EUROPEAN COMMODITIES UPDATE: Softer Chinese PMIs, risk aversion, and Trump tariff rhetoric weigh on the complex

Crude Oil: WTI Mar -2.0%,Brent Apr -0.2%

• Softer trade but off worst levels with initial downside overnight amid the broader risk aversion on the back of Chinese start-up DeepSeek announcing a model on par with OpenAI's advanced o1 model for a fraction of the costs - in turn waning on the demand side of the equation.


• Further, for demand, some woes may have emanated from US President Trump's tariff rhetoric, in which he announced emergency tariffs on Columbia, whilst momentum is reportedly growing among US President Trump’s advisers to place 25% tariffs on Mexico and Canada as soon as Saturday ahead of negotiations, according to WSJ.


• Add to that, Chinese PMIs overnight did not fare well for demand which showed headline Chinese Manufacturing PMI back in contraction territory.


• On the supply side, US President Trump said he spoke with Saudi Arabia’s Crown Prince and discussed bringing oil prices down.


• That being said, prices have clambered off worst levels since the European morning as the Dollar wanes off best levels and with geopolitics still simmering in the background with reports of more Israeli soldiers deployed to South Lebanon. Elsewhere, the Baltic Sea submarine fibre optic cable between Latvia and Sweden was damaged on Sunday morning which was caused by external influence, according to Latvian public broadcaster LSM citing the cable operator.


• In addition, the Radio Free Europe editor posted that the EU ambassadors meeting has concluded and a six-month extension to Russian sanctions is likely to come later today.


• WTI Mar resides in a USD 73.67-74.60/bbl range and Brent April in a 76.57-77.45/bbl range.

Nat Gas: Dutch TTF -2.0%, US Nat Gas -5.5%

• Softer trade across nat gas amid potential implication on energy demand from Chinese start-up DeepSeek announcing a model on par with OpenAI's advanced o1 model for a fraction of the costs.


• The EU Commission says it will continue talks with Ukraine on Natgas supplies to Europe, which will include Hungary and Slovakia.


• Dutch TTF retreats further from the EUR 50/MWh level and falls under EUR 49/MWh with a current EUR 48.60/MWh low.

Precious Metals: Gold -0.5%, Silver -0.2%, Palladium +0.9%

• Lower across the board amid the broader losses across commodities despite the softer following the Chinese PMIs overnight, which did not fare well for demand which showed headline Chinese Manufacturing PMI back in contraction territory.


• Spot gold sees shallower losses vs peers given its haven properties and the decline in the Dollar.


• Spot gold resides in a USD 2,747.42-2,772.74/oz range at the time of writing vs Friday's USD 2,753.64-2,786.06/oz parameter.

Base Metals: 3M LME Copper -1.0%

• Mostly softer trade across base metals on the back of the broader risk aversion and the disappointing Chinese PMI data overnight after Manufacturing PMI fell back into contraction territory.


• Copper pulls back after last week's surge to a two-month high, trading above USD 9,300/t on Friday, after President Trump adopted a more conciliatory stance toward China, reducing trade tensions.


• 3M LME copper resides in a USD 9,133.00-9,268.50/t range.

27 Jan 2025 - 09:55- MetalsData- Source: Newsquawk