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Viewpoint: Copper supply tightness beckons in Europe
Viewpoint: Copper supply tightness beckons in Europe
London, 17 December (Argus) — Europe's copper market heads into 2026 carrying the imprint of an extraordinary 2025, a year in which price signals, physical flows and geopolitics diverged sharply. What emerged was not a simple story of shortage or surplus, but a fractured global market in which Europe briefly found itself competing for metal with the US, while China's smelting overcapacity distorted upstream fundamentals. While European supply has stabilised, a projected tightness in 2026 promises higher premiums, particularly if underlying metal prices remain at record highs. Fractured fundamentals in 2025 Copper prices surged through 2025, with London Metal Exchange (LME) three-month values repeatedly achieving record territory above $11,000/t and briefly approaching $12,000/t in December. On the surface, the rally appeared to signal a classic supply crunch, driven by mine disruptions at assets such as Grasberg, in Indonesia, and Kamoa-Kakula, in the Democratic Republic of Congo, and structurally strong demand from grids, electrification and data centres. But the deeper story was more complex. Demand growth was uneven. China's apparent consumption slowed sharply in the second half of the year as stimulus effects faded, while manufacturing activity in Europe remained weak. Yet prices continued to rise, reflecting not so much booming end-use demand as a geopolitical and logistical reshaping of supply. The decisive factor was the growing pull of copper into the US market on the threat of import tariffs on refined copper. The widening price premium on the Chicago Mercantile Exchange (CME) contract relative to the LME opened a powerful arbitrage that drew metal out of LME warehouses and, by extension, away from Europe. By late 2025, CME stocks accounted for more than half of global exchange inventories, while LME registered stocks fell below 100,000t at points — levels historically associated with acute tightness in deliverable supply. For Europe, this mattered more than headline global balances. Even as total exchange inventories rose above 700,000t worldwide, availability became tighter in non-US regions, pushing spot and term premiums sharply higher. LME-CME arbitrage: the key swing factor The LME-CME arbitrage, which is governed by several interlinked factors — relative interest rates, currency moves, logistics costs, warehouse accessibility and above all, US trade policy — is expected to remain in 2026. As long as the CME price commands a premium of several hundred dollars per tonne over the LME, the incentive to ship metal into the US persists. In 2025, that premium regularly exceeded estimated freight and financing costs, keeping the arbitrage wide open. In 2026, tariff-driven uncertainty could trigger further pre-emptive inflows into the US early in the year, sustaining tightness elsewhere — including Europe — before potentially easing later once inventories are built and global supply recovers from 2025 shocks. Conversely, a delay or dilution of tariffs could narrow the spread, allowing some metal to remain or return to LME locations. European supply and premiums: a new baseline? European spot premiums eased in September-November as the scramble for cathode outside the US eased, but as major producers have responded to 2025 events by lifting 2026 term premiums aggressively, European spot premiums also surged as sellers look to mirror the new market baseline in the spot market. Chilean supplier Codelco announced a near 40pc increase in its European premium for 2026 deliveries, taking it to the mid-$300s/t over LME, with Aurubis following with similarly high offers. The Argus assessment for copper cathode grade A cif Rotterdam rose to $210-220/t on 2 December, increasing by more than a third relative to September-November levels. Trading groups and producers surveyed by Argus indicate a reassessment of risk — producers are pricing in the possibility that Europe becomes structurally "second in line" behind the US for deliverable cathode. Whether these elevated premiums are sustainable through the whole of 2026 depends on how quickly arbitrage-driven stock movements stabilise. But even if LME stocks rebuild later in the year, the premium reset of 2025 may have established a higher floor for Europe. Bank forecasts: surplus, but not comfort Major banks mostly agree that the global copper market remains in surplus in 2026, although the size of that surplus is shrinking. Goldman Sachs projects a surplus of about 160,000t in 2026, down from roughly 500,000t in 2025, and expects prices to average $10,000-11,000/t. But the International Copper Study Group points to a possible deficit of 150,000t in 2026, keeping the market on watch. Chinese market participants are expecting non-US supply to tighten significantly as material flows in the US, but some US market participants point to an easing trend. On paper, these numbers argue against a classic shortage. But the experience of 2025 shows that regional tightness can coexist with a global surplus. For Europe, the key takeaway is that surplus metal may not be available where it is needed, when it is needed, if arbitrage and policy continue to redirect flows. In that sense, 2026 could resemble 2025 — balanced or a surplus globally, but intermittently tight in Europe. By Raghav Jain Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.
