Commodities Update Q1/2023

HIGHLIGHTS

• Steel prices recovered to the highest level since July 2022 with positive expectation about the recovery of Chinese property sector.
• Rubber demand from China is still weak due to effects of prolonged lockdown methods  and this would take a long time for the demand to recover.
• Thermal coal prices dropped strongly while warmer-than-expected weather affected demand amid concerns about supply disruption from Australia.
• WTI Oil prices dropped to 76 USD/barrel with concerns of another FED rate hike while US oil inventory continues to stock up.
• Vietnam rice posed a good prospect for next several months with increasing export prices and limited supply outlook from export restrictions which Indian authorities set on their rice.

COMMODITIES MARKET OVERVIEW

Commodities market experiences a recovery as the economy of China is slowly reopening after prolonged restriction. However, demand on the commodities market has not been robust as large economies are still facing high inflation and concerns about further interest rate hikes from FED.

Steel market

Steel rebar prices bounced to 603 USD/ton, the highest level since July 2022, supported by slowly reopening of China and some stimulus measures. 

• The stimulus policies of China focus on heating up the frozen real estate market, which help to support property demand. Thanks to stable property prices after 16 consecutive months of decline in China, developers can extend their activities and increase demand for construction materials.
• Although increasing interest rates in major economies such as the US and EU reduced real estate demand as increased mortgage rates have undermined buyers’ purchasing power, the recovery of China – the largest steel consumer, can help to extend the current trend of steel prices.

View details in full report below.