COMMODITY OVERVIEW
Geopolitical risk is supporting oil’s underlying supply premium, even as diplomatic signals have pulled crude below $100/bbl. Elsewhere, markets are split: weak official Chinese data and rate concerns weigh on copper and lithium, while U.S. tariffs and resilient domestic demand support steel and aluminum.
ENERGY
Crude oil eased below $100/bbl as U.S. signals favoring diplomacy with Iran reduced near-term escalation and inflation concerns. But the risk premium remains: OPEC+ held December production targets steady, leaving no immediate supply response if tensions threaten the Strait of Hormuz.
European gas faces tighter near-term risk from shipping disruption, low storage and colder forecasts. TotalEnergies’ stake in Malaysia’s Lang Lebah and B14 fields is a long-term addition to Asian gas supply, not a near-term relief valve; development and regulatory hurdles remain.
METALS
Industrial Metals
U.S. steel and aluminum producers are benefiting from 50% import tariffs and firm domestic demand. Nucor reported higher steel prices and 89% mill utilization, while U.S. primary aluminum production increased year over year; elevated imports, however, show domestic supply remains short of demand.
Copper is under pressure from tech-sector weakness and Fed rate concerns, despite long-run electrification demand. The court decision allowing Resolution Copper to proceed improves the outlook for U.S. mine development, but any material supply impact is years away. Nickel remains vulnerable to oversupply; Giga Metals’ Turnagain study advances a North American project but does not change near-term balances.
Lithium has the clearest bearish signal: Citi cut price forecasts on weaker battery demand and expected supply growth from 2027, adding pressure to miners.
Precious Metals
Silver rose 2.45% to about $50.35 as lower oil prices eased inflation concerns and tempered rate expectations. The rebound followed a near one-year low, but silver remains below its 9-day EMA and its broader technical structure is still weak. The gold-related news provided no material price catalyst.
AGRICULTURE
There were no meaningful crop, weather or export-data catalysts in the reports. ADM’s Nairobi expansion signals a longer-term bet on African food and feed demand, while weak crop prices and farm profitability continue to weigh on crop-protection spending. Bunge reported improved soy-crush margins and supply-chain flexibility, but the items point to company-specific developments rather than a clear grains-price direction.
MACRO DRIVERS
- China: The official manufacturing PMI fell to 49.3 and the composite to 49.7, reinforcing downside risk to industrial commodity demand despite private PMI remaining expansionary at 52.0.
- Rates and risk appetite: Fed hike concerns and a tech selloff are weighing on copper; lower oil and easing inflation fears supported silver’s rebound.
- Geopolitics: Iran and Hormuz risks keep an oil supply premium in place, while diplomatic signals have reduced immediate escalation fears.
- Trade policy: U.S. tariffs support domestic steel and aluminum pricing but raise the risk of higher input costs and weaker downstream demand.
POSITIONING IDEAS
- Bullish: U.S. steel and aluminum on tariff protection, firm domestic demand and evidence of producer pricing power. Crude oil offers a tactical event-risk bias, but the case depends on escalation; diplomacy has already pressured spot prices.
- Bearish: Lithium on weaker battery demand, China EV incentive changes and expected supply growth from 2027. Copper faces near-term downside risk from weak official Chinese data and rate concerns, despite Resolution Copper’s longer-term supply significance.