London Commodity News
Market Snapshot (16:30 GMT)
- API2 (April): $105.70/mt
- API4 (April): $105.00/mt
- Brent Crude: $99.01/bbl, up 4.55%
- SGX Iron Ore 62% Fe: $105.20/mt, unchanged
- LME 3-Month Copper: $12,678/mt, down 0.37%
Market Overview
- Markets remain headline-driven, with sentiment shifting rapidly on developments in the Middle East
- Energy has stabilised after the initial sell-off, with oil rebounding as doubts over Hormuz reopening resurface
- Coal continues to track energy lower, though with more limited downside
- Metals remain mixed, reflecting weak underlying demand and macro uncertainty
Coal
Coal markets saw a brief recovery in line with the broader energy complex during the morning session, following the sharp declines observed yesterday. Early strength was driven by continued uncertainty around the implications of the ceasefire for near-term supply, with both European gas and Brent crude rising by around 3% before reversing later in the day.
The recovery proved short-lived, however, as renewed headlines—particularly around negotiations between Israel and Lebanon—reintroduced caution and weighed on prices into the afternoon. As a result, API2 closed lower on the day, while seaborne markets showed greater resilience, with NEWC and API4 remaining modestly supported.
Fundamentally, the market continues to balance structurally tight conditions against shifting sentiment. ARA inventories rose by 200,000 tonnes to 2.53 million tonnes, recovering from recent lows but still historically tight, while low Rhine river levels continue to pose a risk to inland deliveries and restocking efforts.
In export markets, South African coal remains under pressure, with bids across the quality spectrum easing. However, the relative strength seen in API4 and NEWC suggests that physical demand and regional dynamics are providing some support, even as broader energy sentiment remains the dominant driver in the near term.
Coal Curves (LCB Data)
- API2: Weakened on the day after failing to hold early gains, with the curve reflecting continued sensitivity to European gas and broader energy sentiment. Front-end softness suggests limited conviction in near-term demand despite structurally tight inventories.
- API4 / NEWC: More resilient, with parts of the curve holding onto early-session gains. This relative strength points to ongoing support from seaborne demand and tighter physical dynamics in export markets.
- Spread: The divergence between API2 and seaborne curves is widening slightly, highlighting the increasing importance of regional factors and freight dynamics. This will be a key indicator to watch if energy markets remain volatile.
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Trade Insight
- The market has shifted from risk premium unwinding to reassessing physical disruption, particularly around Hormuz
- Coal’s relative stability highlights its role as a lagging energy indicator, with demand support cushioning downside
- Freight and logistics—not outright supply—are likely to be the next key drivers across energy and bulk commodities
Market Focus: Brent Crude
Oil prices rebounded after the sharp sell-off, as doubts over the reopening of the Strait of Hormuz quickly resurfaced. While the ceasefire initially triggered a significant unwind of geopolitical risk premium, the lack of meaningful vessel traffic has reinforced concerns that supply disruptions remain unresolved.
Shipping activity remains extremely limited, with operators hesitant to resume transit amid ongoing security risks, elevated insurance costs, and uncertainty around safe passage. Renewed tensions in the region, including additional military activity and retaliatory threats, have further undermined confidence in the ceasefire.
As a result, the geopolitical premium has only partially unwound. In the near term, oil is expected to remain supported and volatile, with price direction closely tied to developments in shipping flows and the durability of the ceasefire.
Additional Markets
Iron Ore
Iron ore extended its decline, with prices under pressure from ample supply and elevated inventories. Trading remains subdued, with steel mills focused on cost control and limiting procurement. Without a clear demand catalyst, the market is likely to remain weak in the near term.
Copper
Copper eased from recent highs as renewed geopolitical tension and rising energy prices weighed on sentiment. Softer import demand and rising global inventories, particularly on the LME, continue to limit upside. The market remains macro-sensitive, with further direction dependent on demand recovery.
Market Regime
Partial risk unwind / Volatile energy / Weak bulk / Cautious metals
Closing View
Markets have transitioned from an initial unwind of geopolitical risk to a more complex phase driven by uncertainty around physical supply and logistics. Energy remains the dominant driver, with oil setting the tone for coal and broader commodity markets.
While some risk premium has been removed, the absence of normalised shipping flows and the fragility of the ceasefire suggest that volatility will persist. Until there is clear evidence of sustained stability in the region, markets are likely to remain reactive, with price direction dictated by headlines rather than fundamentals.
