Tensions in the Middle East reach boiling point as Israel and Iran go tit-for-tat with an array of different military strikes. Oil prices surge and markets nervously ask the question of ‘what happens next?’.
While it’s hard to look past the fact the world is experiencing its highest number of active conflicts since 1946, there is still plenty to talk about…
A contender for the most used word in 2025, ‘tariff’, comes back to light as the Trump administration continues its negotiations with China, EU, and other major economies alike.
The US and China sat down at the negotiating table in London for a second time, yielding a ‘framework agreement’ – a non-binding but symbolic structure meant to uphold the 90-day tariff truce struck in Geneva in May. While encouraging, key areas regarding AI chips and rare earth exports remain unclear. The EU continues to struggle finding common ground and is likely to stall beyond their 90-day deadline, risking 50% tariffs from the US. Mexico is pursuing no tariffs on steel below a certain quota, removing the current 50% tariff.
Base metals were mostly mixed; Ali and Lead performed better, the latter continuing to grind towards $2,000. However, for the most part, flat prices drifted given the extreme levels of uncertainty at present.
On Tuesday, Bloomberg reported that Chinese smelters are expected to deliver copper into LME warehouses to take advantage of higher international prices – exact dates of delivery are unknown. Copper has seen steady drawdowns as an active market participant withdraws Russian metal for Chinese consumption; metal that hasn’t been touched in over two years. Nearby spreads have been tight, with the C-3M in backwardation for the past six weeks. Chinese inflow, depending on the size, should provide some respite for an already tight LME market.
On Ali, a 40%+ long appeared on the bandings for Jul, with two 5-9% longs in addition. Basis the Open Interest (as of 16/6 am), this would make the total July position at minimum 44,000 lots. Spreads out of Jul are trading narrower yet remain in contago. All eyes to the LME to see how they respond…
Tin stocks continue their decline – as of Friday, on-warrant LME stocks were at 1,740, levels not seen since May23. The Congolese conflict continues to keep traders wary, given another potential closure of the Alphamin mine located in the Walikale district.