CBAM verification to redefine Italian HRC pricing
CBAM verification to redefine Italian HRC pricing
London, 17 December (Argus) — Italian hot-rolled coil (HRC) prices could find stronger support in 2026 as the EU's carbon border adjustment mechanism (CBAM) moves into its financial phase and safeguard quotas tighten, raising the cost and complexity of third-country supply. Default values under CBAM underscore the need for suppliers to have their emissions data verified, and perceptions of compliance and trustworthiness could reshape import flows in the year ahead. A modest recovery in real steel consumption could add to the upward pressure, even as buyers remain cautious after four years of contraction. European steel association Eurofer forecasts EU real steel consumption will rise by 1.1pc in 2026, following declines of 4.2pc in 2024 and an expected 2.1pc this year, weighed down by weak automotive demand. The improvement coincides with stricter import regulation: CBAM charges will vary by origin, and quota management will become critical, as volumes drop. The origin of import material is likely to only grow in importance for purchasing decision-making. Argus currently publishes seven HRC origin differentials to its cif Italy HRC assessment. Low-CBAM, short-haul origins could tighten spreads to domestic offers, while higher-CBAM volumes will need deeper discounts to remain competitive, which would be exacerbated by expectations of pro-rated safeguard duties once the post-safeguard mechanism enters into effect. Beyond carbon intensity and quota considerations, the ability of suppliers to demonstrate verified CBAM compliance could become a decisive factor in purchasing decisions. Mills perceived as lacking robust internal processes for emissions reporting may face reduced buyer confidence, while those with transparent systems could command a premium. In a market where regulatory risk is rising, trustworthiness and preparedness are emerging as value drivers, influencing origin differentials and potentially narrowing the gap between suppliers perceived as compliant and domestic offers. Domestic Italian mills, by contrast, are positioned to hold premiums over 2025 average prices as imports lose some of their cost advantage, and as volumes are likely to be cut. The Argus Italian HRC ex-works assessment has averaged €583.71/t so far in 2025, down from €620.13/t in 2024, while cif Italy has averaged €530.39/t against €578.47/t a year earlier. Lower averages reflected subdued demand and steady import arrivals through to mid-year, when ample offers from Indonesia, India and Turkey, combined with a firm US dollar, pulled cif Italy lower and forced mills to discount. Domestic HRC values slid into the summer on thin buying and cheaper imports, hitting a low monthly average of €535.75/t in July. Prices rebounded sharply in October to average €608.75/t ex-works as expectations of tighter import rules and CBAM-linked costs lifted sentiment, even as downstream demand stayed muted. With carbon intensity and quotas shaping trade flows, Italian HRC in 2026 could trade higher than in 2025: not on demand strength alone, but on the rising premium for certainty in a more regulated import landscape. By Lora Stoyanova Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.
Australia coal, Fe prices to fall; LNG up: Treasury
Australia coal, Fe prices to fall; LNG up: Treasury
Sydney, 17 December (Argus) — Australian iron ore, coking coal, and thermal coal prices are expected to decline by the end of December 2026, while LNG prices may rise from current levels, according to Treasury forecasts released on 17 December. Australian commodity prices are expected to return to long-run fundamental levels, Treasury said in its Mid-Year Fiscal and Economic Outlook for the 2025-26 financial year ending 30 June. Thermal Coal Australia's thermal coal prices have been supported by ex-China demand since Treasury released its July 2025-June 2026 budget on 25 March, Treasury said. But it does not expect this trend to continue. Treasury forecasts Australian thermal coal spot prices will fall to $70/t on a fob basis by the end of December 2026, down from current levels. Argus ' Australian NAR 6,000 kcal/kg fob Newcastle price was last assessed at $108.46/t on 16 December, up from $95.62/t on 25 March. Australian thermal coal exports to China fell 11pc on the year in January-October ( see table ), while shipments to Japan, South Korea, Vietnam, and Malaysia rose, data from the Australian Bureau of Statistics show. Steelmaking Inputs Chinese economic policy support has lifted iron ore and metallurgical coal prices since March, Treasury said. But it expects Australian iron ore and coking coal spot prices to fall to $60/t and $140/t fob, respectively, by the end of 2026. Argus ' metallurgical coal premium hard low-volatile fob Australia price was last assessed at $215.10/t on 16 December, while its iron ore fines 61pc Fe (ICX) fob Australia netback price was last assessed at $90.55/t. Treasury also expects mining investment to remain