Commodities for Thursday, Nov. 27, 2025

Key Concepts

• Oil Prices and Geopolitics: Impact of US envoy's efforts to broker a Russia-Ukraine deal on global oil supply.
• Metals Market: Investor sentiment towards gold, ETF buying, and the influence of expected Federal Reserve interest rate cuts.
• Canadian Energy Agreement: Memorandum of Understanding (MOU) between Prime Minister and Alberta Premier to reduce oil export dependence on the US and increase Asian market access.
• Steel Tariffs and Protectionism: Canadian government's imposition of a 25% tariff on steel derivative imports and its impact on domestic steel producers and fabricators.
• Rare Earth Elements (REEs): Ucore Rare Metals' plans to scale up processing facilities in Louisiana and Kingston, Ontario, focusing on critical REEs like Samarium and Gadolinium for defense applications.
• REEE Processing Technology: Ucore's proprietary "Rapid SX" technology for more efficient REEE separation compared to traditional solvent extraction.
• Weight Loss Drugs (GLP-1 Agonists): Impact on appetite suppression and dietary choices, particularly around holidays like Thanksgiving.

Oil and Metals Market Update

The oil price is being closely watched as America's Special Envoy is set to negotiate a deal between Russia and Ukraine, which could potentially release significant Russian oil onto the global market. While this could ease supply, investors are currently bidding up prices. Trading volume was lighter due to the Thanksgiving holiday in the US.

In the metals market, there was substantial ETF buying, suggesting renewed interest in gold from retail investors. Gold has been rallying in recent sessions but saw a slip today. Its recent buoyancy was attributed to expectations of further interest rate cuts by the Federal Reserve next month.

Canadian Energy Agreement: Reducing US Dependence and Expanding Asian Markets

A significant development in the commodity sphere is the new outline energy agreement, a Memorandum of Understanding (MOU), signed by Prime Minister Mr. Carney and Alberta Premier Danielle Smith. This plan aims to:

• Reduce Canada's dependence on oil exports to the United States.
• Unlock potential in Alberta's energy resources.

The MOU signifies Ottawa's support for one or more new oil pipelines to enhance export access to Asian markets. Key aspects include:

• Suspension of certain environmental policies for Alberta.
• Potential adjustment of the tanker ban on BC's North Coast if necessary.

Teck Resources Takeover and Steel Industry Support

Anglo American's proposed takeover of Teck Resources has cleared a national security hurdle in Canada, as Ottawa's review period lapsed without extension. However, further reviews, including a net economic benefit review, are pending. Teck and Anglo shareholders are scheduled to vote on the deal on December 9th.

Algoma Steel shares rallied approximately 4% following the federal government's announcement of a new 25% tariff on about $10 billion worth of steel derivative imports from all countries, including the United States.

• RBC's Outlook: Despite the tariffs, the Canadian market is still expected to face oversupply.
• Government Support: Ottawa's plan to reduce freight rates for inter-provincial steel transport is intended to boost demand for Canadian steel and improve the competitiveness of Ontario steel.

Key Perspectives from the Steel Industry

Keenan Loomis, CEO of the Canadian Institute of Steel Construction, shared insights on the government's measures:

• Government Engagement: The federal government has been actively liaising with the steel industry, discussing the impact of tariffs and policy recommendations. Loomis stated, "They've been listening and they have responded in kind."
• Recapturing Domestic Market Share: An analysis provided by steel producers to the government indicated that at the current tariff levels, they can recapture a significant portion of the domestic market, which is crucial for weathering difficult times.
• Focus on Domestic Procurement: A key focus is on domestic procurement, with the belief that Canada should be its own best customer, not only for raw steel but also for fabricated steel, especially for taxpayer-funded projects. Loomis expressed, "We're very happy with this announcement. It does provide us with a little bit of certainty going forward."
• Protection of the Value Chain: Loomis emphasized the importance of applying measures to both primary steel and the derivatives industry. He argued, "If you do not protect all of the various elements in the value chain, you're really not protecting the producers either, because it creates loopholes in the trading system."
• Mindset Shift in Procurement: There's a perceived shift in procurement mindset, moving away from solely adhering to WTO obligations and being more mindful of where taxpayer dollars are spent. The directive is expected to flow down to provincial and municipal levels, which are significant steel buyers.
• Impact of Tariffs: The tariffs are primarily aimed at countering "cheap Chinese dumped steel, unfairly traded steel that's been flooding our market," especially after the US closed its borders to such imports. This is expected to raise the floor price of steel in Canada.
• Private vs. Public Sector Impact: The tariffs are likely to impact the private sector more significantly, potentially leading to higher steel costs for owners and general contractors. However, this is considered a worthwhile trade-off to protect the domestic steel industry and its value chain.
• Fair Competition: The goal is to compete on a fair basis, keeping out unfairly traded and low-quality steel.
• No Political Repercussions Expected: Loomis does not anticipate political repercussions from the US, suggesting that Canada's stance against Chinese steel positions it well for renegotiations with the US, particularly regarding increased enforcement to prevent Canada from becoming a transshipment point for Chinese steel.

