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Copper

LONDON COMMODITY NEWS

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14th January 2025

Coal
Coal markets experienced volatility, reacting to shifts in the energy complex. Aggressive morning bidding pushed API2 up by $4 and Newcastle (NEWC) swaps up by $5, driven by short-covering following gas price gains. However, as gas markets retreated in the afternoon, coal saw a wave of selling, with both API2 and NEWC closing lower in prompt markets. Longer-dated calendar-year contracts, however, maintained support.

The Chinese Coal Transportation and Distribution Association announced plans to expand coal output by 1.5% to 4.82 billion tonnes by 2025, aiming to mitigate risks from carbon limits and safety-related mine shutdowns. Despite this, record-high coal inventories, up 12% in two months to October, and increased hydroelectric generation from heavy rainfall are pressuring demand.

Brent
Oil retreated from five-month highs, with March Brent crude falling $1.06 to $79.95 as of 16:40 GMT. The market reacted to potential demand impacts from proposed 60% US tariffs on Chinese imports, overshadowing supply concerns from new sanctions targeting Russian oil producers, vessels, and traders.

Saxo Bank noted, “Brent’s rally paused near October highs as traders reassess demand risks tied to tariffs despite initial fears of reduced Russian supply.”

Dutch TTF Gas
Dutch TTF gas prices dipped after Monday’s 7% surge. LSEG analyst Wayne Bryan attributed the decline to profit-taking in the absence of fresh news. Monday’s rally followed US sanctions on Russian energy and reports of a TurkStream pipeline attack, which remained operational.

Ten EU nations proposed banning Russian LNG and pipeline gas, though major importers like Germany and France excluded themselves. Temperatures are expected to normalise after a cold spell, easing demand. Benchmark EU carbon prices dropped 0.54 euros to 76.38 euros per tonne.

Iron Ore
SGX TSI 62% iron ore rose 0.64% to $98.72 by 16:00 GMT. China’s I2505 contract climbed 2.22% to 783 yuan/mt amid strong selling interest. PB fines traded higher at 780–785 yuan/mt in Shandong and 800–805 yuan/mt in Tangshan, both up 10–15 yuan/mt.

Macro news boosted sentiment, with pre-holiday restocking supporting prices. Iron ore remains aligned with a broader upward trend in black commodities.

Copper
LME 3-month copper rose 0.73% to $9,158.50 by 16:16 GMT, driven by an 18% surge in Chinese imports of unwrought copper and copper products to 559,000 tonnes in December, the highest in 13 months. Rising smelter activity and robust exports supported the gains.

SHFE copper 2502 closed at 75,430 yuan/mt, while BC copper 2502 at 67,020 yuan/mt translates to a post-tax price of 75,733 yuan/mt, widening the inverted spread to -303 yuan/mt.

Warehouse warrant prices were $71–81/mt (QP January), up $1/mt. B/L prices reached $59–73/mt (QP February), up $1/mt, and EQ copper (CIF B/L) rose $3/mt to $9–23/mt (QP February), reflecting late January and early February arrivals.

LONDON COMMODITY NEWS 29/11/2024

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Coal
The coal market continued to face bearish sentiment today, with both API2 and Newcastle (NEWC) coal futures closing slightly lower. This weakness followed more pronounced drops earlier in the trading session. Subdued physical market activity in both DES ARA (Europe) and Newcastle (Asia-Pacific) regions offered little direction, reflecting muted demand and limited liquidity.
Despite European natural gas prices rallying by approximately 2.5% during the day, this did not translate into significant support for coal markets. The uptick in gas prices was linked to expectations of increased heating demand due to colder weather forecasts. However, coal markets appeared largely decoupled from gas price movements as warmer-than-usual conditions continued to curb coal consumption, particularly in power generation.
The ongoing shift towards alternative energy sources and stronger LNG availability in Europe has also weighed on coal, compounding bearish sentiment. With limited physical activity and a lack of clear demand catalysts, coal markets are struggling to gain momentum as we approach the end of November.

Brent Crude
Brent crude oil futures eased below $73 per barrel on Friday, as traders digested geopolitical risks following accusations of ceasefire violations between Israel and Hezbollah. Additional concerns stemmed from warnings by Russian President Putin about a potential new missile strike on Ukraine, elevating risks to energy infrastructure. Markets remain cautious ahead of the postponed OPEC+ meeting on December 5, where the group will discuss the possibility of extending production cuts to prevent a supply glut. Despite these factors, Brent remains on track for a 3% weekly decline due to soft demand signals and easing geopolitical concerns earlier in the week.

