EUROPEAN COMMODITIES UPDATE: Crude and base metals on the backfoot amid Trump tariff rhetoric

Crude Oil: WTI Mar -1.6%/Brent Mar -0.7%

• Softer trade across the crude complex this morning as markets digest Trump's executive orders alongside implications of the new administration for the oil market over the next four years, with the Dollar also on a firmer footing following yesterday's slide.


• Prices were subdued during APAC hours following the prior day's declines but were off worst levels after tariff-related comments from Trump on Canada and Mexico jolted markets.


• On energy, Trump said he would declare a national energy emergency and reiterated his 'drill baby, drill' catchphrase. Furthermore, US President Trump signed an order on unleashing energy production and repealed Biden's 2023 memo barring oil drilling in some 16mln acres in the Arctic, according to the White House which said it would prioritise the development of Alaska's LNG potential, including the permitting of all necessary pipeline and export infrastructure. US President Trump said they would probably stop buying oil from Venezuela and don't need their oil.


• Add to that, US President Trump said they will straighten out the deficit with the EU through tariffs or by buying US oil and gas.


• There is an intraday price change disparity between WTI and Brent with the former not seeing a settlement yesterday on account of US MLK day.


• WTI Mar resides in a USD 75.82-77.86/bbl range while its Brent counterpart trades in a USD 79.36-80.46/bbl range.

Precious Metals: Gold +0.5%, Silver -0.1%, Palladium -2.0%

• Mixed trade across precious metals amid the tentative mood around markets as Trump was sworn in as the 47th President yesterday.


• Spot palladium lags, potentially owing to the implications of the 25% Canada and Mexico tariffs touted by US President Trump, which will likely deal a blow to the auto sector.


• Spot silver is flat but printed on either side of USD 30.50/oz (USD 30.20-30.72/oz range).


• Spot gold steadily extended on yesterday's gains and currently trades in a USD 2,702.81-,2,733.06/oz range after topping the peak set last Thursday (USD 2,724.78/oz).

Base Metals: 3M LME Copper -0.4%

• Lower across the board following Trump's latest tariff-related rhetoric dampening demand in the base metal space.


• That being said, iron ore prices rose for a ninth straight session with some pinning the move on US President Trump not immediately imposing tariffs on China, with the May Dalian iron ore contract ending daytime trade +0.6% whilst the SGX Feb future rose some 1%.


• LME prices failed to benefit and are lower across the board, with 3M LME copper currently towards the bottom of a USD 9,178.00-9,289.50/t range.


• BHP (BHP AT) reported quarterly iron ore WAIO production rose 1% Y/Y to 73.1mln tons, copper production rose 17% Y/Y to 510.7k tons, nickel production fell 59% Y/Y to 8k tons, Co. said it is on track to deliver production in the upper half of the FY25 guidance range at WAIO, BMA and NSWEC, as is Samarco, Co. sees costs to be elevated in HY FY25 For Nickel West and it intends to review decision to temporarily suspend Western Australia Nickel by February 2027.

21 Jan 2025 - 10:20- MetalsEU Research- Source: Newsquawk