EUROPEAN COMMODITIES UPDATE: Crude firmer but metals hit by Trump levies

Crude Oil: WTI Mar +1.0%, Brent Apr +1.0%

• Firmer trade across the crude complex this morning amid Middle Eastern geopolitical updates and in the aftermath of tariff escalations after US President Trump signed proclamations to reimpose a 25% tariff on steel and aluminium imports and declared there are no exceptions or exemptions, effective March 12th.


• The upside comes as several nations prepare responses to the move; European Commission President von der Leyen says unjustified tariffs on the EU will not go unanswered; they will trigger firm and proportionate countermeasures.


• Elsewhere in geopolitics, the Israel-Hamas ceasefire looks fragile, with Gaza ceasefire mediators fearing a breakdown of the agreement, while Hamas is to delay the hostage release planned for Saturday until further notice; Israeli Defence Minister Katz said in response to Hamas delaying Israeli hostages that this is a complete violation of the ceasefire agreement and he instructed the IDF to prepare for any scenario in Gaza.


• US President Trump said if all Gaza hostages aren't returned by noon on Saturday, he would say cancel the ceasefire and let all hell break out, while he added that Israel can override it and thinks Jordan will take refugees. Trump also said the US could withhold aid to Jordan and Egypt if they don’t take refugees, while he might talk to Israeli PM Netanyahu about the Saturday deadline.


• Ahead, traders will be on watch for macro developments (i.e. tariffs, geopolitics) ahead of the EIA STEO and Private Inventory data, with Fed Chair Powell also likely to inject some volatility at his semi-annual testimony at 15:00 GMT/10:00 EST.


• WTI resides in a USD 72.31-73.11/bbl range while Brent sits in a USD 75.90-76.74/bbl parameter at the time of writing.

Nat Gas: Dutch TTF -1.4%, US Nat Gas +1.0%

• European nat gas gives back some recent gains after trading at their highest level in two years on Monday - which saw front-month contracts rise above EUR 58/MWh.


• Desks pin the rise on bolstered demand from colder weather alongside dwindling storage, supply issues, and weaker power generation from renewables.

Precious Metals: Gold +0.1%, Silver -0.8%, Palladium -1.0%

• Mixed/mostly lower trade across precious metals with silver and palladium hampered by the implications of US levies, but spot gold trading flat.


• Silver has both monetary and industrial uses, with around half of its demand coming from industrial applications (electronics, solar panels, etc.).


• Palladium is almost entirely an industrial metal, mainly used in catalytic converters for cars.


• Gold is cushioned by haven properties, with the yellow metal pulling back after printing a fresh high overnight at USD 2,942.78/oz (vs current low 2,904.92/oz).

Base Metals: 3M LME Copper -1.0%

• Lower across the board amid the implication on demand from the aforementioned tariffs.


• Furthermore, US President Trump said they are looking at tariffs on cars, pharmaceuticals and chips and will hold meetings over the next four weeks, while they will do reciprocal tariffs over the next two days. Trump also commented that tariffs on metals could go higher and he does not mind if other countries retaliate.


• Analysts at ING posit that "Aluminium is likely to be most impacted by potential tariffs on metals with the US importing significant volumes of its aluminium from abroad. Tariffs would result in higher aluminium prices in the US, representing a significant upside risk to the US Midwest premium this year. However, the effects on LME prices will be minimal. US tariffs previously had little impact on LME prices. Tariffs also risk demand destruction in the US as the extra costs would most likely be passed on to end consumers. The prospect of a global trade war is bearish for the LME aluminium price. Tariffs are bearish for industrial metals in terms of slowing global growth and keeping inflation higher for longer."


• 3M LME copper sits towards the bottom end of a USD 9,364.00-9,452.55/t range at the time of writing.

11 Feb 2025 - 09:55- MetalsEU Research- Source: Newsquawk