LNG and coal rally to 2021 commodities as markets consider COVID-19 for next step
By Naveen Thukral and Florence Tan
SINGAPORE, December 31 (Reuters) – The prices of raw materials, energy and metals in agricultural products rebounded strongly in 2021, with electric fuels leading the rally, driven by tight supplies and a strong economic recovery as vaccinations against COVID- 19 made it possible to avoid general blockages.
Global demand for commodities is expected to remain robust in 2022 and support prices as the global economy continues to recover, although similar price increases are unlikely, analysts and traders say.
“2021 has been characterized by a huge rally across the board,” said Jeffrey Halley, senior analyst at brokerage firm OANDA.
“While I believe commodity prices will remain robust, I believe the rebound in 2020 and the rally in 2021 will be exceptional years and as such I do not anticipate the same level of gains in the year. future.”
Energy and food prices have skyrocketed this year, hitting utilities and consumers from Beijing to Brussels, increasing inflationary pressures.
High prices are encouraging producers to increase production, but some analysts expect supplies for products such as petroleum and liquefied natural gas (LNG) to remain limited, as these projects take years for production. comes online.
Record prices for coal and natural gas have led to a severe electricity shortage from Europe to India and China in 2021.
Asian LNG LNG-AS rose more than 200%, while benchmark coal prices in Asia NCFMc1 double.
“Global demand for LNG grew by 20 million tonnes per year in 2021, with Asia accounting for virtually all of this growth,” said Valery Chow, head of gas and LNG research in Asia at Wood Mackenzie, adding that more than 20% growth in demand from China has made it the world’s largest importer, overtaking Japan.
“However, still high LNG spot prices are expected to start to dampen overall demand growth, especially in the more price sensitive markets of South Asia and South East Asia,” he said. he declared.
World oil prices LCOc1, CLc1 also recovered 50% to 55% in 2021, with Brent at $ 77.78 per barrel and WTI at $ 75.21 per barrel, and are put at go up further next year as demand for jet fuel catches up. [nL1N2TG03Y]
In China, coal prices have more than halved from a record high in October after the top producer and consumer amplified output and controlled prices.
Electricity crisis in China and Europe has hit aluminum production, pushing up prices CMAL3 up over 40% for a second year of earnings. However, it has also affected demand for iron ore as the world’s largest steel producer, China, has cut production.
Iron ore prices, which hit record highs in May, collapsed in the second half of the year amid tight production restrictions in China. Dalian Iron Ore Futures DCIOcv1 has fallen more than 10% after a massive rally over the past two years.
Base metals are expected to outperform as the energy transition will boost demand, analysts say, while supply chain bottlenecks may persist.
copper LME CMCU3 increased for a third year, up about 25% in 2021.
“Demand for copper is expected to enter its second year of expansion, especially after the recently concluded COP26 demonstrated a growing willingness by governments to prioritize clean energy,” OCBC economist said. Howie Lee.
RALLY AGRICULTURAL MARKETS
Chicago soybeans Sv1 increased for a third consecutive year, maize CV1 through 22% and wheat Wv1 more than 20%.
Supply constraints due to inclement weather and high demand have generally boosted agricultural markets.
Malaysian palm oil FCPOc3 and soybean oil BOv1 added over 30%, each rallying for a third year.
For drinks, arabica coffee KCc1 added nearly 80%, taking second year gains and robustas LRCc2 jumped 70%, recouping three years of losses, as supply chain problems increased appetite.
Raw sugar SBc1 increased by more than 20%, rallying for a third year and white sugar LSUc1 made similar gains as production fell in the main producing country of Brazil due to drought and frosts.
Precious metal prices could cool, dragged down by strong risk appetite in stocks and other markets, analysts said.
Gold XAU = was largely unchanged after dropping last year and the money XAG = should end the year down after two good years.
Main energy markets in 2021https://tmsnrt.rs/32MmCho
The main metals markets in China in 2021https://tmsnrt.rs/3pGoaT6
Main global agricultural futures markets in 2021https://tmsnrt.rs/3pArhfr
(Reporting by Naveen Thukral and Florence Tan in Singapore; additional reporting by Yuka Obayashi in Tokyo, Enrico Dela Cruz, Manila, Muyu Xu and Emily Chow in Beijing; graphics by Gavin Maguire; editing by Richard Pullin)
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