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LME copper set to rise at its fastest pace since September due to tightening supply
Copper prices in London were unchanged on Friday but are on track for their largest monthly increase in eight months, due to tighter supply. This is highlighted by the premium of nearby copper contracts compared with those further away. The benchmark three-month copper price on the London Metal Exchange was unchanged at $9,570 per metric ton as of 1006 GMT. The contract has risen 4.8% in May so far, and is on track to have its best month since September. Prices are supported by the decline in stocks at LME-registered storage facilities The lowest level in nearly a year, with a drop of 45% from mid-February. The Shanghai Futures Exchange monitored copper inventories in warehouses rose 7.2% during the week. The premium for COMEX copper over the LME benchmark is still high, which attracts more metal to COMEX owned warehouses. "The LME Copper is facing a little squeeze because the COMEX stock keeps going up and the LME stock is declining," said Dan Smith. Spread between cash LME and three-month copper contracts Closed on Thursday at $51.6 per ton, the highest premium since November 2022. This indicates concerns about supply. Smith said that the premium, or backwardation as it is also known, reflects the uncertainty surrounding the supply of copper from the Kamoa-Kakula mine in the Democratic Republic of Congo. This mine is the largest copper producer in Africa, and one of the largest in the world, Smith explained. The industrial metals as a whole were under pressure, with the dollar strengthening and the market losing optimism following a recent court ruling which reinstated tariffs that President Donald Trump had imposed. China's Futures Markets are closed until 3 June for the Dragon Boat Holiday, which has reduced the overall trading volume. On the demand side, Saturday's official purchasing managers index (PMI), which is a measure of metals consumption in China, will be the main focus. A poll shows that China's factory output likely declined for a second consecutive month in May. LME aluminium dropped 0.3% to $2.443.50 per ton. Zinc fell 0.4% to 2,663.50; lead lost 0.2% at $1.958; tin declined 1.8% to $30.655 while nickel increased 0.2% at $15.395. (Reporting from London by Polina Devlin; Additional reporting in Bengaluru by Brijesh Patel; Editing by Jane Merriman).
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Iron ore pessimism subsides despite looming Simandou supply
Analysts and traders agree that the prospects for iron ore price are improving due to a smaller than expected global surplus in this year. However, new supply coming from the massive Simandou project, located in Guinea, remains a downside risk on a longer-term basis. More than a dozen analysts and traders interviewed at this week's Singapore International Ferrous Week said that their forecasts of oversupply for this year have been reduced from 50,000,000 tons to between 20,000,000 and 30,000,000 metric tons. The reason is that demand has been resilient this year, thanks to strong steel exports. Buyers stocked up on steel amid signs of a global trade war escalating while cyclones in Australia disrupted the supply. Official data revealed that in the first four month of 2025 China's imports of iron ore fell 5.5% on an annual basis, while its crude steel production increased 0.4%. Iron ore price Steel prices have remained well above $90 a ton. Below that price, high-cost miner struggle to make a profit. This is despite the trade tensions between two of the world's largest economies, which have raised concerns about the future outlook for steel demand. Analysts and traders have revised up their bearish pricing scenarios from $75 to $85 per tonne at the beginning of the year. Analysts say that the medium term demand for Iron Ore will remain strong because China's new fleet of blast-furnaces will need iron ore for another decade. According to the current life cycle of equipment in China, there won't be a big reduction in blast furnaces by 2035. This means that iron ore will remain at a high level," Long Hongming said in a speech delivered on Tuesday. SIMANDOU Simandou is one of the largest high-grade ore mines in the world. It will begin shipping ore to the market by November. This entry should exacerbate the glut on the global iron ore market starting 2026. The increasingly hostile attitude by the military government of Guinea, which has recently cancelled 129 exploration permits for minerals and is in a standoff against Emirates Global Aluminium, caused concern among traders, analysts, and steel mills attending the conference in Singapore. Participants asked whether the government’s aggressive stance would affect the smoothness of the project’s ramp-up to its full production level of 120 million tonnes a year. Simandou is the joint venture of Rio Tinto (the world's biggest iron ore mining company) and Chinese companies, including China Baowu. China Baowu is the largest steel producer in the world by production. Reporting by Amy Lv, Hongmei Li. Mark Potter edited the article.
