Trade tensions slow down recovery in non-ferrous metals

The trade tensions between the United States and China continue to influence financial market dynamics. After the crash of the U.S. stock market on Friday, October 10, triggered by Trump’s threats to impose additional 100% tariffs on Chinese imports and introduce new controls on the export of strategic software, the President sought to mitigate the market decline by stating that neither country desires a trade war and that the common goal is to ease tensions.
The more diplomatic tone from the United States supported a rise in stock markets on Monday and a partial recovery in energy prices, particularly oil, following a drop caused by oversupply and fears of a slowdown in Chinese demand driven by trade frictions. Despite signs of openness from the United States, the Chinese Ministry of Commerce reiterated its firmness, confirming that Beijing has no intention of yielding to tariff threats. While preferring a negotiated solution, China does not appear intimidated by a potential trade war and declares itself ready to react with countermeasures if necessary.

China’s firmness, which has reignited fears of renewed trade tensions, combined with unexpected increases in oil inventories, has exerted downward pressure on the crude oil market, leading to a third consecutive week of price declines.
In contrast, prices of European natural gas (TTF Netherlands) followed an opposite trend: after an initial drop, they rose over the week, driven by Russian attacks on Ukrainian energy infrastructure, which heightened concerns about European supply.

Financial prices of precious metals continue their upward trend, reaching new record highs again this week. The movement is supported by the U.S.-China trade tensions, the American government shutdown, and expectations of an upcoming interest rate cut, reinforced by recent statements from Powell, who expressed concern over the weakening U.S. labor market. Gold has approached the $4,300/troy ounce threshold, while silver has already reached $53/ounce.

In the industrial metals market, there is a general decline in prices. Among ferrous metals, a sharper drop is observed in China, mainly due to falling prices of coils and steel rebar on the Shanghai market.
As for non-ferrous metals, the bearish trend has been much more pronounced, with a widespread decline, especially in lead, copper, and nickel prices.

In the copper market, after the strong increases of previous weeks that had pushed quotations close to $11,000/ton, financial operators are now taking profits. The movement was also supported by news, reported by Bloomberg, that two major Chinese steel companies plan to export up to 25,000 tons of copper in the coming weeks, taking advantage of the current price surge.
Nickel prices have contracted, due to the significant rise in LME market inventories.
Zinc LME spot prices, however, remain stable, supported by low stock levels on the London exchange. Concerns about inventory shortages have led LME zinc spot prices to exceed those on the Shanghai Futures Exchange (SHFE), which, unlike the London market, also include VAT and other taxes.
The following chart compares spot and futures zinc prices on the LME and SHFE, expressed in $/ton.

Comparison between LME and SHFE zinc spot and futures prices, expressed in $/ton

The comparison between zinc prices in the two markets reveals an opposite situation: the SHFE market is in a state of contango, meaning that futures prices are higher than spot prices, while the LME market is characterized by a phase of backwardation, where spot prices are higher than futures. The latter situation indicates that financial operators expect a decline in LME zinc prices.

In the food commodity sector, financial prices of tropical goods are recovering, mainly driven by robusta coffee. The price increase is linked to declining inventories at the Intercontinental Exchange (ICE), a consequence of the new 50% tariffs imposed by the United States on coffee imports from Brazil, which reduced supplies and caused a significant stock shortage.

ENERGY

The PricePedia energy index continues its downward price trend.

PricePedia Financial Index of energy prices in dollars

Analysis of the heatmap highlights a significant weekly decrease in oil and derivative prices.

HeatMap of energy prices in euros

PRECIOUS METALS

The financial index of precious metals continues to reach new record highs, fueled by trade tensions, the U.S. government shutdown, and expectations of a new Federal Reserve rate cut.

PricePedia Financial Index of precious metal prices in dollars

The precious metals heatmap turns red, indicating a general rise in prices.

HeatMap of precious metal prices in euros

FERROUS METALS

The index of ferrous metals in the European market remains relatively stable, while the Chinese index declines.

PricePedia Financial Indices of ferrous metal prices in dollars

The ferrous metals heatmap indicates a decline in Chinese prices, alongside an increase in wire rod prices on the Shanghai market.

HeatMap of ferrous metal prices in euros

NON-FERROUS INDUSTRIAL METALS

Following the escalation of trade tensions between the United States and China, both non-ferrous metal indices have reversed their recent trend, now entering a phase of price decline.

PricePedia Financial Indices of non-ferrous industrial metal prices in dollars

With the exception of cobalt prices, which show a weekly increase in the 3-day moving average, other non-ferrous metal prices are declining.

HeatMap of non-ferrous metal prices in euros

FOOD COMMODITIES

This week, the financial indices of cereals and tropicals have turned upward, while the edible oils index has shown mostly lateral dynamics.

PricePedia Financial Indices of food commodity prices in dollars

CEREALS

The cereal heatmap shows a weekly rise in the 3-day moving average price of soya bean flour.

HeatMap of cereal prices in euros

TROPICALS

The tropicals heatmap shows an increase in coffee prices and a decline in sugar prices.

HeatMap of tropical food commodity prices in euros

OILS

The edible oils heatmap highlights a decline in rapeseed oil and palm oil prices.

HeatMap of edible oil prices in euros