28th August 2025
Commodity markets traded with mixed signals today, as energy contracts reflected shifting demand expectations while metals grappled with supply changes and sentiment swings from broader risk markets.
Coal
Volatility in energy markets persisted, with European gas prices falling more than 3% intraday before paring losses to finish about 2.5% lower. The weakness fed into coal derivatives, with API2 swaps slipping around $1 across the curve. In the physical market, DES ARA prices held steady, while Newcastle attracted less bidding interest. Even so, NEWC swaps remained relatively supported, underscoring a divergence between derivatives and physical sentiment.
Brent Crude
Brent futures slipped toward $67/bbl, giving back prior-session gains as traders weighed softening U.S. fuel demand against signs of supply tightness. U.S. crude inventories fell 2.39m barrels to 418.3m, with Cushing supplies down 838,000 barrels, but analysts noted the summer driving season is nearing its end, raising the risk of weaker consumption post–Labor Day. Tariff tensions also remained in focus after Washington imposed a 50% duty on Indian imports in response to continued Russian crude purchases. While India is expected to maintain its buying patterns, the move adds pressure to trade relations. Losses were cushioned by intensified Russia–Ukraine strikes on energy infrastructure and optimism that a potential Fed rate cut could underpin demand. Analysts cautioned, however, that OPEC+’s gradual unwinding of supply cuts and rising non-OPEC output could tilt the market back into surplus, while a narrowing prompt premium suggests softer demand expectations ahead.
Spot Brent at 16h55 BST – $67.08, down 0.53%
European LNG
European natural gas futures dropped more than 3% in early trade, extending a three-session decline. Higher LNG flows into Germany and Italy helped offset reduced Norwegian output during seasonal maintenance, while stronger wind generation across northwest Europe further weighed on demand. EU gas storage rose to 76.4% of capacity versus 91.8% last year, with Germany at 69.4%, Italy 88%, and France 85%. Weaker Asian demand, particularly from China, has freed up additional LNG cargoes for Europe, easing supply concerns despite maintenance works at several Norwegian fields expected to last into late September. Still, geopolitical risks persist, with Ukraine continuing to target Russian energy infrastructure and President Trump warning of tougher measures if peace talks fail to progress within two weeks.
Spot Dutch TTF Gas at 16h50 – €31.86/MWh, down 2.68%
Iron Ore
Iron ore markets were mixed, supported by stronger rebar demand and limited supply growth but pressured by looming production curbs. Industry data showed overall steel production rising, with apparent rebar demand improving modestly, helping sentiment. However, northern steel mills are set to implement environmental restrictions next week, likely trimming hot metal output and weakening ore demand. China has pledged to curb overcapacity between 2025 and 2026, though details remain unclear. Official data showed crude steel output fell 3.1% YoY in Jan–Jul to 594.47 Mt. On the supply side, Rio Tinto suspended operations at Guinea’s Simandou project after a worker fatality, raising uncertainty over its November export timeline. Separately, geologists confirmed a landmark discovery in Western Australia’s Pilbara, described as the world’s largest iron ore deposit, with an estimated value of $6 trillion.
Spot TSI 62% iron ore fines on SGX at 16h45 BST – $103.70/mt, up 1.72%
Copper (LME)
Copper prices edged higher, supported by broader risk appetite after strong results from Nvidia boosted confidence in the AI-driven growth story, lifting equities in Europe and China. Gains were capped by surging inventories, with Comex warehouse stocks nearly tripling this year after heavy flows ahead of last month’s 50% U.S. copper tariffs. LME inventories also climbed, adding 1,850 tonnes to 157,950 tonnes, the highest in three months. While risk sentiment has buoyed prices near term, rising stockpiles and tariff-driven trade distortions continue to weigh on the outlook.
LME 3-month Copper at 16h45 BST – $9820/mt, up 0.66%
Energy markets remain finely balanced, with crude supported by supply draws but facing pressure from tariffs and looming surplus risks, while European gas continues to trade lower on ample LNG inflows. In bulk commodities, iron ore sentiment is steady but fragile ahead of fresh production curbs, while copper reflects both optimism from global equities and persistent headwinds from rising inventories.
