22nd January 2025
Coal
Coal prices saw a significant pullback today, with API2 contracts leading the decline, falling by nearly $5 at certain points along the curve. European gas prices also dropped notably, with shorter-dated contracts losing approximately 2.5%, attracting sellers after the recent rallies. Additionally, the physical DES ARA market showed increased offers compared to yesterday, adding further downward pressure on swaps.
Brent
Oil prices fell for a fifth consecutive session on Wednesday as trade war concerns weighed on sentiment. March Brent crude declined 0.18% to $79.28 per barrel, driven by U.S. President Donald Trump’s plans to impose a 25% tariff on imports from Canada and Mexico and a 10% levy on Chinese goods starting February 1. Canada, a key supplier of heavy crude to U.S. refineries, accounts for nearly two-thirds of U.S. oil imports.
Trump’s policies, including a national energy emergency declaration to expand U.S. oil output, further pressured prices. Recent U.S. sanctions on Russia disrupted physical oil markets, providing some support. Additionally, a winter storm in the Gulf Coast led to temporary production losses in North Dakota, estimated at 130,000–160,000 barrels per day.
Dutch TTF Gas
European natural gas prices stabilised near €49–50 per megawatt-hour on Wednesday, balancing supply and demand concerns. Forecasts for warmer, windier weather in Europe suggested reduced heating needs, while cold weather in Texas disrupted operations at Port Freeport, the U.S.’s second-largest LNG export facility.
European gas storage levels remain at 59%, significantly lower than 74% at the same time last year. President Trump’s decision to lift restrictions on LNG export licences is expected to increase U.S. exports to Europe and Asia. This aligns with a projected 15% rise in European LNG imports this year, tightening global gas markets.
Iron Ore
Iron ore futures eased on Wednesday, with concerns over U.S. tariffs on Chinese imports adding to market pressure. The most-traded May iron ore contract on China’s Dalian Commodity Exchange fell 0.44% to 800.5 yuan ($109.94) per metric ton, ending a nine-session rally. On the Singapore Exchange, February contracts slipped 1.1% to $101.21 per ton.
Despite rising pig iron production and higher operating rates at steel mills, trading was subdued as mills remained cautious. Prices for PB fines in Shandong fell 5 yuan per ton from the previous session. However, ongoing restocking needs and steady pig iron output may support a short-term recovery in iron ore prices.
Copper
Base metals weakened on Wednesday, with LME three-month copper slipping 0.6% to $9,218 per metric ton. Market sentiment was dampened by U.S. trade policy uncertainty. Trump hinted at delaying tariffs on China while maintaining threats against Canada and Mexico, temporarily easing concerns of an immediate hit to commodities demand.
Caution also stemmed from upcoming U.S. Federal Reserve and Bank of Japan interest rate decisions and slower activity ahead of China’s Lunar New Year. Optimism remains for additional stimulus measures from Beijing, with expectations that the People’s Bank of China may cut reserve requirement ratios for banks this month, supporting physical metals demand.
