20th June 2025
Geopolitics continued to dominate commodity markets, with traders reacting to heightened tensions in the Middle East and growing speculation around potential U.S. military involvement. The broader energy complex remained volatile, while industrial metals responded to shifting supply dynamics and macroeconomic cues.
*Coal*
It was a relatively subdued session for coal swaps, despite ongoing volatility across the broader energy complex. European gas and oil prices opened around 2% lower, dragging API2 prices down in early trading. However, coal recovered in the afternoon, leaving the API2 curve marginally firmer by the close. Meanwhile, NEWC swaps found some support in the morning but softened steadily through the rest of the day.
*Brent Crude*
Brent crude posted its third consecutive weekly gain, briefly breaching $78/bbl midweek before retreating to around $76.42 by Friday. Early strength was driven by fears of regional supply disruptions as Israel intensified strikes on Iran and the U.S. reportedly weighed direct involvement. However, easing concerns around immediate U.S. action trimmed risk premiums. Prices found support from a sharp U.S. inventory draw and sustained Iranian crude exports, which hit a five-week high of 2.2 million bpd.
*European Gas (Dutch TTF)*
European gas prices surged over the week, with TTF rallying to a 10-week high above €40/MWh. The market reacted to heightened geopolitical risk, particularly the potential for disruptions at the Strait of Hormuz—a vital route for LNG flows. While Qatari shipments remained stable, traders stayed on edge. Warmer-than-normal temperatures across Europe further supported prices, boosting near-term demand for cooling.
*Iron Ore*
Iron ore rebounded from recent lows, ending the week higher around $93.95/mt (SGX TSI 62%). Gains were underpinned by resilient steel production in China, where blast furnace utilisation rose and hot metal output stayed firm. However, weak May steel output (-6.9%), adverse weather, and Beijing’s continued crackdown on overcapacity kept gains in check. Sentiment remains cautious amid broader demand concerns.
*Copper (LME)*
Copper saw muted movement, largely trading sideways despite a softer U.S. dollar and tight exchange inventories. The market grappled with conflicting forces: geopolitical instability, weaker sentiment from China, and looming U.S. tariff policy. News of a significant new copper-gold-silver discovery in Argentina added a longer-term bearish undertone, though near-term supply remains constrained, with LME stocks down 60% since March.
*Outlook*
The coming week is likely to remain volatile, with markets continuing to price in geopolitical risk, weather-driven demand shifts in Europe, and macroeconomic developments. Eyes will be firmly on Washington, where a decision on U.S. military action could reset risk sentiment across commodities.
