*COAL*
Coal prices continued to show significant weakness, with API2 leading the decline as the curve dropped over $4. Bearish sentiment was fueled by a sharp fall in European gas prices, where the front month dropped nearly 5%, further pressuring API2.
In the physical market, DES ARA saw reduced support, contributing to the downward trend for API2. Meanwhile, physical Newcastle markets remained relatively quiet, offering little direction for NEWC swaps. The lack of activity in these markets added to the subdued tone for coal prices overall.
*BRENT*
Brent crude oil prices edged higher on Monday, trading at $76.97 per barrel, marking their highest levels since mid-October. Prices gained 0.6%, supported by colder weather driving demand and expectations of tighter sanctions on Iranian and Russian oil exports. However, market momentum was tempered by a strong dollar and conflicting reports about the incoming Trump administration’s tariff policies.
Last week, Brent crude surged nearly 5%, bolstered by rising heating demand in Europe and the US, optimism surrounding increased Chinese consumption, and a decline in US crude stockpiles. On the supply side, Goldman Sachs forecasts reduced Iranian production and exports due to stricter US sanctions. Despite these bullish factors, uncertainty looms over the market, with concerns about oversupply, potential OPEC+ production increases, and weaker Chinese demand.
*TTF GAS*
European natural gas futures retreated to €48 per megawatt-hour on Monday, following last week’s 3.8% rise. While colder temperatures have increased demand, immediate supply shortages are not anticipated. Europe’s gas reserves are at their lowest usage levels in seven years, with storage at just over 70% compared to 86% a year ago. This steep depletion, driven by surging heating needs, poses challenges for restocking efforts ahead of next winter.
Europe’s growing reliance on liquefied natural gas (LNG) imports adds to market volatility, with disruptions like Norway’s Hammerfest LNG plant closure compounding concerns. Short-term price pressures remain, even as longer-term supply adequacy appears stable.
*IRON ORE*
Iron ore futures extended their decline on Monday, hitting their lowest levels in more than a month, as reduced hot metal output in China and weakness in the country’s equity markets weighed on prices.
The most-traded May contract on China’s Dalian Commodity Exchange dropped 2.21% to 751.5 yuan ($102.54) per metric ton, its weakest close since 19th November. On the Singapore Exchange, the benchmark February iron ore contract traded at $98.10/ton as of 15:24 GMT.
Market participants expect some support for iron ore prices this month as Chinese mills begin pre-holiday stockpiling ahead of the Lunar New Year, now just four weeks away. However, consultancy Mysteel noted that the seasonal slowdown in hot metal output could limit the scale of ore replenishment, exerting downward pressure on prices.
Despite recent declines, pre-holiday restocking and a rebound in pig iron production offered some stability. Supply constraints eased as shipments from Australia to China fell, while Brazil’s contribution to shipments increased. Analysts believe that while prices may face headwinds in the short term, the downside risks are relatively constrained.
*COPPER*
Copper prices on the London Metal Exchange (LME) rose by 1.55%, closing at $9,014/mt at 16:24 GMT. Market sentiment remains cautious, with prices trading within a narrow range due to a lack of clear directional outlook.
Optimism emerged as reports suggested President-elect Donald Trump’s team is considering selective tariffs on key goods, rather than broad-based tariffs on all imports. This revised approach could alleviate trade tensions and improve market confidence. However, uncertainty continues to weigh on copper’s price trajectory.
