1st April 2026
Market sentiment shifted modestly towards risk-on, with signs of potential de-escalation in the Middle East providing some relief across the commodity complex. Energy markets softened on easing geopolitical concerns, while industrial metals found support from improving demand signals and a more constructive macro backdrop.
Prices at 17h00 GMT
Thermal Coal: April API2 – $113.75/mt ; April API4 – $108.00/mt
Brent Crude: $102.10/bll; Down 1.80%
SGX Iron Ore 62%Fe: $106.40/mt; Down 1.21%
LME 3-Month Copper: $12,422/mt; Up 0.77%
Coal
Energy markets came under broad pressure at the open, with sentiment driven by indications from the U.S. government that the Iran conflict could be brought to an end in the coming weeks. This triggered a sharp initial sell-off across the complex, with both Brent crude and European gas falling by more than 5% early in the session.
As the day progressed, oil prices staged a partial recovery, trimming losses to close around 2% lower. Gas markets, however, remained under sustained pressure, oscillating throughout the session but ultimately settling close to 7% down. The sharper weakness in gas continued to weigh on coal markets, where prices declined more significantly, particularly in API2, while Newcastle (NEWC) also posted notable losses.
Overall, the session reflected a shift in market focus towards potential de-escalation, with energy prices repricing lower as geopolitical risk premiums began to unwind, albeit unevenly across the complex.
Brent Crude
Oil prices moved lower following reports suggesting Iran may be willing to end the conflict, albeit under certain conditions. Additional comments from U.S. President Donald Trump indicating a possible withdrawal of U.S. forces within weeks further reinforced expectations that tensions could ease. However, uncertainty remains, with a third U.S. aircraft carrier heading to the region and lingering questions around the potential for further military escalation before any resolution is reached.
Despite the recent pullback, the underlying disruption to global energy flows remains significant. The effective choking of the Strait of Hormuz drove Brent to its strongest monthly performance on record in March and continues to impact both oil and gas markets, contributing to elevated inflationary pressures. Encouragingly, vessel traffic through Hormuz has begun to recover, with a gradual increase in transits suggesting a tentative normalisation, although the situation remains fragile.
In the near term, oil markets are likely to remain highly sensitive to geopolitical developments. While signs of de-escalation are weighing on prices, the broader supply risk has not been fully resolved, leaving the market susceptible to renewed volatility should conditions deteriorate again.
Iron Ore
Iron ore markets experienced another volatile session, with prices strengthening in early trading before easing back later in the day. Futures closed marginally higher, while spot prices saw only modest gains. Market participation remained cautious, with traders willing to quote but steel mills continuing to focus on just-in-time procurement, resulting in relatively subdued spot activity.
Fundamentally, the picture remains supportive on the demand side. Blast furnace utilisation has continued to recover, lifting hot metal output and reinforcing steady consumption of iron ore. This has provided a firm base for prices, limiting downside risk despite the lack of strong buying momentum. At the same time, elevated inventory levels continue to cap upside, preventing any sustained rally.
Overall, the market remains balanced. Strong underlying demand is offset by ample supply, leaving prices rangebound in the short term. A clearer directional move is likely to depend on fresh catalysts, whether from changes in steel production, inventory drawdowns, or broader macro developments.
Copper
Copper extended its recent recovery, with prices reaching a two-week high as optimism grew around a potential end to the conflict. The market has responded positively to improving sentiment, with gains supported by stronger manufacturing data from China and signs of tightening physical supply, including declining exchange inventories and firmer premiums.
The rally has also been aided by a weaker U.S. dollar, improving affordability for buyers using other currencies and providing an additional tailwind to prices. Evidence of renewed physical demand, particularly following earlier price weakness, suggests that underlying consumption remains intact despite broader macro uncertainties.
While copper remains below its recent highs, the tone has improved in the near term. The market is balancing cautious optimism around geopolitical developments with ongoing concerns over global growth. If demand indicators continue to strengthen and macro conditions stabilise, further upside could develop, although volatility is likely to persist.
Across the complex, markets appear to be cautiously recalibrating as the prospect of de-escalation begins to take shape. Energy remains sensitive to any shift in geopolitical risk, while metals are finding support from improving demand fundamentals. For now, sentiment has stabilised, but with uncertainty still present, markets are likely to remain reactive to incoming headlines and data.
______________________________
