4th February 2026
Prices at 17h00 GMT
Thermal Coal: February API2 $99.50/mt & API4 $95.00/mt
Brent Crude: $67.81/bll – Up 0.74%
Iron Ore SGX 62%Fe: $101.40/mt – _Down 0.64%
LME 3-Month Copper: $13,072.50/mt – Down 2.95%
It was another headline-driven session across commodity markets, with geopolitics, positioning and shifting risk sentiment continuing to outweigh near-term fundamentals. Price action remained choppy, reflecting an uneasy balance between de-escalation narratives and lingering supply-side risks.
Coal
Energy markets remained volatile again today, with European gas prices rising by over 2% and front-month Brent crude also gaining close to 2%. Physical DES ARA and Newcastle markets were broadly stable. Coal swaps strengthened in line with the wider energy complex, led by NEWC, where buying interest was clearly evident across the curve.
Brent Crude
Oil prices steadied on Wednesday after an early rebound, as renewed Middle East tensions briefly reignited geopolitical risk premiums. Support came after the U.S. military shot down an Iranian drone that approached a U.S. aircraft carrier in the Arabian Sea, alongside reports that Iranian gunboats moved close to a U.S.-flagged tanker north of Oman. These incidents revived concerns over the security of shipping lanes ahead of scheduled U.S.–Iran talks in Oman later this week.
Despite these developments, gains proved difficult to sustain. Broader risk-off sentiment, led by a sharp selloff in U.S. technology equities, weighed on energy markets and capped upside. Oil has continued to seesaw this week as traders attempt to price the probability of escalation against the growing likelihood of renewed diplomacy. As one analyst put it, crude prices would likely be materially lower absent the recurring “sabre-rattling” in the Middle East.
Attention also remained firmly on trade flows. India’s imports of Russian crude slipped again in January, extending a downturn that began in December as refiners respond to sanctions pressure and ongoing U.S.–India trade negotiations. Market participants increasingly expect India to sharply curtail purchases of Russian oil as part of a broader trade agreement with Washington. With roughly one million barrels per day of Russian crude still flowing to India, any sudden withdrawal would leave a sizeable volume searching for a home.
While China is the most obvious alternative buyer, it is already absorbing Russian barrels at record levels. This has forced Moscow to widen discounts aggressively—reportedly as much as $20 per barrel below Brent—to maintain buying interest. The risk, should China fail to absorb incremental volumes, is that the market becomes saturated with claims of shut-in Russian production, further distorting physical flows. Against this backdrop, strength in the physical Dubai market has provided some underlying support, even as overall crude prices remain rangebound.
Iron Ore
Iron ore prices extended their weak tone, with DCE futures closing modestly lower despite a firmer showing in the physical market. The benchmark I2605 contract ended the session down 0.32% at 781.5 yuan/mt, while spot prices edged up by 1–3 yuan/mt. Trading activity was steady but unremarkable, with mills focused almost exclusively on meeting immediate production needs rather than building inventory. Fundamentally, demand indicators showed some improvement.
However, the demand recovery remains insufficient to offset persistent supply-side pressure. Port inventories remain elevated, continuing to act as a firm ceiling on prices. With inbound supply still ample and no clear drawdown in visible stocks, futures remain vulnerable to further downside. As such, the market appears locked in a familiar pattern: improving operating rates provide downside protection, but excess inventory prevents any sustained upside momentum. In the near term, iron ore prices are likely to remain volatile with a weak underlying bias.
Copper (LME)
Copper prices eased after registering their largest one-day gain in more than three years on Tuesday, as attention shifted back toward underlying demand conditions—particularly in China. The metal had surged on renewed speculative interest, state-linked calls for increased strategic stockpiling, and broader investor rotation into hard assets amid currency uncertainty. That enthusiasm cooled somewhat today. While copper remains up around 8% year-to-date and recently touched record highs above $14,500/mt, signs of near-term demand fatigue are emerging. Physical demand in China has softened as elevated prices squeezed fabricator margins, while fresh data showed rising inventories in LME warehouses across Asia.
Supply dynamics are also shifting. Traders have moved additional spot cargoes from Africa into China, taking advantage of a brief arbitrage window last week when Shanghai futures outpaced gains in London. At the same time, China’s Nonferrous Metals Industry Association forecast a further 5% increase in refined copper output this year, following a 10% expansion in 2025. Smelters continue to operate at high utilisation rates despite compressed processing fees, adding to near-term supply availability.
Still, the broader backdrop remains supportive. Long-term fundamentals—tight mine supply, electrification demand, data-centre expansion and energy transition investment—continue to underpin bullish structural narratives. While the risk of further near-term volatility is elevated, particularly with the Lunar New Year approaching and liquidity thinning, copper remains well supported on a longer-term view.
Overall, today’s session reinforced the theme that markets remain highly sensitive to geopolitical signals, positioning flows and risk sentiment. Until clearer direction emerges—either through tangible diplomatic outcomes or sustained shifts in physical balances—volatility is likely to persist across the commodity complex.
