- US metal prices are soaring as traders rush to secure copper, steel, and aluminium ahead of Donald Trump’s planned 25% tariffs on imports.
- This has widened the price gap between US and European markets, with Comex copper premiums hitting multiyear highs.?
- The surge reflects fears of supply shortages rather than increased demand.
- Aluminium, heavily reliant on imports, has seen sharp price spikes, with the Midwest premium rising nearly 10%.?
- Producing a penny costs far more than its face value, leading to significant financial losses.?
- Supporters argue eliminating pennies would save millions and align with the shift to electronic payments.?
- Critics fear price rounding could increase costs for consumers and businesses, particularly those reliant on cash transactions.?
- Some worry that nickel usage could rise, which is even more expensive to produce.?
- While only Congress can fully eliminate the penny, Trump can halt new minting, significantly reducing circulation.?
- Other countries, like Canada, have successfully phased out pennies without major economic impact.
- European gas prices have hit a two-year high due to increased demand from cold weather, leading to accelerated withdrawals from storage.?
- Gas stocks are at 49% capacity, down from 67% last year, as Europe faces greater competition from Asia for LNG shipments.?
- With Russian pipeline gas via Ukraine now halted, Europe’s gas market is more vulnerable to weather-driven price spikes.?
- Analysts warn that simultaneous cold snaps in Europe and Asia could further strain supplies.?
- Meanwhile, a U.S.-China trade dispute over LNG is expected to shift global trade flows but is unlikely to impact Europe’s imports.
- Europe’s gas storage is under pressure due to faster-than-expected depletion over winter, high summer gas prices, and uncertainty over Russian supply.?
- Colder weather and lower wind energy output forced the EU to rely more on storage, leaving reserves at their lowest February levels since 2022.?
- Rising summer gas prices make refilling less economical, while competition for LNG remains tight.?
- A potential Russia-Ukraine peace deal could revive pipeline transit, but the EU is unlikely to return to pre-war dependency.?
- Governments may intervene to ensure storage targets are met, but this could distort markets and drive prices higher.
Harry Mills | Director, Oku Markets
