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Russell: China's structural shift is reflected in its weak steel production and strong imports of iron ore.
The disparity between China's low steel production and its robust imports of?iron ore is still evident, but it is now starting to appear as a structural shift instead of a temporary dislocation. China, which accounts for just over half the world's total steel production, produced 86.63 metric tons of steel in April. This is a 2.8% drop from the same period in 2025 and the lowest April figure since 2018. Steel production for the first four months of the year was 331.12 millions tons, down 4.1% from last year's same period. According to official statistics, however, iron ore exports increased by 8% during the first four month of the year, to 418,6 million tonnes. Imports of steel-related raw materials in April were 103.9 millions tons. This is down 0.8% compared to March's total of 104.74, but slightly higher per day due to April having one less day than March. Analysts at DBX Commodities estimate that May seaborne arrivals will be 104.67 millions tons. The lackluster steel production can be explained by the continuing weakness in the property construction sector and the decline in exports. In April, shipments dropped 9% from the same month last year. Steel exports fell 9.7% in the first quarter of 2026 to 34.2 millions tons. Iron ore imports are a result of both structural and temporary factors. Inventories are built SteelHome consultants SteelHome monitor port stockpiles to ensure that they are not contaminated. Holding near record highs The week ending May 22 saw inventories at 160.35 millions tons, up slightly from the previous week's 160.34 and close to the record of 165.67 that was reached the week before. As steel production increases to meet the construction demand, inventories tend to build towards the end of each year. They then peak early in the following year and decline toward the middle. Stockpiles are up 22% since the July low of 131.05 millions tons, which was 2025's lowest level. Market participants will be able to tell whether inventories will follow their usual seasonal pattern, and begin to decline as we approach the northern summer. Or if soft steel production will continue to keep them high compared with previous years. It is possible that the Iran war, and the threat of fuel shortages in Asia due to the continued closure of the Strait of Hormuz by the Iranian government may have also encouraged Chinese steel mills to import more ore. The lack of volatility may also be a factor in the rise in imports. Singapore Exchange contracts have been locked in a narrow range around $105 per ton over the last 10 months. On Monday, the front-month contract closed at $109.09. Iron ore imports are driven by a decline in China's domestic production of iron ore, which is further exacerbated due to deteriorating ore grades. This means that the same amount of ore will yield less iron. According to MySteel, China's first four months iron ore production was 326.8 millions tons, a 1% decrease from the same period in 2013. The drop in 2024 was 2.8% to 1.04 billion tons. China's iron ore is a mixture of 20-30% iron. This means that it must be upgraded in order to match the imported grades, which are 60-65%. The process?is energy-intensive and costly. Imports are likely to increase, as China's domestic iron ore continues to decline. This is assuming that steel production remains relatively stable. You like this column? Open Interest (ROI) is your new essential source of global financial commentary. ROI provides data-driven, thought-provoking analysis on everything from soybeans to swap rates. The markets are changing faster than ever. ROI can help you keep up. Follow ROI on LinkedIn, X. These are the views of a columnist, who is also an author.
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MORNING BID EUROPE-Peace talks hit turbulence
Rae Wee gives us a look at what the future holds for European and global markets. Oil prices climbed Tuesday after U.S. forces conducted what they called defensive'strikes' in southern Iran, just as investors were becoming more hopeful about a peace agreement?between the two nations. The strikes occurred as Iran's chief negotiator, its foreign minister and the Qatari prime minister met in Doha for talks on Monday about a possible deal with the U.S. that would end the war of three months. Washington and Tehran played down the hopes of an imminent breakthrough. This kept the optimism down, as the dollar gained some of its appeal as a safe-haven currency while stocks were mixed. Investors hope for a peace deal that will end the conflict, with a focus on the reopening of Strait of Hormuz. The Nikkei, a Japanese newspaper, reported that the U.S. is in talks with Iran about?opening the waterway 30 days after both countries have reached a deal to end hostilities. Details are still scarce. Energy prices will likely remain high until then. This puts pressure on policymakers and businesses, as well as everyday consumers, when inflation increases. The central bank of Sri Lanka surprised the markets by increasing its benchmark policy rate 100 basis points in an attempt to'stem inflation and pressure on the currency. Ryozo Himino, Deputy governor of the Bank of Japan, said that the Bank's timing of rate hikes will be affected by developments in the Middle East. Investors now expect a 25-basis point rate increase from the Federal Reserve in December. This is a dramatic change from the two rate cuts that were priced into the market at the beginning of the year. The European Central Bank and Bank of England are also expected to tighten policy. The Conference Board's U.S. Consumer Confidence Index will be released later today, Tuesday. In May, the index is likely to fall by eight-tenths a point and reach 92. The higher gasoline prices caused by the Iran War will continue to be a concern for consumers. The following are key developments that may influence the markets on Tuesday. U.S. Consumer Confidence (May)
