Global Commodity Markets: The metals industry is watching the effects of the London Metal Exchange’s embargo on new Russian shipments, while oil traders are trying to estimate the impact of Iran’s attack on Israel over the weekend on the international market. In the meantime, project developers, public servants, and financiers will gather in New York for the annual BNEF Summit, which aims to examine global trends in the energy transition.
Here are five significant charts to monitors in global commodity markets as the week begins.
Aluminum
Following US and UK sanctions, the LME restricted delivery of new Russian metal, but left the door open for a surge of old stocks to enter the market, raising the possibility of pricing disruptions. No Russian metal produced after April 13 will be eligible for delivery to the LME, which is a key player in the global metals market as the source of benchmark prices for everything from copper to zinc. Aluminum, which has risen strongly since the end of February, jumped by more than 6% at the open.
Clean Technology
According to BloombergNEF, the world’s reliance on China has grown for the technologies required to sustain a global transition away from fossil fuels. Breakneck expenditure has boosted China’s share of global manufacturing capacity above 80% in 11 clean-technology value chain areas. China’s production is expected to considerably outstrip global demand for solar, batteries, and electric vehicles for many years to come. The BNEF summit on Tuesday and Wednesday will cover a variety of subjects, including supply chains for renewable energy.
Oil
Global benchmark Brent crude has shrugged off Iran’s attack on Israel over the weekend, but the direct strike marks a perilous new phase in the Middle East conflict. The escalation will compel the market to reconsider the geopolitical risk premium that it must apply in a market where tight supply-demand fundamentals have already drove prices beyond $90 a barrel. The region generates over one-third of the world’s petroleum.
Eggs
Bird flu is on the rise again: the leading US egg producer reported the worst epidemic since December, and the highly pathogenic avian influenza virus has spread to dairy cows. So far, egg costs have remained relatively stable, but there are concerns that they may climb again as more egg-laying chickens with the virus during the peak migration season for wild birds. The worst-ever outbreak has never completely subsided since it was discovered in the United States in February 2022.
Energy
A big oil-fueled surge in energy equities is gaining traction, helping them beat technology indices this year.The Energy Select Sector exchange-traded fund, or XLE, has risen around 15% since the start of the year, compared to a mere 7% gain for the Nasdaq 100 Index. Growing oil costs have been beneficial. as West Texas Intermediate crude broke above $80 per barrel in mid-March. Since the beginning of March, energy has led the S&P 500’s 11 market sectors, growing more than 11%, compared to the next closest group, communication services, which rose 5.8%, and the broader index, which fell 0.3%.
