*COAL*
Coal prices experienced a modest rebound today, driven primarily by a sharp recovery in European gas markets. Short-dated gas prices surged over 4% by the close, halting the steady downward trend seen since the start of December. This uptick in gas provided broader support to the energy complex, lifting coal prices alongside it.
The physical Newcastle market remained relatively subdued, but both NEWC and API4 swaps gained momentum, following strength in API2 contracts. This suggests that coal markets are responding to developments in Europe, where gas dynamics continue to play a central role in influencing broader energy prices.
*BRENT CRUDE*
Brent crude oil futures fell 1.1% to $73.08 per barrel, marking a second consecutive day of losses, as concerns over weak Chinese demand weighed on the market. Despite OPEC+ production cuts, oil prices have remained rangebound throughout 2024 due to rising output from non-OPEC producers and sluggish demand growth tied to China’s economic challenges.
*TTF GAS*
European natural gas futures rebounded above €41.5 per megawatt-hour, recovering from the one-month low of €39.5 reached earlier this week. The market remains focused on supply uncertainties as Russian gas flows through Ukraine are set to halt at year-end with the expiry of the current transit deal. Hungary and Slovakia, critical hubs for gas distribution to Italy and Austria, continue to push for extensions through European Commission negotiations. However, the EU’s ongoing strategy to reduce reliance on Russian fossil fuels has driven renewed interest in alternative supplies, including LNG. Major German utilities recently signed LNG supply agreements with the UAE’s ADNOC, while record wind power output in the UK enabled electricity exports to continental Europe, alleviating supply concerns.
*IRON ORE*
Iron ore prices continued to slide toward $105 per tonne, pressured by lacklustre signals from China. The recent Central Economic Work Conference reaffirmed China’s commitment to “proactive fiscal policy” and “moderately looser monetary policy” but provided little clarity on the size or scale of upcoming stimulus measures. Plans to increase the deficit, issue ultra-long bonds, and lower interest rates did little to lift market sentiment. Meanwhile, portside iron ore stocks in China surpassed 150 million tons, a record high for this time of year, further weighing on prices. Additionally, a reassessment of U.S. Federal Reserve rate-cut expectations for 2025 has pressured global commodity markets, even as a rate move this week remains widely anticipated.
*COPPER*
Copper futures edged higher, supported by resilient demand from downstream sectors, including power grids, air conditioning, and electric vehicles. Analysts at Galaxy Futures noted steady consumption but highlighted investor caution ahead of the U.S. Federal Reserve’s policy meeting. While a 25-basis-point rate cut remains highly probable for December, markets are recalibrating expectations for the pace of rate cuts in 2025, which could influence copper prices. At the time of writing, the three-month LME copper contract had risen slightly by 0.1% to $9,074.00 per tonne.
