Five Key Charts to Watch in Global Commodities This Week
Monday, Oct 28, 2024 9:36 am ET
2min read As the global commodities market continues to evolve, investors and market participants must stay informed about the latest trends and developments. This week, we highlight five key charts that provide valuable insights into the dynamics of global commodities markets.
1. Bloomberg Commodity Spot Index
The Bloomberg Commodity Spot Index, which tracks 24 energy, metal, and agricultural contracts, has been on a steady march upwards, reaching levels not seen in over a year. This gauge of raw materials prices reflects a mix of supply disruptions, geopolitical tensions, and inflation concerns driving demand for commodities as a hedge. Crude oil, industrial metals, and precious metals have all contributed to the index's rise, with crude oil benefiting from strong demand and supply concerns, while metals have drawn renewed investor interest.
2. Copper Market Disruption
A massive dislocation between copper prices on the Comex exchange and other commodity exchanges has been causing market turmoil, with a short squeeze driving up prices in New York. This disruption has led to a frantic dash for supplies to ship to the US, highlighting the interconnectedness of global commodity markets. The copper market's volatility serves as a reminder of the risks and opportunities present in commodity trading.
3. Oil Refining Margins Recovery
Oil refining margins have been under pressure in recent weeks, but signs of a comeback are emerging. Following a series of processing rate cuts and unplanned outages, Brent hydroskimming margins have recovered from a 10-month low. If margins sustain their recovery, it could boost crude prices in the short term, although traders continue to grapple with bumper capacity additions that have lifted supplies this year.
4. Lithium Prices and Production Adjustments
Despite a reported shutdown at one of China's largest lithium mines, prices of the battery metal have struggled to rebound. Contemporary Amperex Technology Co. Ltd. (CATL) announced output adjustments at the Yichun mine in Jiangxi province, but other suppliers remain, keeping prices in check. Battery metals, including lithium, cobalt, and nickel, have faced headwinds as a flood of new production has overwhelmed demand, cooling the pace of electric vehicle adoption.
5. EV Charging Infrastructure Growth
Electric vehicle (EV) charging infrastructure is expanding worldwide, with installations expected to rise by at least 800,000 in the second half of this year, a third more than the numbers posted from January through June. BloombergNEF estimates that trends suggest China may see more installations in the final three months of the year, while government grants in the US and new entrants like the automakers' joint venture Ionna could boost growth in North America beyond 2024 despite slowing EV sales.
These five key charts provide valuable insights into the dynamics of global commodities markets, helping investors and market participants make informed decisions. By staying attuned to these trends, investors can capitalize on opportunities while mitigating potential risks. As the global commodities market continues to evolve, it is essential to monitor these trends and adapt investment strategies accordingly.
1. Bloomberg Commodity Spot Index
The Bloomberg Commodity Spot Index, which tracks 24 energy, metal, and agricultural contracts, has been on a steady march upwards, reaching levels not seen in over a year. This gauge of raw materials prices reflects a mix of supply disruptions, geopolitical tensions, and inflation concerns driving demand for commodities as a hedge. Crude oil, industrial metals, and precious metals have all contributed to the index's rise, with crude oil benefiting from strong demand and supply concerns, while metals have drawn renewed investor interest.
2. Copper Market Disruption
A massive dislocation between copper prices on the Comex exchange and other commodity exchanges has been causing market turmoil, with a short squeeze driving up prices in New York. This disruption has led to a frantic dash for supplies to ship to the US, highlighting the interconnectedness of global commodity markets. The copper market's volatility serves as a reminder of the risks and opportunities present in commodity trading.
3. Oil Refining Margins Recovery
Oil refining margins have been under pressure in recent weeks, but signs of a comeback are emerging. Following a series of processing rate cuts and unplanned outages, Brent hydroskimming margins have recovered from a 10-month low. If margins sustain their recovery, it could boost crude prices in the short term, although traders continue to grapple with bumper capacity additions that have lifted supplies this year.
4. Lithium Prices and Production Adjustments
Despite a reported shutdown at one of China's largest lithium mines, prices of the battery metal have struggled to rebound. Contemporary Amperex Technology Co. Ltd. (CATL) announced output adjustments at the Yichun mine in Jiangxi province, but other suppliers remain, keeping prices in check. Battery metals, including lithium, cobalt, and nickel, have faced headwinds as a flood of new production has overwhelmed demand, cooling the pace of electric vehicle adoption.
5. EV Charging Infrastructure Growth
Electric vehicle (EV) charging infrastructure is expanding worldwide, with installations expected to rise by at least 800,000 in the second half of this year, a third more than the numbers posted from January through June. BloombergNEF estimates that trends suggest China may see more installations in the final three months of the year, while government grants in the US and new entrants like the automakers' joint venture Ionna could boost growth in North America beyond 2024 despite slowing EV sales.
These five key charts provide valuable insights into the dynamics of global commodities markets, helping investors and market participants make informed decisions. By staying attuned to these trends, investors can capitalize on opportunities while mitigating potential risks. As the global commodities market continues to evolve, it is essential to monitor these trends and adapt investment strategies accordingly.
Disclaimer: the above is a summary showing certain market information. AInvest is not responsible for any data errors, omissions or other information that may be displayed incorrectly as the data is derived from a third party source. Communications displaying market prices, data and other information available in this post are meant for informational purposes only and are not intended as an offer or solicitation for the purchase or sale of any security. Please do your own research when investing. All investments involve risk and the past performance of a security, or financial product does not guarantee future results or returns. Keep in mind that while diversification may help spread risk, it does not assure a profit, or protect against loss in a down market.
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