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GRAINS-Chicago Wheat falls for the fourth day as Rain falls on US Plains
Chicago wheat futures declined for the?fourth session in a row on Tuesday, as rain eased drought conditions across U.S. cropping areas and traders prepared for fresh supplies from Northern Hemisphere harvests. As a result of the U.S. peace agreement with Iran, corn and soybean futures 'also 'fell, because traders positioned for fresh?supplies from Northern Hemisphere harvests. Chicago Board of Trade's most traded wheat contract was down 1.2% to $6.38-1/2 per bushel as of 0338 GMT. CBOT Corn fell 1.1% to $4.58-1/4 per bushel, while soybeans were trading 0.7% lower on $11.88-1/2. Wheat has fallen around 7% since a high of $6.88-1/4 reached on May 14 but is still roughly 25% above the level of the beginning of the year. This is largely because of drought damage to U.S. crop. In many parts of the U.S. Wheat Belt, rain has fallen or is expected in the next few days. Tobin Gorey of Cornucopia, an agricultural consultant, said that the rain could help to stop the fall in crop yields. He added that "warm temperatures might work against a stop." The prospect of more grain coming to the market from Northern Hemisphere countries that produce the majority of the world’s wheat and many of whom expect good harvests is also keeping prices down. Argentina's government said it would reduce export taxes to support production and shipments. The European Union announced that they would temporarily remove customs duties for key nitrogen-based fertilisers in order to help farmers deal with the price increases. The largest speculators are still net'short CBOT Wheat and net long Corn and Soybeans, but they have reduced the size of their position in the week ending May 19. The CNPE, Brazil's energy council, is expected?to approve a?rising of the mandatory ethanol mix in gasoline from 30% to 32%. In recent months, crop prices have been supported by a strong biofuel demand.
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China's recent coal mine closures in context
Analysts expect that the worst mining disaster in China's history will have a negative impact on the coal supply during the summer, when demand is usually high. Gas explosions at Liushenyu Mine in Northern?Shanxi Province killed 82 people late Friday night. Officials called for better safety oversight. President?Xi _Jinping has ordered an investigation. How much coal mining has been halted due to safety checks? According to an analysis by Mysteel analysts, as of Monday, 319,000 tons of coal per day were halted in 109 mines across Shanxi for safety inspections. This is typical after a fatal accident. Mysteel stated that most mines would be closed for two to seven day. Mysteel reported that a small amount of capacity in Shaanxi and Henan provinces, as well as other provinces, also suspended production. Mysteel said that 16.85 million tonnes of production capacity would be suspended for three to five days. How do the closures compare to overall production? Shanxi produces about a quarter the total output of China. The 319,000 tons of mine closures per day equals about 10% the 3.08 million tonnes in daily average output by 2026. This includes coal used for electricity generation, coking coal and steelmaking. What is the outlook for the coal market? Some analysts warned about possible shortages of supplies and the impact on international prices. Others said it was still too early to determine what effect this would have. In a recent note, Liu Xiaomin said that the thermal coal market may see high prices and shortages similar to those seen in 2022-23. The high coal prices coincided with the summer heatwaves, which increased cooling demand. This led to coal shortages, and disruptions in electricity supply. Galaxy Futures analysts stated in a report that safety inspections for coking coal could result in Shanxi's output being reduced by 10 to 15 percent?in May and June, and the national supply of coal by 7 to 10%. The impact on production should ease by late summer. Analysts predict that the output of coking coal could drop?3%-5% between July and August compared to a year ago. Simon Wu, senior advisor for'metallurgical coal markets' at Wood?Mackenzie said that, while inspections would weigh on production levels, it is unlikely that further shutdowns will occur unless inspections show that mines are exceeding their capacity. Wu said that most mines in Shanxi were?state-owned and are unlikely to violate their production allocations. Will global prices be affected? Wu said that it is too early to tell if the increase in coking coal shipments from Mongolia to China will have an impact on international prices. However, Mongolia's neighbouring country could gain by increasing shipments. This would help ease pressure on China's internal prices. Liu predicted an increase in China's imports of coal, which would boost international seaborne prices. What could happen next? Longer term, this disaster may lead to better safety oversight and higher coal prices. S&P's Liu stated that "the industry will have to adjust to a new norm: increased costs due to safety improvements and a possible drop in productivity."
