Coal, gas lead 2022 commodities rally;  fear of recession happy new year

Coal, gas lead 2022 commodities rally; fear of recession happy new year

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Newcastle coal futures are up almost 140% in 2022, the biggest jump since 2008. US gas futures and Dutch bulk gas prices are up more than 20% each, rising for the third year in a row.

Gas prices are expected to remain higher amid limited new supplies as Europe continues to import LNG to rebuild gas inventories next year after the winter.

The easing of strict pandemic controls in China, the world’s second-biggest LNG importer, could also spur economic recovery and higher LNG consumption next year.

However, a European cap on gas prices starting in February could help keep a lid on the market and reduce the volatility seen this year.

Oil prices are on track for a second annual gain, with Brent rising nearly 6% and US crude rising nearly 5%.

For industrial metals, three-month 2022 copper is down more than 13% and aluminum is down nearly 15% on the London Metal Exchange, even though both metals hit record highs in March.

Spot prices of iron ore bound for China, which consumes about two-thirds of the global supply, ended the year down nearly 5% to close to $115 a tonne.

Analysts at Citi are bearish on nickel and zinc for the next six to 12 months given strong supply growth, while they are bullish on iron ore and aluminium.

“Iron ore is expected to remain strong in the near term and may follow a bull case of a major China credit easing,” he said in a note.

China’s U-turn on COVID policy and its pledge to increase support for the ailing real estate sector helped lift ferrous and non-ferrous metals prices in December.

Still, optimism has been tempered by the country’s rising COVID infections and the rising risk of a global recession in 2023 if central banks raise interest rates to curb inflation, as expected.

Nickel, the big outperformer in the metals segment, is on course for a 45% increase, its biggest since 2010, partly because of a shortage of the metal that can be delivered against the LME contract and partly because volumes The market has been volatile since the low. After a trading failure in March.

food inflation

Benchmark Chicago wheat futures hit an all-time high of $13.63-1/2 a bushel in March as the invasion reduced supplies from major grain exporter Ukraine in a global market already driven higher by adverse weather and COVID-19-related restrictions. Did it

Corn and soybeans hit near-decade highs, while Malaysia’s benchmark crude palm oil prices climbed to an all-time record.

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