ISTANBUL
Commodity prices were mixed last week amid trade war concerns due to US tariffs and tariff-targeted countries’ responses in policy and statements against the US.
The US imposed 25% tariffs on goods from Canada and Mexico and an additional 10% tariff on China last week.
Washington's move to tariff its major trade partners and increasing tariffs on China fueled the concerns that trade wars may lead to disruptions in global trade.
President Donald Trump announced exemptions to his tariff orders, amending the 25% tariffs on Mexico and Canada that had gone into effect on March 4. Goods compatible with the US-Mexico-Canada Agreement (USMCA) have been exempted from tariffs until April 2.
Meanwhile, Fed Chair Jerome Powell said the economy is moving toward a good place despite the rising levels of uncertainties arising from policies, noting that the bank is in no rush to cut rates and the current monetary policy is in a good enough position to wait to see more clarity for the future.
At the same time, the US non-farm payrolls increased 151,000 in February, below estimates, while the unemployment rate rose from 4% to 4.1%.
The US 10-Year Futures bond balanced at 4.30% and the US dollar index was at 103.8% last week.
Trump made a surprise announcement that he is “strongly considering large-scale sanctions” on Russia until a Moscow-Kyiv ceasefire is reached, as the country is “absolutely ‘pounding’ Ukraine on the battlefield right now.”
Following these developments, gold rose after a decline breaking its eight-consecutive-week rise, reaching as high as $2,930 last week, though it declined from that figure, finishing the week at $2,909 per ounce, up 1.8%.
Silver increased 4.4%, palladium 3.2%, and platinum 1.7% per ounce last week.
Meanwhile, China’s manufacturing Purchasing Managers’ Index (PMI) rose to 50.8, the highest since November, driving copper to rise 3.5% per pound last week.
The eurozone’s manufacturing PMI reached a two-year high at 47.6 and the global manufacturing PMI rose to 50.6, marking the highest level in the last eight months.
China’s copper imports declined 7.2% year-on-year in January-February, according to the country’s customs data.
Analysts note that Trump’s tariff announcement on copper in a bid to reduce the US’ foreign dependence on base metals led to an increased short-term demand, pushing prices upwards.
Aluminum climbed 3%, zinc 1.2%, nickel 3.1%, and lead 1.2% per pound last week.
Meanwhile, Brent crude fell to the lowest levels since December 2021 last week, as low as $68.2 per barrel, finishing the week at $70.2 due to growing supply and demand concerns.
The OPEC+ countries decided to gradually lift the voluntary production cuts, fueling oversupply concerns. Saudi Arabia, Russia, Iraq, Kuwait, Kazakhstan, Algeria, the UAE, and Oman had planned to cut oil production by 2.2 million barrels per day but the plan is set to be phased out gradually, starting in April.
The decision marks the first production increase by the OPEC+ group since 2022, putting pressure on prices.
While the one-month exemption for some automobiles under the USMCA somewhat eased the uncertainties in the markets, it led to a short-term recovery in oil prices by lessening the concerns over slowing demand in the industrial and transportation sectors.
Natural gas fell 14.8% last week, despite rising amid the EU Commission’s announcement of extending its storage targets for another two years and cold weather. The commission targets filling 90% of its natural gas storage by Nov. 1.
The US Department of Energy extended the expert authorization of the Golden Pass LNG project by QatarEnergy and ExxonMobil in Texas. The $10 billion project’s deadline for exports to Asia and Europe was postponed until March 31, 2027.
At the same time, corn and soybeans fell 0.1% per bushel last week, following China’s decision to impose 10-15% tariffs on various agricultural products and investment restrictions on 25 US corporations. Mexico decided to ban genetically modified maize to protect local corn varieties.
Trump’s amendment to Canada and Mexico tariffs until April 2 somewhat balanced the losses in agricultural commodities last week, while uncertainties over the following period continue.
Wheat fell 0.6% per bushel last week as Russia signaled that Moscow may restrict grain exports, while China raised its annual grain production target to around 700 million tons and increased its agricultural stock budget for ensuring food security amid rising trade tensions.
China imported over 157 million tons of grains and soybeans last year. Beijing aims to reduce these imports to lessen its dependence on the US and Brazil for these commodities.
The decline in soybeans and corn was also driven by drought in Brazil and rain in Argentina, threatening yields.
Rice declined 0.3% per bushel at the same time.
Coffee rose 3% per pound last week as global coffee traders and roasters reduced their purchases to minimum levels after failing to convince retailers of the sharp price increases.
Sugar fell 1% and cotton climbed 1.4% per pound, while the ton price of cocoa rose 9.1% last week.