TTF Gas
European natural gas futures ticked up to €47.5 per megawatt-hour, supported by forecasts for cooler weather in December and rising seasonal heating demand. However, storage levels in Europe, now at 86.65% full, remain significantly lower than this time last year, stoking concerns over winter supply adequacy. Meanwhile, uncertainties persist around the expiration of Russia’s gas transit deal with Ukraine and strong LNG demand in Asia, both of which could tighten European gas markets.

Iron Ore
Iron ore prices climbed above $102 per ton, buoyed by robust Chinese steel production, which grew by 9.5% in the past three weeks compared to the same period last year. Optimism around potential economic stimulus from Beijing also provided support, offsetting concerns about declining industrial profits in October. Market attention is shifting to China’s key economic meetings in December, which could set the tone for infrastructure investment and broader industrial activity in 2024.

Copper
Copper futures rebounded on Friday, trading above $9,000 per metric ton as sentiment improved on hopes of stimulus from China. Support also came from a weaker US dollar, which retreated after US PCE inflation data aligned with expectations. Traders are keeping a close eye on developments from China’s upcoming Politburo and Central Economic Work Conference meetings, which are expected to outline measures to sustain growth amid ongoing concerns about global economic uncertainty.

Lithium
Lithium carbonate prices increased to CNY 79,000 per tonne, marking a recovery from near three-year lows reached in October. The rally was driven by supply curbs and stronger demand, particularly after Chinese subsidies incentivised EV purchases. Rising demand has prompted battery manufacturers to restock, while mine closures in Australia and China have tightened supply. These dynamics underline the broader market recovery as the EV industry continues to expand.

Commodity News 27/11/24

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Coal Market

Coal prices experienced limited volatility today, trading within a narrow range and ending the session close to unchanged. European gas prices softened further, with the front-month contract down approximately 1.5%, exerting downward pressure on API2 prices. Brent crude also declined by about 1%, while physical DES ARA markets appeared to weaken slightly. Newcastle coal futures continued trading below $142 per tonne, hovering near their lowest levels since late September. This sustained weakness reflects abundant Chinese coal supply and increased utilisation of alternative energy sources, including hydropower. October’s data highlighted a 4.6% year-on-year increase in Chinese coal output, following the conclusion of safety inspections at major mines. Yunnan’s hydropower generation, bolstered by heavy rainfall, also contributed to reduced coal demand. However, Newcastle futures remain 25% higher than their March lows, driven by robust thermal power demand. In September, Chinese thermal power generation rose nearly 10% year-on-year, with imports reaching a record 47.6 million tonnes, a 13% increase from the previous year.

European Natural Gas

European gas futures dipped towards €46 per megawatt-hour, the lowest in a week, as warmer-than-expected weather and higher wind power output reduced heating demand. Average temperatures in northwest Europe were 2°C above seasonal norms, and LNG supply from French terminals remained strong. Concerns over immediate disruptions in Russian gas flows eased following auction results suggesting that shipments through Ukraine are likely to continue into December. However, Gazprom expects flows to cease by year-end as the Russia-Ukraine transit agreement is unlikely to be extended. EU gas storage stood at 87.4% capacity, down from 97% in early November, indicating faster-than-expected withdrawals.

Oil Market

Brent crude oil prices edged above $73 per barrel on Wednesday after declining earlier in the week. Market participants are closely monitoring the upcoming OPEC+ meeting on December 1, with speculation that planned production increases for January may be postponed due to signs of oversupply. Geopolitical risks eased somewhat after a 60-day cease-fire was brokered between Israel and Hezbollah. However, renewed exchanges of fire shortly after the agreement highlighted ongoing volatility in the region. On the demand side, the latest API data showed an unexpected 5.9 million-barrel drop in US crude inventories last week, offering additional support to prices.

Iron Ore

Iron ore prices stabilised at approximately $102 per tonne, supported by strong global steel output, declining inventories, and optimism about further stimulus measures from China. The World Steel Association reported a 0.4% increase in global crude steel production to 151.2 million tonnes in October, with China’s contribution rising by 2.9% to 81.9 million tonnes. Reduced Chinese steel inventories and higher export volumes also lent support to prices. Markets remain hopeful for additional policy measures from Beijing to counteract the potential economic impact of elevated US tariffs.

