Edward Meir's Week in Review for AMU: Dec. 7, 2025

In energy markets, WTI tacked on about $0.80/brl. But Brent lost about $0.40. The lack of progress from talks between US envoys and Russian President Putin is keeping oil prices fairly well supported. The thinking is that sanctions on Russian energy will likely continue and may even intensify.

The natural gas complex seems to decoupling impressively from crude, with prices now at three-year highs of around $5.40/BCF. Falling inventories and frigid temperatures gripping parts of the Northeast and Midwest for much of the last two weeks boosted prices. In addition, US LNG exports have been very strong. The EIA estimates that the US exported a record 10.7 million tons of LNG in November, 40% higher compared to the previous year. Overall exports for 2025 are expected to be up by 25% versus year-ago levels and are seen to rise by a further 10% next year. Europe’s commitment to phase out Russian LNG by year-end 2027 further solidifies the long-term export market for US gas.

In base metals, copper was very much in the spotlight this past week as we watched it soar to a record high of $11,705/ton on Friday (up nearly 4% on the week as well.) CME high-grade copper ended at $5.45/lb. The copper market is responding to low inventories, coupled with news out of China that smelters will be cutting back production by more than 10% in 2026 to offset chronic overcapacity.

We have seen such announcements before. But this never prevented China’s copper industry from raising output year after year. This time, however, might be different. Negative treatment margins and widespread losses amid an excess of Chinese smelting capacity makes the current situation untenable. And more importantly, over the medium and longer term, we think there is a structural shift underway in copper. With mine supply strained just as new sources of demand are bursting onto the scene, it is quite possible that copper will be trading in a much higher range going into the second half of this decade.

Meanwhile, Glencore lowered its 2026 copper guidance from 930,000 tons to 840,000 tons last week. But Glencore still sees its production trajectory moving higher from 2027 and beyond. By 2035, Glencore said it hopes to reach 1.6 million tons of production. Although this is an ambitious target, the market was more concerned with its cut to 2026 output – which is yet another reason why copper rallied.

On the flip side, Rio Tinto upped its 2025 production forecast, citing a ramp-up at its Oyu Tolgoi facility in Mongolia. But this was only a modest increase and not as helpful to prices as the Glencore announcement was.

Interestingly, while copper has been surging, most other metals have not followed. Aluminum and zinc, for example, ended November down to flat. They have not done all that much going into December either. Lead and nickel both finished lower last month as well. And they were up only slightly last week. Tin was the exception. It pushed up by roughly 7% in November and crossed $41,000/ton last week – nearly a four-year high.

In the precious metals space, gold lost about $30/ounce last week. It was a far different story in silver, which gained almost $2/ounce and is now knocking against the $60/ounce barrier. In the ferrous space, steel prices were steadier.

In trade developments, we heard from the US Trade Representative this past week that President Trump might decide not to renew the USMCA trade agreement. The trade pact is up for review in 2026. This would leave a confusing and elevated patchwork of tariffs in place between the three countries. We hope this will not be the case. The three leaders met this past weekend for the World Cup draw, and we hope there was some discussion of resuming the floundering talks.

Going into this week, the odds of a Fed rate cut on Wednesday are well discounted by now. We think this week’s meeting will nevertheless provide an additional element of support to most markets. At his last press conference, Fed Chair Jerome Powell came across as rather hawkish in our view, cautioning against rising expectations for a December cut. We think he may have to walk back those remarks somewhat – not only for a December move but also possibly beyond that. Why? The macro readings that have come in since have deteriorated.

The anemic rate of growth in jobs in particular, coupled with relatively weak retail sales and declining consumer confidence, are all variables that could prompt Powell to change his outlook somewhat. Although the Fed does not have the most current inflation readings, the latest September data (more on that below) suggests that inflation is not getting any worse (or better) than it was last month – and so it should not be a game-changer.

If Powell’s comments are more “rate friendly,” the dollar could weaken because the US rate profile will be on a downward trajectory – and just as other central banks will either be pushing rates higher (like the Bank of Japan) or will be on hold (like the ECB).

