Coal
API2 coal prices weakened further today, dropping approximately $4 across much of the curve, driven by a sharp 4.5% decline in European gas front-month contracts by day’s end. The sell-off in gas prices significantly pressured API2 swaps.
Meanwhile, the physical Newcastle market remained relatively quiet, with NEWC swaps holding firmer compared to API2. However, NEWC futures were down 1.21%, closing at $118.30. This decline was exacerbated by concerns that Beijing’s stimulus measures might fail to ignite growth, dampening record-high thermal coal consumption in 2024. Additionally, increased rainfall in key Chinese manufacturing hubs supported hydroelectric power generation, further reducing coal demand.
Brent
Brent crude traded higher in the morning session, but a stronger dollar reversed gains after reports emerged that former President Trump may declare a national economic emergency to impose universal tariffs. Nigeria’s increased output has offset OPEC’s production decline due to regular field maintenance. By 16h18 GMT, March Brent was down 1.05% at $76.25.
TTF Gas
European natural gas futures dropped to €45.6 per megawatt-hour, marking a near three-week low, as milder temperatures are expected to increase gas availability later this month. Temperatures are forecast to return to near or slightly above normal levels from the weekend onward.
Storage levels, though lower than last year, remain stable at just under 70% compared to 83% in 2024.
Norway’s Gassco announced maintenance at its Kollsnes processing plant until January 11. Earlier in January, gas prices surged to a 14-month high above €50/MWh due to halted Russian gas flows, which ceased on New Year’s Day after the expiration of a transit deal, intensifying fears of rapid storage depletion.
Iron Ore
Steel mills in China are cutting production due to softer demand and shrinking profit margins, with output expected to decline further this year, extending 2024’s downward trend.
Iron ore shipments to China have risen, as port arrivals remain high from increased deliveries by overseas miners meeting year-end targets.
Today, DCE iron ore futures fell, but the decline narrowed. The most-traded I2505 contract closed at 747.5 yuan/mt, down 0.73%. Some traders hesitated to sell, while others offloaded at market prices, with steel mills restocking minimally.
Market transactions were moderate:
- Shandong PB fines: 750-753 yuan/mt (down 2-3 yuan from yesterday).
- Tangshan PB fines: 770 yuan/mt (unchanged).
The SMM blast furnace operating rate rose 0.26 percentage points to 85.33%, and daily pig iron production at 242 sample mills increased by 15,100 mt to 2.346 million mt WoW. However, bearish macro sentiment continued to weigh on the market.
Pre-holiday restocking remains slow, with prices expected to fluctuate downward in the short term.
As of 16h22 GMT, SGX TSI 62% Fe February futures were trading up 0.21% at $96.65.
Copper
Three-month copper on the London Metal Exchange (LME) rose 0.34% to $9,036 per metric ton at 16h24 GMT, holding above last week’s five-month low of $8,757. Gains were supported by CTA fund activity, although many investors remained cautious amid uncertainty about former President Trump’s tariff plans.
Despite a dollar rally and strong Treasury yields fueled by robust US economic data reducing expectations of further Federal Reserve rate cuts, copper prices remained resilient. However, the uncertainty surrounding potential aggressive tariff measures weighed on sentiment.
