Commodity Calls: Week Ending 21 June 2024

Chinese refineries send copper overseas, India snaps up discounted Russian oil, and US encourages nuclear energy innovation.

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.

Copper

Bullish

• Weaker than expected consumer activity in the US and poor employment figures has increased odds of a Fed rate cut in the near term.¹ Meanwhile, stronger retail sales in China could also signal a return of consumer health.²

Bearish

• Refined copper in China is selling at a very unusual discount to LME prices.³ Chinese copper at the SHFE usually sells at a premium to global markets, however poor demand has grown inventories and crushed prices.
• In response to the price discount, Chinese smelters have started exporting refined copper to international markets. Chinese smelters exported a record 149,000 tonnes in May to take advantage of the arbitrage trade.⁴

Explore copper with WIRE.

Crude Oil

Bullish

• A record number of Americans are expected to travel over the upcoming Independence Day holiday period and potentially drive-up gasoline demand.⁵ The American Auto Association estimates 70.9 million travellers will drive 50 miles or more from home over the period, up 5% from 2023.⁶

Bearish

• Russia continued to raise crude oil exports despite promises to pare back supplies to match OPEC+ output targets in June. In the 30 days to June 16, Russian tankers shipped 3.42 million barrels per day (bpd), increasing the average monthly export for the second week in a row.⁷
• India imported a record-high amount of oil from Russia, roughly 2.1 million bpd, in May.⁸ Indian refiners have been capitalising on discounted Russian crude prices as European sanctions have led to excess Russian supply.

Explore crude oil with BCOM.

Uranium

Bullish

• According to the US Energy Information Administration, US utility companies purchased 27% more uranium in 2023 than 2022.⁹ In total, roughly 51.6 million pounds (~23400 tonnes) of yellow cake was purchased, of which 95% was imported from international sources.¹⁰
• The US Senate has passed the ADVANCE Act with strong bipartisan support.¹¹ The bill, which aims to speed up the construction of new nuclear power generation capacity, will provide the US Nuclear Regulatory Commission with additional tools to review new nuclear technologies and subsequently reduce regulatory costs for companies seeking to license new technologies.¹²

Bearish

• Soaring clean energy output is putting nuclear plants out of work in France. While more clean power is needed across Europe, the lack of battery storage infrastructure has occasionally caused excess input to the grid at certain points of the day – causing negative energy prices. The Electricite De France was forced to halt six nuclear plants in recent weeks to avoid paying excess fees on negative pricing.¹³

Explore uranium with ATOM.

^{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 25/06/2024. 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.}