Tin, nickel, and copper surge collectively! Trump administration plans to use AI models to price critical minerals

Recently, amid tensions between the U.S. and Iran, the daily rental rates for super-large oil tankers departing from the Middle East have surged significantly, drawing market attention.

Secondly, in the mineral sector, according to Reuters, the Trump administration plans to use AI models to set prices for key minerals. Following this news, prices of various base metals on the London Metal Exchange rose overnight.

In the context of potential military conflict between the U.S. and Iran, crude oil exports from the Middle East have recently increased noticeably. As traders seek to lock in shipping capacity before any potential conflict erupts, transportation costs for oil tankers have also risen sharply.

Data from the London Stock Exchange Group (LSEG) shows that on Tuesday local time, the daily rental rate for VLCCs (Very Large Crude Carriers) traveling from the Middle East to China exceeded $170,000, the highest level since April 2020.

According to shipping analysis firm Kpler, Middle Eastern crude oil exports in February surpassed 19 million barrels per day, also the highest since April 2020. The increase in exports mainly comes from Saudi Arabia, the UAE, and Iran.

Analysts believe that several key factors support the rise in super-large oil tanker freight rates:

• The return of Venezuelan crude oil to compliant fleet operations, reducing reliance on the so-called “shadow fleet,” which had occupied available capacity;
• OPEC+ increasing production, boosting maritime shipping demand;
• Strong global refinery demand for crude oil, with India being particularly prominent, as its crude procurement shifts from Russia to the Middle East.

Looking ahead, analysts suggest that if the U.S. takes military action against Iran and Iran retaliates by disrupting the Strait of Hormuz— a critical oil passage— the “war risk” insurance premiums could rise rapidly, pushing up overall crude oil transportation costs.

Clarkson, a shipping brokerage firm, pointed out that for oil tankers, as market risk expectations increase, freight rates tend to respond quickly. Specifically, higher war risk insurance premiums, shipowners demanding higher compensation to enter risk zones, and charterers locking in long-term capacity early could all drive up freight costs.

On Tuesday local time, three sources told Reuters that the Trump administration is planning to utilize an AI project developed by the U.S. Pentagon to set reference prices for key minerals, aiming to promote the establishment of a global metals trading zone.

It is reported that the reference prices will be set by the U.S. Department of Defense’s “National Security Open Price Exploration” (OPEN) AI metal project. Sources say the Trump administration is currently prioritizing the OPEN AI pricing model for at least four critical minerals, including germanium, gallium, antimony, and tungsten, with plans to gradually expand coverage. S&P Global and a Finnish data company will provide data and technical support for the project. Analysts believe this mechanism could benefit U.S. mining companies but may also increase downstream manufacturing costs.

Following the announcement, basic metals markets reacted swiftly, with multiple commodities on the London Metal Exchange rising collectively overnight. Tin futures increased by over 5.4%, nickel by about 3.6%, and copper by more than 2%.

However, the feasibility of this plan remains uncertain, including questions about whether AI-based pricing is effective, whether prices will be floating or fixed, and the scope of tariffs. The timeline for implementation is also unclear. The Trump administration must first persuade dozens of allies to join this trade group to ensure the mechanism functions effectively.

(Source: CCTV Finance)