Geopolitical risks surrounding Iran continue to fluctuate, with tail risks spreading. On February 28, the United States and Israel conducted airstrikes against Iran, prompting large-scale retaliatory actions by the Iranian Islamic Revolutionary Guard Corps. On March 19, Middle East conflicts escalated further as Israel and Iran exchanged strikes on critical energy facilities, damaging Qatar's LNG infrastructure. On April 8, mediated by Pakistan, the U.S., Iran, and Israel reached a two-week temporary ceasefire agreement. Iran committed to reopening the Strait of Hormuz, with the truce set to expire at 8:00 a.m. Beijing time on April 22. On April 12, former President Trump announced an immediate U.S. naval blockade of all vessels entering or exiting the Strait of Hormuz, which was enforced starting April 13. U.S. Vice President Vance is scheduled to travel to Pakistan on the morning of April 21 (Eastern Time) to engage in a new round of ceasefire negotiations with Iran. However, reports indicate that, as of now, no Iranian delegation has arrived in Islamabad, Pakistan's capital. The impact of the Iran situation is primarily concentrated in crude oil, LPG, and shipping sectors. Sustained high oil prices have already exerted upward pressure on petrochemicals and oilseed-related products, while raising market concerns about inflation-induced economic recession. Furthermore, disruptions to natural gas supplies in the Middle East may have longer-term implications, placing significant strain on power and energy supplies for Asia-Pacific nations and transmitting effects to agricultural products through cost and fertilizer channels.
Elevated oil prices are intensifying global concerns about interest rate hikes. On March 30, Federal Reserve Chair Powell stated that U.S. interest rates are in a "favorable position" and that the Fed could overlook Iran-related oil price shocks but must remain vigilant about changes in inflation expectations. The prepared remarks for nominee Wash's hearing were revealed, pledging strict independence in monetary policy and emphasizing that the Fed's autonomy hinges on its own actions. March non-farm payroll data exceeded market expectations, though statistical distortions were notable. The U.S. unadjusted CPI for March recorded a 3.3% year-on-year increase, a significant rise from the previous 2.4%. Persistently high oil prices are adding pressure on central banks worldwide to consider rate hikes. The Bank of England held rates steady and removed references to "rate cuts," emphasizing readiness to act on inflation. The Bank of Japan maintained its policy stance, with Governor Ueda noting that surging oil prices complicate policy decisions and indicating that further rate hikes would follow if economic prospects materialize. The European Central Bank kept rates unchanged at 2% for the sixth consecutive time, though its policy stance has turned more hawkish due to Middle East conflicts. Affected by rising energy prices and supply chain disruptions, the Eurozone's March PMI unexpectedly dropped to 50.5, a 10-month low. The services PMI fell to 50.1, while the manufacturing PMI rose to 51.4. The unexpected rebound in manufacturing failed to offset broad weakness in services. PMI readings in Germany and France also cooled beyond expectations. The combination of rising oil prices increasing costs, suppressing demand, and fueling expectations of global rate hikes has created a unique copper-oil seesaw dynamic, with markets pricing in a "recession" scenario. On Monday, U.S. Customs and Border Protection officially opened a tariff refund portal, allowing importers to seek reimbursements for tariffs imposed under the Trump administration that were ruled unconstitutional by the Supreme Court.
Domestic policies in China are being implemented ahead of schedule, amid a diverging economic structure. First-quarter GDP grew 5.0% year-on-year, accelerating by 0.5 percentage points from the previous quarter and exceeding expectations. China's official manufacturing PMI for March rose to 50.4, while the non-manufacturing PMI climbed to 50.1, both beating forecasts. March exports denominated in U.S. dollars increased 2.5% year-on-year, while imports surged 27.8%. Natural gas imports fell to a more than three-year low, while electric vehicle exports soared 77% in the first quarter, and lithium battery exports grew 50%. China's March CPI rose mildly by 1% year-on-year, while the PPI increased 0.5%, marking the first rise after 41 consecutive months of decline.
Across commodity sectors, short-term fluctuations are dominated by Iran-related developments and oil prices. The recent inverse correlation between non-ferrous metals, precious metals, and oil prices warrants close attention. Rising inflation is reducing expectations of rate cuts and elevating recession risks, necessitating caution regarding shifts in macroeconomic narratives. The White House announced, based on Section 232 of the 1962 Trade Act, a 25% tariff on steel, aluminum, and copper derivatives, and a 100% tariff on patented pharmaceuticals, though exemptions apply for compliant agreements. In energy, the IEA chief warned that the current oil shock exceeds the combined impact of the two 1970s oil crises and the 2022 Russian natural gas supply cutoff. Continued monitoring of short-term developments in Iran is advised. If oil prices continue to rise, they will significantly boost petrochemical products such as pure benzene, EB, PVC, PTA, ethylene glycol, and methanol. Conversely, if tensions ease, equities, non-ferrous metals, and precious metals may offer strong allocation value. Oilseed products in the agriculture sector are also affected by spillover effects from oil prices. For ferrous metals, focus remains on domestic policy expectations and potential low-valuation recoveries.
Strategy: Commodity and equity futures: Consider buying on dips in equities, precious metals, and select agricultural products.
Risks: Geopolitical risks (upside risk for energy sector); unexpected global economic downturn (downside risk for risk assets); unexpectedly hawkish Fed policy (downside risk for risk assets); overseas liquidity risk shocks (downside risk for risk assets).
Key Developments: Fed nominee Wash, in opening remarks at the hearing, will pledge to senators that the FOMC will maintain strict central bank independence in interest rate decisions, while emphasizing that the Fed must "stay in its lane." Wash will state that the central bank should listen to diverse opinions and that there is no excuse for failing to ensure price stability. The administration's rhetoric will not threaten Fed policy. (Politico, CNBC)
White House Press Secretary Levitt stated in an interview on the evening of the 20th that the U.S. and Iran are on the "brink" of reaching an agreement. Levitt noted that even if a deal is not reached, President Trump has multiple options and is not afraid to use them. According to The Wall Street Journal, a White House official indicated that President Trump does not intend to extend the U.S.-Iran ceasefire set to expire on the evening of the 22nd. Although Iran has not publicly confirmed whether it will send representatives to talks in Islamabad, it has informed regional mediators that a team will be dispatched for negotiations on the 21st. British sources report that at least 26 vessels linked to Iranian shipping have breached the U.S. naval blockade. Since the blockade on vessels entering or exiting Iranian ports began on the 13th, 11 of the突破ing vessels were oil tankers carrying Iranian cargo.
According to Iran's Islamic Republic Broadcasting on the 21st, as of now, no Iranian delegation has traveled to Islamabad, Pakistan's capital. Iran's ambassador to Pakistan stated that negotiations will not occur under threat or coercion. Pakistani diplomatic sources indicated that an advance team from Iran has arrived in Islamabad. Commander Abdolahi of Iran's Khatam al-Anbiya Central Headquarters stated that Iran's armed forces, united with the government and people, are prepared to respond decisively and swiftly to enemy threats and actions, following the directives of the Supreme Leader.
