While the metals industry watches the effects of the London Metal Exchange’s prohibition on new Russian shipments, oil traders will try to price in what the Iranian strike on Israel over the weekend implies for the global market. Concurrently, project developers, government representatives, and bankers will gather in New York for the annual BNEF Summit, which aims to explore global trends in the energy transition.
Here are five noteworthy charts for you to review as the week begins in the global commodity markets.
Aluminium Market
The LME banned the delivery of new Russian metal when the US and UK imposed sanctions, but this allowed an influx of existing inventories into the market and raised the risk of price disruptions.No metal produced in Russia will be permitted to be supplied to the London Metal Exchange (LME) starting on April 13. The LME is a significant player in the global metals market and sets benchmark prices for a variety of metals, including copper and zinc. Aluminum, which has risen dramatically since the end of February, climbed by more than 6% at the open.
Tech
According to BloombergNEF, there is a growing reliance on China for the technologies required to facilitate the world’s shift away from fossil fuels. China already possesses more than 80% of the world’s production capacity across 11 clean technology value chain areas, thanks to rapid spending. For many years to come, China’s production is expected to significantly exceed the demand for solar, batteries, and electric vehicles worldwide. BNEF’s summit on Tuesday and Wednesday will cover a variety of issues, including supply chains for renewable energy.
Cattle Market
The extremely contagious avian influenza virus has spread to dairy cattle, and the leading US egg producer announced this month that the US is experiencing its largest outbreak since December. The cost of eggs has remained reasonably stable thus far, but there is a chance that it will increase further as more hens that lay eggs may contract the virus during the busiest time of year for wild bird migration. Since its initial discovery in the United States in February 2022, the worst-ever pandemic has never completely subsided.
The Oil And Energy Market
The worldwide average Although Brent crude has not responded to Iran’s attack on Israel over the weekend, the direct strike has introduced a risky new stage in the Middle East conflict. The market will be forced by the escalation to reconsider the geopolitical risk premium that it must apply in a market where prices per barrel have already risen beyond $90 due to constrained supply and demand fundamentals. Approximately one-third of the world’s crude oil is produced in this area.
Energy equities have risen sharply this year, driven by oil, and are now outperforming technology indexes. The Nasdaq 100 Index has gained just 7% since the beginning of the year, while the actively followed Energy Select Sector exchange-traded fund, or XLE, has increased by about 15%. Since mid-March, when West Texas Intermediate crude broke above $80 per barrel, rising oil prices have been beneficial. Since the beginning of March, the S&P 500’s 11 market sectors have been led by the energy sector, which has increased by more than 11%. The next closest group, communication services, is at 5.8%, while the overall index has decreased by 0.3%.
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