Commodity Calls: Week Ending 10 May 2024

India secures its lithium pipeline, China starts importing more oil, and improving rate-cut odds buoy copper sentiment.

Join Global X each week for ‘Commodity Calls’ to explore all the recent signals and developments that occurred in the world of commodities.

Looking for more? Check out this week’s Market Moves and Thematic Spotlight.

Lithium

Bullish

  • India is reportedly considering providing incentives to private companies in setting up lithium processing plants in New Delhi.1 The Indian Ministry of Mines has pushed for the government to ensure the availability of critical minerals as the country fosters a nascent EV industry.

Bearish

  • US President Joe Biden has raised tariffs on Chinese exports of electric vehicles, batteries, solar cells, and other technologies as the Biden administration attempts to crack down on China prior to the upcoming election.2 The biggest change entails the increase of tariffs on Chinese EVs from 27.5% to 102.5%.3
  • Albermarle, the world’s largest lithium producer, missed first quarter profit estimates in its earnings report due to low lithium prices. The company’s battery grade lithium division posted a quarterly profit of just US$198 million compared with US$1.57 billion the year prior.4

Explore lithium with ACDC.

Crude Oil

Bullish

  • Chinese imports of crude oil rose 5.45% YoY for April, equivalent to a daily rate of 10.88 million barrels.5 This was lower than Chinese imports for the month of March, but markets were nonetheless satisfied that the yearly improvement was a sign of Chinese demand growth.
  • Crude oil prices moved higher as ceasefire talks between Israel and Hamas broke down, with Israel bombing Rafah despite warnings from the US.6

Bearish

  • Niger’s first shipment of crude oil to China has been blocked by the West African nation of Benin due to an ongoing border dispute. The oil headed towards China was part of a US$400 million commodity backed loan which Niger’s military had agreed to repay in oil over a period of 12-months.7

Explore crude oil with BCOM.

Copper

Bullish

  • US unemployment claims hit an eight-month high last week, fueling hopes of rate cuts despite numerous Fed officials reiterating a neutral monetary policy.8 Rate cuts stimulate the economy, which tends to drive higher demand for industrial metals such as copper.

Bearish

  • Codelco, the world’s biggest copper miner by output, is expected to increase its annual output for the first time in multiple years. While delivering its annual results, the company included guidance for an increase in production for 2024.9

Explore copper with WIRE.

 

Forecasts are not guaranteed and undue reliance should not be placed on them. This information is based on views held by Global X as at 14/05/2024. Investing involves risk, including the possible loss of principal. Diversification does not ensure a profit nor guarantee against a loss.

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This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. This information is not intended to be individual or personalised investment or tax advice and should not be used for trading purposes. Please consult a financial advisor or tax professional for more information regarding your investment and/or tax situation.