Coal Market
Coal prices experienced limited volatility today, trading within a narrow range and ending the session close to unchanged. European gas prices softened further, with the front-month contract down approximately 1.5%, exerting downward pressure on API2 prices. Brent crude also declined by about 1%, while physical DES ARA markets appeared to weaken slightly. Newcastle coal futures continued trading below $142 per tonne, hovering near their lowest levels since late September. This sustained weakness reflects abundant Chinese coal supply and increased utilisation of alternative energy sources, including hydropower. October’s data highlighted a 4.6% year-on-year increase in Chinese coal output, following the conclusion of safety inspections at major mines. Yunnan’s hydropower generation, bolstered by heavy rainfall, also contributed to reduced coal demand. However, Newcastle futures remain 25% higher than their March lows, driven by robust thermal power demand. In September, Chinese thermal power generation rose nearly 10% year-on-year, with imports reaching a record 47.6 million tonnes, a 13% increase from the previous year.
European Natural Gas
European gas futures dipped towards €46 per megawatt-hour, the lowest in a week, as warmer-than-expected weather and higher wind power output reduced heating demand. Average temperatures in northwest Europe were 2°C above seasonal norms, and LNG supply from French terminals remained strong. Concerns over immediate disruptions in Russian gas flows eased following auction results suggesting that shipments through Ukraine are likely to continue into December. However, Gazprom expects flows to cease by year-end as the Russia-Ukraine transit agreement is unlikely to be extended. EU gas storage stood at 87.4% capacity, down from 97% in early November, indicating faster-than-expected withdrawals.
Oil Market
Brent crude oil prices edged above $73 per barrel on Wednesday after declining earlier in the week. Market participants are closely monitoring the upcoming OPEC+ meeting on December 1, with speculation that planned production increases for January may be postponed due to signs of oversupply. Geopolitical risks eased somewhat after a 60-day cease-fire was brokered between Israel and Hezbollah. However, renewed exchanges of fire shortly after the agreement highlighted ongoing volatility in the region. On the demand side, the latest API data showed an unexpected 5.9 million-barrel drop in US crude inventories last week, offering additional support to prices.
Iron Ore
Iron ore prices stabilised at approximately $102 per tonne, supported by strong global steel output, declining inventories, and optimism about further stimulus measures from China. The World Steel Association reported a 0.4% increase in global crude steel production to 151.2 million tonnes in October, with China’s contribution rising by 2.9% to 81.9 million tonnes. Reduced Chinese steel inventories and higher export volumes also lent support to prices. Markets remain hopeful for additional policy measures from Beijing to counteract the potential economic impact of elevated US tariffs.
Copper
Copper futures rebounded on Wednesday, supported by improved risk sentiment, a weaker dollar, and falling US Treasury yields. Expectations of increased demand from China’s appliance and automotive sectors provided further support, though global trade concerns persisted amid US President-elect Trump’s tariff threats. Supply constraints were underscored by challenges at Chile’s Escondida mine, where declining ore grades and higher costs continue to impact output.
Lithium
Lithium carbonate prices recovered to CNY 79,000 per tonne after touching a three-year low of CNY 71,000 in late October. The rebound reflects supply curtailments and an uptick in demand, with Chinese government subsidies for trading older vehicles for electric ones driving battery production expectations. Despite historically high inventories, manufacturers increased purchasing activity due to concerns over potential trade disruptions under the incoming US administration. Since 2023, lower prices have led to 190 tonnes of curtailments at lithium mines in Australia and China, tightening supply.