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Inflation data ahead of the stock market's best month since 2023
The dollar flirted with its first annual rise as traders awaited key inflation data, and assessed Washington's latest tariff bluster. Investors have tried to ride the roller coaster of news this week after a U.S. federal appeals court temporarily restored tariffs that were temporarily blocked by a U.S. district court. The initial decline in European stock prices on Friday was followed by a 0.3%-1% gain despite the unexpected drop in German retail sales. Wall Street futures began to slump again before U.S. inflation data is due later. The main MSCI world index has risen over 5% in the last month, while the dollar is tantalizingly near to its first month of positive growth since 2025. The benchmark 10-year U.S. Treasury rates, which are a proxy of U.S. borrowing cost, rose 0.5 basis points during European trade. On Thursday, they had fallen on the back of weak economic data and an auction for 7-year bonds. Investors were also alarmed by a provision that was not widely publicized in Trump's proposed budget. This would have allowed the government to tax foreign investments up to 20 percent. Elias Haddad, a strategist at Brown Brothers Harriman, said that the One Big Beautiful Bill Act's foreign tax provision was alarming. He added that the uncertainty created by the act raised the possibility of "stagflation" in the United States. The oil prices are on course for a second successive weekly decline on expectations of a further OPEC+ production hike. However, they were still up on the day as well as for the entire month. Investors were also worried about the Japanese debt level and tariff impact. The yen gained as much as 2 percent from its Thursday low and was trading at around 144 dollars per yen in London. The euro and the pound both fell 0.3% and 0.1% to $1.13 and $1.3 respectively. Hong Kong's Hang Seng fell 1.2% in Asia. Apple suppliers were also hit by the U.S. tariff reverse. Blue chips on the mainland also fell 0.5%, despite both posting solid gains for the month. Korean stocks performed even better than the world index, achieving their best month in November 2023. In the meantime, an index that tracks emerging market currencies has gained about 2% in a month. This is the best performance since November 2023. Gold prices on the rise have helped Ghana cedi to rocket by nearly 40% in this month. Rodrigo Catril is a senior FX Strategist at National Australia Bank. He said that Trump's trade agenda was still alive and well, but the legal battle added yet another layer to uncertainty. He said, "The only thing more certain than more uncertainty is more certainty." The Trump administration has said that despite the drama in the courts, negotiations with the top trading partners continue unabated. Treasury Secretary Scott Bessent stated in an interview with Fox News, that he would be meeting with a high level Japanese delegation on Friday evening in Washington. However, he noted that talks with China had "a little stalled".
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Trump's rally in Pennsylvania to celebrate Nippon Steel's 'deal'
Donald Trump, the U.S. president, will be in Pittsburgh, Pennsylvania, on Friday, to address a rally celebrating Nippon Steel’s “planned partnership” with U.S. Steel. This could signal that the final approval of the deal is imminent. The supporters of the deal hope that his visit to the state in which U.S. Steel has its headquarters will bring an end to a turbulent 18-month attempt by Nippon Steel, plagued by union opposition and by two national security reviews. The deal may not be finalized. Trump, who announced the rally on Truth Social on Friday and appeared to endorse the merger in his post, cast doubts on Sunday by describing the deal as an "investment" with "partial ownership", with control remaining with the U.S. Trump will make remarks at the U.S. Steel Plant at 5 pm. Friday, ET (2100 GMT), in the swing state that he won during the election of 2024. The White House said that his remarks were about the "U.S. Steel Deal." Trump has to make a decision by next Thursday, after the Committee on Foreign Investment in the U.S. completed its second review last week. The timeline may slip. The road leading up to the rally on Friday has been bumpy. Nippon Steel made an offer of $14.9 billion to U.S. Steel for December 2023. They wanted to take advantage of the expected increase in steel sales due to the bipartisan Infrastructure Law. The tie-up was doomed from the beginning, as both Biden and Trump insisted that U.S. Steel be owned by Americans. They were trying to win over Pennsylvania voters ahead of the presidential election in November. Former Vice President Kamala Harris who was the Democratic nominee for 2024 when Biden stepped down, said that U.S. Steel must remain domestically-owned. Biden, following a CFIUS review in January, blocked the deal on grounds of national security. The companies filed suit, claiming they had not received a fair review, an accusation that the Biden White House denied. Steel giants saw an opportunity with the Trump administration. The Trump administration opened a 45-day review of the proposed merger in terms of national security last month. Trump's public remarks, which ranged from welcoming the Japanese company to "invest" in U.S. Steel to suggesting that Nippon Steel would have a minor stake, did not do much to reassure investors about a possible green light. Reports last week stated that Nippon Steel was planning to invest up to $14 billion into U.S. Steel operations, including $4 billion for a new mill. This is in response to government requests for more investment. Trump wrote on Facebook last Friday that the partnership would create 70,000 jobs and bring $14 billion dollars to the U.S. economy. This gave new life to prospects for this tie-up. I will be seeing you all on May 30th at US Steel in Pittsburgh for a BIG rally. CONGRATULATIONS! (Reporting and editing by Alexandra Alper, Jeff Mason and Kate Mayberry).