unchanged over the next two years, largely because of the iron ore and coking coal sectors. Iron ore producers may invest in projects to maintain production, but coking coal producers are expected to run down their capital stock, Treasury said. Producers are looking to sell or finance around six Queensland coking coal mines, a market participant told Argus on 2 December. Petroleum LNG prices have declined since March because of China's shift toward non-Australian gas, Treasury said. Australian LNG spot prices are expected to reach $10/mm Btu by the end of December 2026, according to Treasury forecasts. Argus ' Gladstone fob price — an LNG netback indicator — was last assessed at $9.01/mm Btu on 16 December, down from $12.90/mm Btu on 25 March. China plans to prioritise pipeline and domestic gas over LNG imports in the coming years, PetroChina International's global head of LNG Yaoyu Zhang said on 4 December. Treasury also expects global oil prices to hover around $66/bl over the next four years, down from its March estimate of $81/bl. Australia's government will raise less revenue from its petroleum resource rent tax than previously expected because of the downgrade, the agency added. The tax is forecast to generate A$1.5bn in 2025-26, down from the earlier estimate of A$1.95bn. By Avinash Govind Treasury Commodity Forecasts (Mid-Year Economic and Fiscal Outlook) $ Commodity Argus Price (most recent)* Forecasted Price* Change (%) Coking Coal 215.1/t 140/t -35.0 Thermal Coal 95.62/t 70/t -26.8 Iron Ore 90.55/t 60/t -33.7 LNG 9.01/mm Btu 10/mm Btu 11.0 * Argus' Australian NAR 6,000 kcal/kg fob Newcastle; metallurgical coal premium hard low-volatile fob Australia; Argus' Gladstone fob; Iron ore fines 61pc Fe (ICX) fob Australia netback * fob Australia basis, at end of December 2026 Argus, Commonwealth of Australia Australian thermal coal exports mn t Market Jan - Oct '25 Jan - Oct '24 YTD Change (%) China 53 60 -11 India 2.9 3.4 -16 Japan 59 59 0.5 South Korea 11 9.7 12 Vietnam 13 9.6 37 Malaysia 5.9 5.4 11 Australian Bureau of Statistics Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.
Brazil steel output may fall in 2026: Aco Brasil
Brazil steel output may fall in 2026: Aco Brasil
Sao Paulo, 16 December (Argus) — Brazilian steel output may drop in 2026 as lower-priced imports keep pressure on the domestic market, industry chamber Aco Brasil said. The country's steel output will fall to 32.4mn metric tonnes(t) in 2026, down by 2.2pc from a year earlier, driven by a 10pc climb in imports to 6.6mn t in the period. These figures exclude the effects of anti-dumping duties expected to take effect in the first half of the year, Aco Brasil said. "Our mills are operating at a 66pc capacity rate because of predatory imports, but we should be at around 80–85pc output capacity", Aco's executive president Marco Polo de Mello Lopes said in a press conference on 16 December. Imports will also weigh on domestic sales, with shipments expected to decline to 20.8mn t next year, down by 1.7pc from 2025, the association said. Imports are expected to reach a record 6.6mn t, up by 3.9pc from the previous all-time high of 6.4mn t projected for 2025, Aco Brasil said. Apparent consumption, the sum of production and imports minus exports, will increase by 1pc on the year to 27mn t in 2026, mainly driven by rising import levels. Revised 2025 projections The chamber has cut its 2025 projection for import growth from 19pc to 7.5pc because domestic price declines are curbing a sharper rise in foreign metal. The revised outlook now sees rolled steel imports at 5.7mn t, up by 20pc instead of the previously estimated 32pc. Imports have already hit an all-time high of 6mn year-to-date November 2025, up by 7pc year on year. Total import volumes may increase to 6.4mn t by year-end, according to Aco Brasil. Despite reaching record levels, import inflows lost traction in the second half of the year. As a result, Aco Brasil's initial projection of 7mn t in imports for the year will likely fail to materialize. In addition to price declines, Brazil's quota policy helped reduce import volumes, sources told Argus . The regime imposes a 25pc tariff on volumes that exceed the quota threshold for 19 rolled steel products. Importers also became wary of anti-dumping duties set to take effect in a couple of months. Seaborne trade has become riskier, as duties of up to $600/t could apply upon discharge at Brazilian ports, market participants said. New anti-dumping duties could reverse import growth, with volumes likely to fall instead of rise if the measures take effect. Whether this will be enough to lift production levels remains uncertain. Aco Brasil has also revised its 2025 output outlook, now projecting a 2.2pc drop to 33.1mn t, compared with a previous estimate of a 0.8pc decline to 33.6mn t. Production cuts deepened despite imports falling short of expectations throughout the year, suggesting that factors beyond imports may be driving the reduction. By Isabel Filgueiras Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.