Commodity market outlook report for 2021 From World Bank

The following is the Commodity market outlook report for 2021 From World Bank recommended by recordtrend.com. And this article belongs to the classification: Chinese economy, research report.

Soaring energy prices   High non energy prices stabilized

Energy prices, especially natural gas and coal, have soared in the past three months, while other non energy prices have stabilized after a sharp rise earlier this year. Bad weather has a serious impact on many commodity markets: high temperatures in summer increase power demand; Drought reduced hydropower supply and affected some agricultural commodities, while floods affected some metal and coal supplies. With the easing of supply tension, most commodity prices are expected to fall in 2022.

Crude oil prices continue to recover

Crude oil prices continued to rise from their lows since the outbreak. In the first half of October, the average price of Brent crude oil was $82 a barrel, much higher than the level before the outbreak. The continued recovery of oil demand has boosted oil prices. At present, oil demand is only 3% lower than the peak before the epidemic. Production growth was also lower than expected due to supply disruptions and capacity constraints. With the increasingly fierce competition for oil as a substitute for heating and power generation, the soaring price of natural gas also supports the oil price.

Crude oil production in the third quarter of 2021 was disappointing

After increasing production for most of 2021, crude oil production decreased in August and September this year. U.S. crude oil production was affected by Hurricane IDA. The output reduction of OPEC and its partners (OPEC +) is also far lower than its target output, which is mainly due to maintenance and unplanned shutdown in some countries due to epidemic restrictions. Another reason is that investment is still weak, and some countries have approached or reached full production.

Natural gas and coal prices soared

In recent months, natural gas and coal prices have risen, and spot prices in Europe and Asia have reached record levels driven by a rebound in demand and stagnant supply. As the economy recovers, the demand for electricity increases, while the warming weather increases the demand for cooling. Due to drought and low wind speed, renewable energy power generation has decreased in some countries. Bad weather also affected natural gas and coal production, and floods reduced coal production in some countries such as China and Indonesia.

Agricultural product prices stabilized

The price of agricultural products stabilized in the third quarter of 2021, but it is still at the highest level since 2013. The decline in food prices (such as the decline in rice prices due to the bumper harvest in Southeast Asia) was offset by the rise in beverage prices, especially coffee prices due to the frost in Brazil. After several years of below average growth, the growth of grain and oilseed supply in the current quarter of 2021-2022 is expected to reach historical levels.

Fertilizer prices soared

The rise of energy prices, especially the prices of coal and natural gas, has greatly increased the cost of agricultural investment. Since January this year, the price of chemical fertilizer has increased by more than 55%. Rising energy prices have forced some chemical companies to stop production or reduce production capacity. The increase of input costs and the new La Nina phenomenon pose a serious upward risk to agriculture, and the ambitious biofuel target may raise the prices of some cereals and Oilseeds in the long term.

Base metal prices continued to rise   Iron ore prices plummeted

After reaching an all-time high in July this year, iron ore prices fell rapidly driven by China’s reduction in steel production to achieve the zero growth target this year. On the other hand, driven by the global economic recovery, the prices of most base metals continued to rise, while energy shortages and blockades interrupted metal production. Tin prices hit an all-time high due to strong demand for electronic products. Aluminum and zinc prices have also been driven by rising energy prices, and some metal refining companies have reduced or stopped production.

Precious metal prices stabilized

Precious metal prices fell 3% month on month (MOM) in the third quarter of 2021 due to the rise in the yield of 10-year US Treasury bonds. Platinum (- 13%) and silver (- 9%) fell more than gold (- 1%). The interruption of global automobile production reduced the demand for catalytic converters, and platinum prices continued to decline.

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