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Copper gains corrected as dollar and oil prices rise due to hopes for a US-Iran Peace Deal
The dollar and oil prices fell on Monday, as a result of hopes for a possible peace agreement between the United States and Iran. This eased fears about inflation and an economic slowdown. By 0845 GMT, the most traded copper contract at the Shanghai Futures Exchange had gained 1.1%, to 105.650 yuan (15,548.76 dollars) per ton. We are hearing some good news about the conflict. Soni Kumari, an ANZ analyst, said that the positive market sentiment is a result of this. The Middle East conflict has caused supply disruptions, which have a negative impact on the demand for base metals. According to Kumari, the demand story remains positive. Oil prices fell below $100 per barrel as a result of expectations of a U.S. and Iran deal to reopen Strait of Hormuz. The 'nearly 3-month-long conflict in the Middle East has sparked inflation fears and shifted the global interest rate outlook. Hopes of a peace agreement have helped ease concerns about inflation and global slowdown. This has supported demand for copper which is widely regarded as a bellwether indicator of the health of the global economic system. Donald Trump, the U.S. president, said that he told his representatives to not rush into a deal with Iran because his administration was downplaying expectations of a breakthrough in the war. Trump claimed on Saturday that Washington and Iran "largely" negotiated a memorandum of understanding (MOU) to reopen Strait of Hormuz. The U.S. Dollar Index fell 0.2%. This made commodities priced in greenbacks cheaper for holders of other currencies. LME data revealed that the available copper stocks in London Metal Exchange storage warehouses had fallen to a 10-week low, 275,525 tons, as of Thursday. Other SHFE metals saw a 0.2% decline in aluminum, 0.4% increase in zinc, 0.2% rise for lead, 0.4% gain for nickel, and 1% growth in tin.
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Copper gains corrected as dollar and oil prices rise due to hopes for a US-Iran Peace Deal
The dollar and oil prices fell on Monday, as hopes of a possible peace deal between the United States and Iran grew. This eased fears about inflation and an economic slowdown. By 0552 GMT, the most traded copper contract at the Shanghai Futures Exchange had gained 0.9%, to 105.370 yuan (15,507.56) per ton. "We're getting positive news about the conflict." Soni Kumari, an ANZ analyst, said that this is good news for the industrial metals market. The Middle East conflict has caused supply disruptions, which is why metals demand remains strong, according to Kumari. Oil prices fell below $100 per barrel due to expectations of a U.S. Iran deal to reopen Strait of Hormuz. The Middle East conflict, which has lasted for nearly three months, has sparked inflation fears and changed the outlook on global interest rates. Hopes of a peaceful resolution have helped ease concerns about inflation and global slowdown. Copper is now a popular commodity, widely considered to be a good indicator of global economic health. Donald Trump, the U.S. president, said that he had told his representatives to not rush into any agreement with Iran. His administration has played down expectations for an imminent victory in the war. Trump stated on Saturday that Washington and Iran had "largely" negotiated a memorandum of agreement regarding a?peace deal which would reopen Strait of Hormuz. The U.S. Dollar Index fell 0.2%, making greenback-priced goods cheaper for other currency holders. Other SHFE metals include?aluminum, which fell 0.4%, while zinc rose 0.3%, and lead, 0.1%. Nickel gained 0.2%, and tin, 0.9%.
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Copper gains corrected as dollar and oil prices rise due to hopes for a US-Iran Peace Deal
Copper prices rose on Monday, as the dollar and oil fell in anticipation of a possible 'peace agreement' between Iran and the United States. This eased fears about inflation and an economic slowdown. The Shanghai Futures Exchange's most traded copper contract rose 1.1%, to 105 590 yuan (15,539.93 dollars) per ton. Oil prices fell below $100 per barrel as oil traders awaited the announcement of a U.S. Iran deal to reopen Strait of Hormuz. The Middle East conflict has caused energy prices to rise sharply, raising inflation fears and changing the outlook for global interest rates. Hopes of a peaceful resolution have eased fears of inflation and a global economic slowdown. This has led to a rise in demand for copper which is considered an indicator of global health. Donald Trump, the U.S. president, said that he told his representatives on Sunday not to rush into any agreement with Iran. His administration also played down expectations about an imminent breakthrough in the war. Trump stated on Saturday that he and the Iranian government had "largely" negotiated a Memorandum of Understanding (MOU) for a peace agreement to reopen the Strait of Hormuz. The U.S. Dollar?index fell 0.2%, making commodities priced in greenbacks cheaper for currency holders. Aluminium, among other?SHFE Metals, was down?0.5%. Zinc rose?0.3%. Lead increased 0.1%. Nickel gained 0.2%. Tin added 1.2%.