Macro readings and other news from last week:

• The November ADP private payroll number showed a loss of 32,000 jobs for the month, worse than the 20,000 increase expected. Separately, global outplacement firm Challenger reported that planned job cuts declined in November by 53% versus October levels. But some 71,000 jobs were eliminated nonetheless, 24% higher than year-ago levels. Telecommunications providers, (notably Verizon) led the cuts, followed by technology companies and meat processing firms. Challenger notes that so far this year, about 55,000 layoffs could be attributable to AI.
• On the inflation front, the delayed September PCE report showed prices up 0.3% month on month (m-o-m), as expected, while the core PCE was up by 0.2%. On a year-on-year (y-o-y) basis, the index was up by 2.8% in September versus 2.7% in August and 2.3% in April. The core rate rose by 2.8% in September versus 2.9% in August and 2.6% in April. The September PCE goods component was up by only 1.4% y-o-y. Although services readings are running high, at 3.4% y-o-y, they are down slightly from August’s 3.6% level.
• The November ISM manufacturing index checked in at 48.2% (consensus:49.0%), down from 48.7% in October. The reading has now been in contraction territory (below 50) for nine months in a row. A separate index compiled by S&P Global had the manufacturing PMI hit 52.2 in the final reading for November, down from 52.5 in October. But the ISM number is the one the markets pay more attention to.
• The November ISM services index was somewhat better, clocking in at 52.6% (consensus 52.4%) and in expansion mode. Still, the reading is about 10 points below the 12-month average since February 2022 of 62.6%.
• September factory orders (delayed) rose by a modest 0.2%. Business spending, as reflected in nondefense capital goods orders (excluding aircraft), was up by 0.9%. That’s better than the 0.7% rate seen in July. However, we suspect that much of the increase in spending was AI related.
• September personal income (delayed) rose by 0.4% while personal spending was up by 0.3%. Both are relatively reassuring numbers and in line with estimates.
• There was a slight uptick in the most recent University of Michigan consumer sentiment reading. The index came out at 53.3, up from 51 last month. But as one research note put it, the number “can still be thought of as broadly somber”.
• Consumer credit increased by $9.2 billion in October following a $11 billion increase in October. Consumers are leaning more on credit cards to fund spending, with some still catching up on missing paychecks due to the government shutdown.
• Exports of tin from Indonesia rose m-o-m in November to 6,565 tons, about 55% higher than October levels.
• Reuters reports that Sucden Financial expects the 2025 copper balance to be in modest surplus but cautions that odds for a deficit cannot be ruled out. The brokerage sees the $10,830 level as the next key support for copper going into year end. Goldman Sachs, meanwhile, raised its average LME copper price forecast for the first half of 2026 to $10,710 from $10,415.
• U.S. Steel announced it has begun the process of restarting one of two previously idled blast furnaces at Granite City. The steelmaker said its decision was “driven by customer demand and as part of the company’s ordinary course of business planning.” While an exact date has not been announced, production could resume in the first half of 2026.
• Germany’s Thyssenkrupp agreed to a restructuring plan with trade unions, while also confirming job cuts and output reductions. The steelmaker said 11,000 jobs would be eliminated or outsourced. Meanwhile, it expects steel volumes to drop to around 9 million tons from a total capacity of nearly 12 million tons. “The restructuring process will now be implemented immediately in order to raise efficiency levels and achieve more competitive cost positions as quickly as possible,” Thyssenkrupp said.
• Commercial Metals has completed its acquisition of Concrete Pipe & Precast for $675 million. CP&P has 17 facilities that offer both standard and highly engineered precast and reinforced concrete pipe for use in infrastructure, non-residential, and residential construction markets. CMC also announced the acquisition of Foley Products Company, a precast concrete company.
• In the first public hearing of the USMCA trade deal hosted by the US Trade Representative’s office, an official from the American Iron and Steel Institute (AISI) recommended a requirement that all steel and steel-intensive products be melted and poured in North America to qualify for USMCA treatment. The goal: “to prevent steel from outside the region from evading tariffs or accruing other benefits under the USMCA.” Broadening the melt and pour requirement to a wider set of steel products would also help address Chinese and other non-market excess capacity that is using the USMCA to ship unfairly traded steel products within the region duty free, the official added.

This week’s US macro readings: Nothing comes out on Monday. On Tuesday, we get the October job openings number. (It’s expected to be at 7.2 million, unchanged from last month.) Wednesday, of course, brings us the Fed policy statement and Jerome Powell’s news conference – which will be the main driver for the markets this week. Thursday brings us weekly initial claims. (It is expected at 221,000 and was last 190,000. The latter marks a two-year low.) Thursday also brings the US trade deficit (expected at $-61 billion, last at -$59.6 billion.) Nothing comes out on Friday.

We wish our readers a pleasant week ahead.