Alberta Energy Resources and Pipeline Potential

The federal government is also pressing ahead with the MOU with Alberta on developing energy resources.

• Bitumen Pipeline to the Pacific: The MOU outlines conditions for a new bitumen pipeline to deliver Canadian oil to the Pacific.
• Key Conditions for Alberta:
  • Signing an industrial carbon pricing agreement to lower emissions by 75% over the next ten years.
  • Extending the carbon capture incentive program.
• Pathways Carbon Capture and Storage Project: This project is directly linked to the pipeline; one cannot proceed without the other.
• Federal Government's Commitment: In return for Alberta meeting these conditions, the federal government will not implement a cap on emissions from the oil and gas sector in Alberta.
• Private Sector Financing and Indigenous Cooperation: The MOU focuses on constructing "one or more pipelines financed by the private sector with Indigenous cooperation." The Prime Minister stated that without a private sector proponent, there will be no pipeline.
• Tanker Ban Exemption: This is a potential last step, contingent on all other conditions being met and followed through.
• Methane Emissions: The target of lowering methane emissions by 75% over the next decade is significant, as methane is a potent greenhouse gas.
• Nuclear Power Plants: The federal government may assist Alberta in building nuclear power plants.
• Opposition and Concerns:
  • Coastal First Nations in BC: Remain opposed to pipelines and tankers, stating the MOU changes nothing for them. Their support is crucial for the project's success.
  • BC Premier David Eby: Has been vocal against the pipeline and was not included in discussions with Alberta and Saskatchewan. While the MOU commits to dialogue with BC to ensure shared economic and financial benefits, Eby has questioned the project's overall viability and the potential for oil oversupply next year.

Ucore Rare Metals: Scaling Up REEE Processing

Ucore Rare Metals has seen its shares soar nearly tenfold in the past year. The company has received conditional approval for up to $36 million in support from the Government of Canada to scale up a processing facility in Kingston, Ontario.

• Focus on Refining: The core strategy is to break China's control over rare earth elements (REEs) by taking back refining and processing capabilities in North America.
• Louisiana Facility: Plans to build a heavy rare earth processing facility in Louisiana, focusing on materials needed for Neodymium Iron Boron magnets used in AI, robotics, electric vehicles, wind energy, and defense. This project was initiated with support from the US Department of Defense.
• Kingston, Ontario Facility: A second facility in Kingston will focus on refining Samarium and Gadolinium, critical for defense applications.
• Why Kingston? Kingston is home to Ucore's commercial demonstration plant, a hub for metallurgy expertise, and a strategic location for expanding their operations.
• Samarium and Gadolinium: These REEs are crucial for Samarium Cobalt magnets, the preferred choice for defense applications due to their ability to withstand high temperatures and corrosive environments.
  • Defense Applications: F-35 fighter jets, Virginia-class submarines, destroyers, and missile guidance systems all utilize Samarium Cobalt magnets. Lockheed Martin in Canada, involved in the F-35 program, uses significant quantities.
  • China's Export Restrictions: China has imposed bans on certain REEs, including Samarium and Gadolinium, creating supply chain challenges for Western defense manufacturers.
• Processing Technology: Rapid SX: Ucore employs a proprietary technology called "Rapid SX," which is described as a more effective way to apply chemistry for REEE separation.
  • Advantages: Offers 70% more throughput with 60% less floor space, leading to reduced power consumption, reagent use, and labor.
  • Validation: Ucore has run over 6,000 hours on its commercial demonstration plant in Kingston, gathering over 10,000 data points to compare Rapid SX with traditional solvent extraction.
• Input Material: The plants will process "total rare earth oxide," which is a concentrate, significantly reduced from raw ore. This concentrate is then separated into individual oxides, which are essential for producing metals, alloys, and magnets.
• Revenue Projections: Raymond James has projected zero revenue for Ucore this year, but anticipates scaling up to $50 million or more next year.
  • Louisiana Plant Timeline: Commissioning of the first Rapid SX machine in Louisiana is expected by mid-2026, with two to three machines running by the end of that year.
  • Full-Scale Plant: A 10,000-tonne plant in Louisiana, projected to be operational after three years, is expected to generate $1 billion in top-line revenue with a good return. Ucore anticipates generating revenue starting next year due to the scalable, modular nature of their technology.

Weight Loss Drugs and Holiday Eating

The Wall Street Journal reports that some Americans are postponing their weekly weight loss drug doses (GLP-1 agonists) to enjoy Thanksgiving feasts.

• Dietary Changes: Many users find creamy and greasy foods less appetizing on these drugs, leading them to avoid such dishes. Sweet dishes are also being cut back.
• Delayed Dosing: Experts suggest that delaying a shot for a day or two to feel more inclined to eat is acceptable, but users should wait at least three days before taking their next scheduled dose.
• Appetite Suppression: These drugs work by suppressing appetite. Some users report nausea when consuming greasy foods, leading them to avoid them.
• User Experiences: One user who skipped her shots for Thanksgiving and Christmas previously experienced a significant increase in appetite, actively anticipating dessert. This year, she plans to take her medication as scheduled.