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Oil rises, stocks mixed as new US strikes dampen peace deal optimism
Investor optimism about a U.S. peace deal with Iran was tempered by the recent U.S. strikes across the Middle East. An official who was briefed about the visit revealed that Iran's top negotiator, as well as its foreign minister, were in Doha to discuss a possible deal with the U.S. for the end of the war. This came after Washington and Tehran had played down expectations for an immediate breakthrough. Separately, The Nikkei reported that the two parties were discussing plans to open up the Strait of Hormuz around 30 days after a ceasefire agreement was reached. Even as the talks continued,?U.S. Forces conducted strikes in southern Iran on Monday against targets such as boats that were attempting to place mines, and missile launch sites in what they called?defensive actions. Brent futures rose more than 1% to $97.32 per barrel in early Asian trading. U.S. West Texas Intermediate Crude was up slightly from Monday's closing price, but down 5.5% since Friday. Due to the U.S. Memorial Day Holiday, there was no settlement Monday. "I'm a little sceptical...?We're told that a deal is near. But what will it look like?" This is what matters most. When will the Strait of Hormuz reopen? Joseph Capurso is a strategist with Commonwealth Bank of Australia. The stock markets were mixed. MSCI's broadest Asia-Pacific index outside Japan gained 0.8% while Japan's Nikkei fell 0.2%. Nasdaq Futures pared earlier gains and traded 0.9% higher. S&P 500 Futures gained 0.68%. The EuroStoxx 50 futures declined by 0.36%. The FTSE futures gained 0.4%, and the DAX futures fell 0.43%. The market wants to think that the war will end soon because it is bad for the global economy. Capurso said that the world economy has had buffers by running down inventory, but it is not possible to keep doing this. DOLLAR STEADIES The dollar was stable on Tuesday, despite renewed demand for safe havens. It is still some distance from the six-week high reached last week. The dollar slipped to $1.3498, while the euro fell 0.06% to $1.1 636. The dollar's value against the yen was unchanged at 158.95. After a week of turmoil, bonds were mostly stable. Investors were concerned that rising energy prices would spark a rise in inflation. This could lead to rate increases across developed and emerging markets. The yield of the two-year U.S. Treasury Note was little changed last week at 4,0612%. Meanwhile, the yield for the 10-year Treasury Note fell to 4.5024%. Standard Chartered's Deputy Chief Strategist and Head of Global Research, Eric Robertsen said: "We will likely see periodic yield retracements when geopolitical risk?falls, but inflation and fiscal risk are likely?"to be more persistent." "Commodity dislocations are expected to take several months to resolve. Fiscal support measures will likely lead to a sustained deterioration of sovereign balance sheets, which will require more borrowing at a time when funding costs are higher." Other than that, spot gold fell 0.5% to $4,545.90 per ounce. (Reporting and editing by Rae Wee)
London copper stable as new US strikes on Iran weigh down on sentiment
London copper prices remained steady on Tuesday, as a weaker dollar was countered by higher oil costs after the latest U.S. strikes against?Iran shattered hopes of a resolution to the Middle East Conflict. This fueled concerns about the global economy outlook.
By 0536 GMT, the London Metal Exchange's three-month copper was unchanged at $13,671 per metric ton.
The most traded copper contract at the Shanghai Futures Exchange fell 0.4% to 104,990 Yuan ($15.451.64) per tonne.
U.S. Secretary Marco Rubio stated on Tuesday that negotiating a deal with Iran would "take a few day," dispelling hopes of an imminent end to the conflict. This comes a day after U.S. troops conducted what Washington referred to as defensive strikes in southern Iran.
The strikes came as Iran's foreign minister and top negotiator were in Doha to discuss a possible deal with the U.S.
Brent crude oil prices increased after the U.S. war. Metals prices are expected to decline due to higher energy costs.
Tim Waterer is the chief market analyst for KCM Trade. He said that metals will likely remain range bound and sensitive to headlines over the next few months.
If a deal is reached that lowers oil prices and the dollar, it will ease inflation fears and boost base metals' appeal.
Lead was up 0.3% on the 'LME. Nickel lost 1.2%. Tin climbed 1.8%.
Aluminium, among other SHFE?metals, ticked up 0.5%, while zinc rose 1.1%, and lead dropped 0.2%. Nickel lost 1.2%, and tin gained 0.9%.
(source: Reuters)