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Pollen Street Lumon abandons takeover pursuit against UK's Argentex
Lumon Acquisitions, a provider of payment services, announced on Friday it would not be making an offer to Argentex following the rejection of an earlier bid by the currency risk management company. Why it's important Argentex was one of the earliest victims of market turmoil brought on by Donald Trump's unpredictable trade policies. The sharp decline in the dollar in late April squeezed the company's finances. CONTEXT Lumon, a British private equity firm, has joined Argentex's former chief executive Harry Adams, and Irish entrepreneur Terry Clune, in abandoning their bid to buy the British company. Adams and Clune said Thursday they also would not be making an offer to buy the company. Argentex rejected bids by Lumon, Adams and Clune as well as IFX Payments. The offer was valued at approximately 3 million pounds ($4 millions). MARKET REACTION Argentex shares, listed on AIM, have fallen 2.3% this year. They've lost over 90% of their value.
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China softens its stance on export restrictions for rare earths
China announced that it would continue to cooperate with other countries in regards to its export control of rare earths, as shortages threaten auto and semiconductor manufacturers in Europe and India. China, which controls 90% of the global processing capacity of rare earth magnets, used in everything from cars and fighter jets, to home appliances and other products, imposed export restrictions in early April, requiring exporters obtain licenses from Beijing. Despite a few licences being granted to Volkswagen suppliers and others, Indian automakers claim they have not received any. They will be forced to cease production at the beginning of June. Lin Jian, a spokesperson for the Foreign Ministry, said Friday that the ministry was "ready to enhance dialogue and cooperation with countries and regions in the area of export control and remain committed to maintaining global production and supply chain stability." Chinese state media reported Wednesday that China could relax its restrictions on rare earths imports for Chinese semiconductor firms and European companies after meetings between industry representatives and the Ministry of Commerce, where the issue of shortages had been raised. The New York Times reported this week that in response to China’s restrictions on the export of minerals, the United States had suspended sales of certain critical technologies, including parts for COMAC, a state-owned aircraft manufacturer. (Reporting and writing by Colleen Waye, Liz Lee and Lewis Jackson, and editing by Christopher Cushing and Eliza Hardcastle).
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Sources say that the EU will propose a more flexible climate goal for July.
EU diplomats said that the European Commission would propose a new EU Climate Target in July, which will include flexibility for countries to meet. This is part of Brussels' efforts to combat mounting criticisms about Europe's environmental goals. Wopke hoekstra, the European Union's Climate Commissioner, confirmed Wednesday that he would present a 2040 EU climate goal on July 2 during a closed-door meeting with EU country representatives. Diplomats stated that the proposal would set an EU target to reduce net greenhouse gas emission by 90% from 1990 levels by 2040. The EU executive intends to make this target more flexible, and could lower the amount it expects from domestic industries. Diplomats explained that the flexibilities included setting a target of emissions reduction for domestic industries below 90% and letting the countries purchase international carbon credits to cover the remainder, in order to reach 90%. Un spokesperson for the European Commission declined to comment. The Commission has pledged not to stifle Europe's ambitious climate goals, despite increasing criticism from governments and legislators concerned about the costs for European businesses who are already struggling with high energy rates and looming U.S. Tariffs. Europe is the continent that warms up most quickly in the world. The Commission has been delaying its 2040 climate proposals for months and has weakened other green laws over the last few months in an attempt to calm political opposition. The EU countries have differing views on the 2040 target, which must be approved by both them and EU legislators. Finland, The Netherlands and Denmark support a 90 percent reduction in emissions. Italy and the Czech Republic are among those who oppose a 90% reduction in emissions. Germany has supported a 90% goal if countries are able to use international carbon credits in order to reach three percentage points. Diplomats say that the Commission is considering easing the requirements for countries to reduce emissions in certain sectors, giving them greater choice as to which industries will do the heavy lifting. The 2040 target will keep EU countries on course between their 2030 emission targets - which they're almost on track to achieve - and the EU’s goal to reach net zero by 2050. (Reporting and editing by Frances Kerry.)
