Energy markets rebound as tariff disputes ease; petcoke prices drop due to slow demand

The recent months of May and June saw a focus on geopolitics and trade tariffs dominating the headlines. The temporary suspension of the USA-China tariff dispute brought some respite, offering hope for potential agreements on other tariff discussions in the future.

However, the situation concerning the escalating Ukraine-Russia conflict remains grim despite pressures from the US to negotiate a ceasefire. The financial markets showed signs of stabilizing as the Volatility Index (VIX) dropped significantly from 60 to 17. Still, the uncertainty looms over how long this period of calm will endure.

In the financial realm, the European Central Bank (ECB) reduced its interest rate once again by 0.25 percent to 2.00 percent, contrasting with the Federal Reserve’s decision to keep the rate unchanged. The outcome of the tariffs and the looming threat of inflation are crucial factors that the Federal Reserve will be monitoring closely.

The US dollar maintained its strength on the broad US$ index but saw a slight decline against the euro, slipping to US$1.1420, indicating a range between US$1.12-1.16. Forecasts by Brannvoll ApS retained their prediction range at US$1.05-1.15 for 2025, with an average of US$1.12.

Looking at the prices for various commodities as of June 10, 2025:

– Brent crude oil stood at US$67.00 per barrel.
– Coal API 2 for 3Q25 was recorded at US$100.00, and for Cal 2025 at US$105.00.
– Coal API 4 for 3Q25 was priced at US$91.00 and for Cal 2025 at US$102.00.
– Petcoke USGC 4.5 percent S 40HGI was priced at US$70.50 FOB and at US$89.00 CFR ARA.
– Petcoke USGC 6.5 percent S 40HGI was priced at US$66.00 FOB and at US$84.50 CFR ARA.

The oil market witnessed a recovery despite increased OPEC+ production amidst some relief after positive conversations between China and the US. OPEC+ nations continued with their production levels for the third consecutive month, while US production remained stable and demand showed hints of growth.

The coal market maintained stability with no significant developments. Chinese and Indian production continued to rise despite low demand attributed to a weak Chinese property sector and high stocks. Expectations of further mine closures linger in Russian and Australian territories, whereas Colombian exporters reduced their output due to low prices.

Overall, the petcoke market showed signs of weakness, although slight improvements were seen after the lows during the USA-China tariff dispute. Stronger production in the US is expected, which could dampen the market in the near future. Discounts have been recovering recently, with FOB and ARA discounts increasing and showing potential to attract buyers back to petcoke, albeit cautiously due to tariff uncertainty.