Commodity Calls: Week Ending 14 June 2024

Serbia is set to open Europe’s largest lithium mine, US citizens show love for nuclear energy, and Russia vows to cut back on excess oil production.

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

  • Serbia is getting closer to approving Rio Tinto’s development of Europe’s largest lithium mine.1 The project, initially proposed in 2022 but called off due to environmental concerns, is finally moving along after a comprehensive report from Rio Tinto addressed Serbia’s concerns.
  • The project, which is expected to open by 2028, will produce up to 58,000 tonnes of lithium per year.2 That will be enough to power 17% of all EV production in the EU – approximately 1.1 million cars. Europe currently has virtually no domestic lithium production.

Bearish

  • Chile, the world’s second-largest producer of lithium, exported a record amount of 29,000 tonnes of lithium in April, up 36% month-over-month and 84% year-on-year.3
  • Increasing preference for hybrid vehicles in the Chinese new energy vehicle (NEV) market is impacting demand for lithium. Hybrids now account of 14% of total vehicle sales in the country, and 39% of NEVs.4

Explore lithium with ACDC.

Uranium

Bullish

  • The National Nuclear Energy Public Opinion Survey which concluded last month found US support for nuclear energy is at record high. 77% of respondents said they strongly favoured the use of nuclear energy in the USA, marking four years in a row that over 75% of the population approved nuclear as a source of cleaner electricity.5
  • Japan’s economy ministry is considering allowing the construction of a new nuclear power fleet as older reactors are decommissioned.6 The move will likely form part of the revisions to Japan’s national energy strategy which is reviewed once every three years.

Bearish

  • Surprising gains for far-right and populist parties in the EU parliament, mirrored by losses from green-leaning groups, could hinder clean energy targets in the region.7 Europe as a region is one of the most prolific users of nuclear energy.

Explore uranium with ATOM.

Crude Oil

Bullish

  • Russia has vowed to cut back oil production in order to fulfil its production quota as set by the OPEC+. When the OPEC convened in early March, Russia had announced that it would reduce supply by 471,000 bpd in Q2 of 2024.8

Bearish

  • The International Energy Agency is forecasting a significant slow-down in oil demand growth over the next few years. A decline in oil use for electricity generation and growing fuel efficiency in petrol vehicles is set to drive a substantial supply glut of roughly 8,000,000 bpd by 2030.9
  • Russian fuel exports increased by 10.4% in the month of May as the government lifted a ban on gasoline and refineries returned from maintenance.10

Explore crude oil with BCOM.

 

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 18/06/2024. Investing involves risk, including the possible loss of principal. Diversification does not ensure a profit nor guarantee against a loss.

Brokerage commissions will reduce returns.

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.