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Prices largely stable but market risks persist
The Dutch and British wholesale prices of gas were mostly stable on Friday, as Norwegian flows stabilized and the low demand allowed storage to be refilled. However, the tighter market conditions continued to support these prices. LSEG data shows that the benchmark Dutch front-month contract was up 0.26 euros at 35.18 Euro per megawatt hour or $11.68/mmBtu at 0816 GMT. Auxilione, a consultancy, said that with the June contract ending on Friday, market attention is now shifted to July. The Dutch July contract increased by 0.14 euros to 35.40 Euro/MWh. The British front-month contracts were down 1.21 pence, at 83.25 pence/therm. Meanwhile, the weekend contracts were down 1.20 pence, at 82.30 pence/therm. Saku Jussila, LSEG analyst, said that prices are now largely at the same levels as before a Norwegian maintenance period which began last week. Data from infrastructure operators Gassco revealed that the total Norwegian export nominated volumes were down from 296 mcm/d (million cubic metres/day) on Thursday morning to 292 mcm/d by Friday morning. Analysts at Jefferies Equity Research stated in a monthly report that TTF gas prices rose almost 10% in May, driven by concerns about tariffs, the weather and the risk of further delays for upcoming LNG projects. They said that the gas demand in North-West Europe fell by 7%, or 33 mcm/day, over the last eight weeks. Analysts added that although the overall filling level is 19% or 12 billion cubic meters (bcm) below the five-year average, it has been higher than the average for the past five years. They said: "We continue seeing a tighter market in '25 due to increased European injection demand, lost Russian pipe imports (15bcm/yr) and LNG project delay." Gas Infrastructure Europe data shows that European gas storage sites are 47.2% full. The benchmark contract on the European carbon markets was up by 0.20 euros at 71.14 euro per metric ton. Nora Buli, reporting from Oslo; Nina Chestney, editing)
Four sources claim that OPEC+ will continue to increase oil production.
OPEC+ will increase oil production and may unwind the voluntary cuts of 2.2 million barrels a day by the end October if the members don't improve their compliance with their production quotas.
OPEC+ surprised the oil market by accelerating its unwinding of cutbacks in April, despite low prices and weak demand. Sources have claimed that the move was intended by OPEC+'s leader Saudi Arabia as a punishment for some members who failed to meet their quotas.
OPEC+ (which includes the Organization of the Petroleum Exporting Countries, as well as allies like Russia) agreed on a major output increase for June, bringing the total of the production it intends to release in May, April and June up to almost 1 million bpd.
Four anonymous OPEC+ sources who were briefed about the situation said that OPEC+ would likely continue the trend, and in June will agree to release another 411,000 bpd for July.
OPEC, Saudi Arabia's government communications office and Alexander Novak's office in Russia did not respond immediately to a comment request.
Sources said that the group would likely approve accelerated increases for August, September, and October. The idea is to unwind the rest of the voluntary cuts in the event that Iraq, Kazakhstan, and other laggards fail to improve their compliance and deliver compensation reductions.
One source said that if compliance did not improve by November, the voluntary reductions would be unwound. This was referring to the voluntary cuts of OPEC+ by eight members, which totalled 2.2 million bpd.
OPEC+ continues to cut output by nearly 5 million bpd, and many of these cuts will remain in place through the end of 2026.
In December, OPEC+ agreed that the voluntary portion of the total reductions would be phased out gradually by the end September 2026. However, they agreed to speed up this process in April.
The oil price fell to a 4-year low below $60 per barrel in April on accelerated OPEC+ increases and U.S. president Donald Trump's new tariffs, which raised concerns over a global slowdown.
Reports this week stated that Saudi officials had informed allies and officials from the oil industry that they were unwilling to support the oil markets by cutting further supplies.
Kazakhstan's energy minister defied OPEC+ by saying he would put national interests ahead of those of OPEC+ when deciding the level of oil production. Kazakhstan's oil production in April exceeded its OPEC+ quota despite a 3% drop. (Additional reporting by Alex Lawler and Yousef SABA; Writing by Dmitry Zhdannikov, Editing by Frances Kerry.)
(source: Reuters)