Copper

Copper futures rebounded on Wednesday, supported by improved risk sentiment, a weaker dollar, and falling US Treasury yields. Expectations of increased demand from China’s appliance and automotive sectors provided further support, though global trade concerns persisted amid US President-elect Trump’s tariff threats. Supply constraints were underscored by challenges at Chile’s Escondida mine, where declining ore grades and higher costs continue to impact output.

Lithium

Lithium carbonate prices recovered to CNY 79,000 per tonne after touching a three-year low of CNY 71,000 in late October. The rebound reflects supply curtailments and an uptick in demand, with Chinese government subsidies for trading older vehicles for electric ones driving battery production expectations. Despite historically high inventories, manufacturers increased purchasing activity due to concerns over potential trade disruptions under the incoming US administration. Since 2023, lower prices have led to 190 tonnes of curtailments at lithium mines in Australia and China, tightening supply.

Market Update 21/11/24: Natural Gas, Coal, and Iron Ore Insights

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Coal prices saw limited movement yesterday, remaining relatively unchanged and closing near their starting levels. In contrast, European natural gas prices experienced significant volatility, with the front-month contract rising over 2%. Meanwhile, Brent crude oil prices remained steady, showing minimal fluctuations and ending the day close to their opening levels.

Newcastle coal futures continued trading below $142 per tonne in November, hovering near their lowest levels since late September. This decline reflects ample coal supplies from China and increased availability of alternative power sources. October data revealed a 4.6% year-on-year increase in Chinese coal production, as the conclusion of safety inspections in major mines allowed for higher output. Additionally, heavy rainfall in Yunnan bolstered hydroelectric power generation, reducing coal’s share in the energy mix. Despite these trends, strong demand for coal power has kept futures 25% above their March lows. Thermal power generation in China rose nearly 10% year-on-year in September, with coal imports during the period reaching a record 47.6 million tonnes, marking a 13% increase.

European natural gas futures dipped slightly to €46/MWh but remained near their highest levels since November 2023. Market sentiment was shaped by rising tensions between the West and Russia, particularly after Russia revised its nuclear doctrine, allowing potential use of atomic weapons. This coincided with Ukraine’s first use of US-manufactured missiles on Russian territory. Weather forecasts for December predict colder temperatures, likely increasing demand and accelerating gas reserve depletion, now below 91% capacity. Norwegian gas flows dropped due to outages at Aasgard and Oseberg, while Austria’s OMV reported that Gazprom would suspend deliveries. Despite this, Russian gas flows through Ukraine have remained stable.

 Iron ore prices for 62% Fe content fell below $102 per tonne, reflecting ongoing weakness in China’s property sector, which drives much of its steel consumption. Property investment in China declined by 10.3% year-on-year in the first 10 months of 2024, while October saw the steepest drop in new home prices in over nine years. Tax incentives for home and land transactions introduced by China’s finance ministry failed to boost market sentiment. On the supply side, ANZ noted that October iron ore shipments from Australia’s Port Holland reached 45.6 million tonnes, bringing the 2024 total to 472.3 million tonnes, a four-year high. Rising Chinese port stockpiles, attributed to traders’ passive restocking, added further pressure.

 Copper futures rose for a third consecutive session on Wednesday, supported by a weaker US dollar easing pressure on commodity prices. Geopolitical concerns remained in focus as Russia lowered its threshold for nuclear weapon use amid its conflict with Ukraine. However, comments from Russian Foreign Minister Sergei Lavrov, pledging efforts to avoid nuclear war, and a steady US nuclear posture helped alleviate tensions. In China, the central bank maintained key lending rates, offering no surprises to influence copper demand in the world’s largest consumer of the metal.

 Lithium carbonate prices rose to CNY 79,000 per tonne, recovering from the three-year low of CNY 71,000 seen in late October. This increase was driven by supply curbs and a moderate revival in demand. The Chinese government implemented subsidies encouraging citizens to trade older cars for electric vehicles (EVs), boosting expectations that battery manufacturers will resume restocking lithium inputs.

Commodity traders urged to seize opportunity as investment in critical metals lags

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Energy and metals traders can tap into a rapidly growing value pool by bringing greater liquidity and risk management tools to a lucrative but underfunded market, a report by McKinsey says. 

The value of commodity trading pools nearly doubled from 2021 to 2022, reaching US$99bn in trading earnings before taxes and interest, finds the report, published on September 26.  

It also says commodities are “currently significantly underpriced” despite rising demand driven by the energy transition…Full Story