Despite fears of copper shortages, China is proving that there’s still plenty of the industrial metal. Robusta coffee is enduring wild price swings as it chalks up three months of gains. And the US oil industry sees another big acquisition.
Author of the article:
Bloomberg News
Mumbi Gitau, Priscila Azevedo Rocha and David Wethe
Published Jun 02, 2024 • 2 minute read
g289{95z5j)9c(hf)jw3q)f5_media_dl_1.png ICE, data as of May 24
(Bloomberg) — Despite fears of copper shortages, China is proving that there’s still plenty of the industrial metal. Robusta coffee is enduring wild price swings as it chalks up three months of gains. And the US oil industry sees another big acquisition.
Here are five notable charts to consider in global commodity markets as the week gets underway.
Oil M&A
The massive wave of US oil consolidation continues with ConocoPhillips announcing plans to buy rival Marathon Oil Corp. last week. The sector’s five-biggest deals in the past 12 months have a combined value of close to $200 billion when including debt and equity. That’s a signal that the US industry is entering a new phase for these exploration and production companies. As shareholders demand growth in returns, oil bosses are buying their rivals in order to cut costs and extend the life of their assets so they can continue growing buybacks and dividends for investors.
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Copper
The global copper market is gripped by fears of a shortage, which has propelled prices to record levels. But in China, the world’s biggest producer and consumer of the refined metal, there’s more than enough to go around. At the center of that disconnect is the nation’s ever-expanding copper smelters. The industry is maintaining production at near-record levels — defying a scarcity of raw materials — as higher prices unlock more scrap metal for processing.
Coffee
Robusta coffee futures have risen for a third straight month on worries that low stockpiles and reduced output in the next season in key grower Vietnam will keep supplies stretched. The most-active contract reached a peak of $4,388 a ton on Thursday, the highest in data going back to 2008, before retreating. That helped push a 60-day measure of volatility to the highest over that period. Hot and dry weather in Vietnam has fueled concerns about the next harvest, and while the Asian nation’s coffee region has seen rain, it cannot undo the damage caused by drought.
Natural Gas
Investment funds are the most bullish on European gas prices since before the energy crisis, the latest signal that concerns over supplies are increasing again. The net-long position in benchmark Dutch gas futures held by investment funds is at the highest since January 2022, the month before Moscow’s invasion of Ukraine that roiled the markets, according to the most recent data from Intercontinental Exchange Inc. The bullish wagers indicate that the market remains fragile to potential supply disruptions, including widespread maintenance at facilities in top supplier Norway as well as Russian gas flows through Ukraine.
Solar
This year is expected to be another record year for solar, with BloombergNEF forecasting 585 gigawatts of modules will be installed — almost a third higher than last year. Expansion in the industry has outpaced deployment to the extent there is potential capacity across the value chain to make about 1,100 gigawatts. Despite some factories halting for maintenance, prices for both the raw material polysilicon and modules have hit all-time lows. BNEF expects poor margins for manufacturers to continue until at least 2025.
—With assistance from Winnie Zhu and Doug Alexander.
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