Trump’s tariff comments shook commodity markets last week

By Tunahan Kukurt

ISTANBUL (AA) - US President-elect Donald Trump’s statement that he may impose levy 25% tariffs on all products from Mexico and Canada, as well as an additional 10% tariff on Chinese products, shook the commodity markets last week, while rising political and geopolitical tensions around the world made price estimates difficult.

The announcement fueled concerns that such a move could affect the manufacturing industry worldwide and curb the demand for base metals, causing selling pressure.

Analysts say that while the monetary easing cycle by central banks worldwide continues, Trump’s policies could disrupt the fight against inflation.

Meanwhile, one of the world’s largest gold deposits has been discovered in Hunan province in Central China. It is expected to have long-term effects on gold prices.

The ounce price of gold fell at the beginning of the week with reports of a cease-fire between Israel and Lebanon. Israel announced on Thursday that the cease-fire was violated by reporting that there were “suspects” in south Lebanon, which positively influenced gold prices due to its safe haven feature.

The ounce price of gold finished the week at a 2.4% decline.

Silver fell 1.9% last week despite rising due to fueling geopolitical tensions and the depreciation of the US Dollar Index, posting its 14-month worst performance in November.

Palladium fluctuated and fell 3.1% last week amid estimates of possible sanctions against Russia. Russian miner Nornickel’s forecast showed that hydrogen synthesis will sustain China’s demand for palladium despite declining consumption due to the surge of electric vehicles, contributing to the price decline.

As for base metals, Trump’s tariffs caused base metal prices to fall due to concerns over the effects on the manufacturing sectors and economies of Canada, Mexico, and China, targets of tariffs.

Copper climbed 0.4% last week as analysts said that China’s scrap copper imports are estimated to fall significantly due to increasing trade tensions with the US, while Australian mine operator BHP shifted its focus to copper production in response to falling iron ore demand as part of its major projects in Australia.

Nickel fell 1.9% after Indonesia announced that it would review miner compliance with environmental regulations and other legislation to ensure the sustainability of its natural resources. These reviews are estimated to affect production quotas and lead to changes in nickel supply.

Meanwhile, aluminum fell 1.9% per pound while lead and zinc increased 2.8% and 3.2%, respectively.

As for the energy group, Brent crude oil declined 3.1% after the accusations of the violation of the Israel-Lebanon ceasefire.

Analysts stated that the postponement of the OPEC+ group’s planned meeting to discuss production policies created uncertainty in the markets and led to increases.

Natural gas fell 0.1% at the end of the week after fluctuating due to volatile weather conditions in the US and Europe. The demand for liquefied natural gas (LNG) in Asian countries increased as winter inched closer, putting upward pressure on global LNG prices.

As for the agricultural group, wheat declined 2.7% as investors reduced their short positions in European wheat futures due to bad weather conditions and growing uncertainties over demand, while Tunisia and Algeria bought 100,000 and 150,000 tons of wheat, respectively, to be delivered in December and January to compensate for the decline in local production.

Soybeans climbed 0.7% as the EU imported 91,201 tons of soybeans last week, surpassing last year’s imports.

Corn declined 0.5% after the US Department of Agriculture (USDA) announced that Mexico purchased a total of 454,090 metric tons of wheat for 2024, 2025, and 2026 in total.

Meanwhile, rice rose 0.5% on the Chicago Mercantile Exchange.

At the same time, coffee reached a 47-year high with a 6% increase last week on unfavorable weather conditions in Brazil, low production in Vietnam, and a three-year supply deficit. European coffee buyers opted for beans ahead of time to comply with the new EU deforestation legislation, while some Brazilian farmers delayed deliveries of this year’s crops.

Sugar declined 1.3% after India lifted ethanol production restrictions for sugar mills for 2024 and 2025, pressuring sugar prices.

The ton price of cocoa ended last week with a 3.38% increase.

*Writing by Emir Yildirim