likely “remain stuck in a regime of chop, uncertainty, and persistent downside anxiety,” he explained.

Still, in the near term, easing “liquidity conditions, cheaper money, and a more certain global environment” is “capable of changing sentiment decisively,” he added.

“Consensus trades have a habit of persisting far longer than expected until they don’t. When positioning, sentiment, and narrative become too one-sided, the conditions for reversal quietly begin to form,” Trantor said.

Macro risk is believed to “remain the predominant factor” at this point, Siwon Huh, researcher at crypto analytics firm Four Pillars, told Decrypt.

“With respect to macro risk, the uncertainty following Kevin Warsh's nomination has emerged as a key driver. Until his stance on interest rates and quantitative easing is clearly articulated, volatility stemming from this ambiguity is unlikely to subside,” Huh said.

There’s also a range of “destabilizing factors,” he said, pointing to “the risk of military conflict with Iran, a sharp decline in precious metals, and elevated risk in AI-related equities.”

These factors “collectively suggest that conditions are not yet conducive to a rotation of liquidity into Bitcoin,” he noted.

Source: decrypt

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Oliver Scott

Economic

Remarks of Officials

Central Bank

Data Interpretation

The U.S. services sector remained stable in January, but a significant jump in business costs is signaling renewed inflationary pressure, potentially reversing a recent cooling trend.

The Institute for Supply Management (ISM) reported that its non-manufacturing PMI was unchanged at 53.8 last month. This figure, which indicates expansion, beat economists' forecasts of 53.5 and suggests the economy started the first quarter on steady footing. The services sector is a critical barometer, accounting for over two-thirds of all U.S. economic activity.

Rising Costs Point to Inflationary Risk

While the headline number was stable, a closer look reveals mounting cost pressures. The ISM survey's measure of prices paid by businesses climbed to 66.6 in January from 65.1 in December.

This increase coincided with signs of supply chain strain. The supplier deliveries index rose to 54.2, its highest level since October 2024. A reading above 50 signifies slower delivery times, which may have been worsened by frigid temperatures and heavy snow across the country.

This development presents a challenge to the view that inflation is firmly under control. Federal Reserve Chair Jerome Powell recently described the impact of import tariffs as a likely "one-time price increase." The central bank left its benchmark interest rate unchanged in the 3.50%-3.75% range last week.

New Orders Weaken as Exports Plunge

Growth in new business moderated, with the new orders gauge falling to 53.1 from 56.5. A sharp contraction in foreign demand was a primary driver of this slowdown. The measure for export orders collapsed to 45.0, its lowest reading since March 2023, down from 54.2 in the prior month.

This slump in exports may be linked to geopolitical friction. Respondents in the ISM's January manufacturing survey noted that U.S. tensions are fueling "anti-American" sentiment among buyers. President Donald Trump has implemented broad tariffs and last month announced temporary American control over Venezuela after capturing President Nicolas Maduro. He also threatened new tariffs against European allies over the sale of Greenland before retracting the statement.

Hiring in the Services Sector Slows

The employment picture in the services sector also softened. The ISM's employment index slipped to 50.3 from 51.7 in December, indicating a much slower pace of hiring.

A more comprehensive view of the labor market remains pending, as the Department of Labor's official employment report for January has been delayed following the partial government shutdown that ended on Tuesday.

To stay updated on all economic events of today, please check out our Economic calendar

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Adam

Forex

FUNDAMENTAL OVERVIEW

USD:

The US Dollar continues to rebound after the strong selloff experienced in the last couple of weeks of January. The greenback remains supported by improving US data with the recent US ISM Manufacturing PMI potentially hinting to stronger economic activity going forward. If the data continues to come out strong, traders will have to pare back their dovish Fed bets, and that’s going to boost the US Dollar.

Today, we have the US ADP and the US ISM Services PMI on the agenda. Surprisingly strong data will likely trigger a hawkish repricing in interest rates expectations and support the greenback. Soft data, on the other hand, could weigh on the greenback in the short-term but it’s unlikely to change much in terms of market pricing.

The main event will be the US NFP report which got delayed due to the partial US government shutdown. We might get the data next week, which is also when we will get the US CPI report. The trend for the dollar is looking increasingly bullish, but traders will still look for confirmation from the data to gain more conviction.

GBP:

On the GBP side, the latest UK Flash PMIs beat expectations by a big margin and triggered a slightly hawkish repricing which gave the pound a boost. The employment and inflation reports, on the other hand, came out basically in line with expectations.

The BoE is expected to hold the Bank Rate steady tomorrow with a 6-3 vote split in favour of no change. There shouldn’t be material changes to the forward guidance as the central bank maintains a data-dependent approach. The focus will be mainly on the updated monetary policy report where a lower revision for inflation or the neutral interest rate could be taken as dovish signals.

GBPUSD TECHNICAL ANALYSIS – DAILY TIMEFRAME

GBPUSD - daily

On the daily chart, we can see that GBPUSD probed above the cycle high around the 1.3790 level but eventually fell back below it. The sellers piled in on the false breakout and are now targeting the major trendline around the 1.3500 handle. If the price gets there, we can expect the buyers to lean on the trendline with a defined risk below it to position for a rally into a new cycle high.

GBPUSD TECHNICAL ANALYSIS – 4 HOUR TIMEFRAME

GBPUSD - 4 hour

On the 4 hour chart, we can see that we have a minor counter-trendline defining the current pullback. The buyers will likely continue to lean on the trendline with a defined risk below it to keep pushing into new highs, while the sellers will look for a break lower to increase the bearish bets into the major trendline.

GBPUSD TECHNICAL ANALYSIS – 1 HOUR TIMEFRAME

GBPUSD - 1 hour

On the 1 hour chart, there’s not much we can add here as the buyers will look for a bounce around the trendline, while the sellers will look for a break lower. The red lines define the average daily range for today.