23rd January 2025
Coal
NEWC prices extended their decline following yesterday’s significant drop. Physical Newcastle coal for February 2025 loading traded noticeably lower than last week, prompting additional selling in NEWC swaps. European gas prices showed early strength, with the front-month contract briefly surpassing €50 before retreating, ending the day just over 1% higher. This provided some support for API2, which held firmer compared to other indices.
*Brent*
Brent crude oil futures traded below $79 after reports of the first rise in U.S. crude inventories since mid-November. The American Petroleum Institute noted a 1 million barrel increase in crude stocks last week, alongside higher fuel stockpiles, with official data pending. Meanwhile, Indian refiners are exploring new supply options to offset reduced Russian imports. Markets remain wary of potential trade measures from the Trump administration, including tariffs on China, Canada, and Mexico, as well as additional sanctions on Russia. Anticipation of these tariffs has also prompted a surge in Canadian oil exports to the U.S.
*Dutch TTF Gas*
European natural gas prices stabilised around €49-50 per megawatt-hour, near a three-week high, amid mixed supply-demand signals. Forecasts for warmer, windier weather in Europe pointed to reduced gas demand, but U.S. Gulf Coast cold weather disrupted operations at Port Freeport, a key LNG export facility. EU gas inventories remain 59% full, down from 74% last year, while U.S. President Trump lifted restrictions on LNG export licences, boosting expectations for increased exports. This policy could drive European LNG imports up by over 15% this year. Recent data shows EU gas withdrawals accelerating, with a 6.49 bcm draw in mid-January, the fastest rate since 2021, amid robust demand averaging 1.63 bcm/day.
*Iron Ore*
Iron ore futures edged higher as Chinese government support measures lifted sentiment. The most-traded May contract on China’s Dalian Commodity Exchange rose 0.44% to 801.5 yuan ($110.04) per metric ton, while the benchmark February contract in Singapore climbed to $103.65 a ton. Chinese equities gained after Beijing encouraged insurance firms to invest in local markets, sparking optimism. Further stimulus is expected, with reports suggesting the People’s Bank of China may lower banks’ reserve requirements. However, spot trading activity slowed as steel mill demand waned. Shandong’s mainstream PB fines traded around 790 yuan/mt, while Tangshan saw prices at 810-815 yuan/mt. Inventory levels increased, tempering near-term market optimism.
*Copper*
LME three-month copper prices traded at $9,229, reflecting resilient fundamentals despite trade tensions. Analysts at Bank of America highlight China’s robust demand, supported by declining inventories, constrained mine and scrap supply, and broad sectoral growth, including transport, grid investment, and electronics. Copper demand in China is forecast to rise 3% in 2025, up from 2% in 2024, underlining strong medium-term prospects. January saw a 6% price gain before recent profit-taking. Concerns persist about potential U.S. tariffs on Chinese imports, which could impact global trade flows. However, optimism for base metals remains, with analysts anticipating continued strength in copper throughout 2024.
