Commodity Calls: Week Ending 10 January 2025

Colder winters are supporting oil demand, China becomes the world’s largest cobalt producer, and Trump’s tariffs raise concerns for copper traders.

Join Global X each week for ‘Commodity Calls’ to explore all the recent signals and developments that occurred in the world of commodities.

Looking for more? Check out this week’s Market Moves and Thematic Spotlight.

Crude Oil


Bullish

  • Chinese and Indian access to Russian crude oil could become more difficult after new US sanctions.1 According to US Treasury documents, 180 new vessels, several senior Russian oil executives and multiple major oil companies will be targeted by sanctions. Indian imports of Russian oil fell 55% YoY last November, a sign that the country may be looking to diversify its sources in light of the new bans.2
  • Record cold winters in the northern hemisphere is supporting oil demand. A recent report by JP Morgan estimates that for every degree Fahrenheit that temperature drops below the 10-year average during the winter season, demand for crude oil increases by 113,000 barrels per day as heating needs increase.3

Bearish

  • President-elect Donald Trump has vowed to reverse the Biden Administration’s ban on offshore oil and gas drilling.4 The current ban withdraws 625 million acres of the ocean from new development.

Explore crude oil with BCOM.

Transition Metals


Bullish

  • China’s largest copper miner, Zijin Mining, is considering taking over Zangge Mining Co., a Chinese lithium miner valued at US$6 billion.5 M&A in the lithium industry has become more common after a 90% decrease in the commodity’s price since 2022 peaks. Chen Jinghe, Zijin’s chairman, has stated that he wishes for the company to become a top producer of lithium.

Bearish

  • Nickel has hit its lowest level since 2020.6 Investors have been put off due to the rallying US dollar, and uncertainties surrounding additional Chinese stimulus. Nickel, which is mainly used in the production of stainless steel and EV batteries, dropped to US$15,000 a ton on the LME in early January.
  • China’s CMOC has become the world’s largest cobalt producer after producing 114,165 tons of the metal in 2024.7 The firm more than doubled its 2023 output and surpassed its initial 2024 guidance by 40,000 tonnes. CMOC’s production of copper also increased 55% from 2023, exceeding 650,000 tonnes.

Explore transition metals with GMTL.

Copper


Bullish

  • Concerns over the scope of Trump’s proposed tariffs are causing near record premiums on copper futures on the Comex over the LME.8 Near month Comex copper futures traded at US$623-a-ton premium over equivalent futures on the LME last week. Traders are now rushing to ship the metal into US warehouses to cash in on the premium, however insufficient supplies could trigger a short squeeze.
  • Chile’s Codelco has sold US$1.5 billion in bonds to fund new mine expansions.9 The cash injection is part of a new spending program that seeks to overhaul Codelco’s aging copper assets after decades of underinvestment. Demand for the bonds exceeded US$8.3 billion, showing strong market endorsement for the firm.

Bearish

  • President-elect Donald Trump has denied a Washington Post report that he would pare back tariff policies so it would only include specific critical imports.10 The article stated that Trump’s tariffs would target metals such as steel, iron and copper, as well as other critical medical supplies and energy materials.

Explore copper with WIRE.

 

Forecasts are not guaranteed and undue reliance should not be placed on them. This information is based on views held by Global X as at 13/01/2025. Investing involves risk, including the possible loss of principal. Diversification does not ensure a profit nor guarantee against a loss.

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This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. This information is not intended to be individual or personalised investment or tax advice and should not be used for trading purposes. Please consult a financial advisor or tax professional for more information regarding your investment and/or tax situation.