Commodity Calls: Week Ending 28 June 2024

Japan discovers trove of battery metals in the Pacific, US oil producers investigated for collusion, and copper stockpiles show signs of returning Chinese demand.

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.

Transition Metals

Bullish

• Japanese researchers have discovered millions of tonnes of battery metals deposited as manganese nodules sitting on the Pacific seabed.¹ The metal-rich rocks are estimated to contain 610,000 tonnes of cobalt and 740,000 tonnes of nickel.² Extraction of the nodules are expected to begin next year.
• Albermarle, the world’s largest lithium miner, plans to organise an increased number of auctions for the metal in an attempt to decrease market volatility.³ The lithium market currently does not have a global market benchmark and a nascent futures market in China acts as the main guide for pricing, which has caused some confusion for purchasers.

Bearish

• European battery metal miners Eramet & BASF have abandoned plans to invest US$2.6 billion on the development of a nickel-cobalt refinery in Indonesia, citing poor electrical vehicle (EV) demand and increased global supply.⁴ The project, named Sonic Bay, was slated to produce 67,000 tonnes of nickel and 7,5000 tonnes of cobalt per year.⁵

Explore transition metals with GMTL.

Crude Oil

Bullish

• Maintenance at multiple Russian oil ports have reduced weekly crude oil shipments from the country to its lowest level in more than three months.⁶ Russian crude oil exports fell by 660,000 barrels per day over the last week.⁷

Bearish

• US oil producing giants including Exxon, BP, Shell, and Occidental are under investigation by the US Senate budget committee on suspected collusion with OPEC and OPEC+ members to enact anti-competitive and coordinated output reductions.⁸
• US crude oil inventories rose by 914,000 barrels at the beginning of last week against analyst expectations that supplies would fall by 3 million barrels.⁹ Total US inventories now stand at 372.2 million barrels, the highest level since December 2022.¹⁰

Explore crude oil with BCOM.

Copper

Bullish

• Copper stockpiles on the Shanghai Futures Exchange have fallen for a third consecutive week in a sign that Chinese domestic demand for the metal may be returning.¹¹ Chinese exchanges typically see inventories decrease between April and May as businesses return from Lunar New Year holidays – that demand has failed to materialise thus far in 2024.¹²

Bearish

• Chilean copper production is showing signs of recovery after the country’s output in May rose more than 8% compared to the same period a year prior.¹³ Whie Codelco, the country’s top producer, has indicated that its output will see YoY increases until H2 2024, other producers have increased their productivity.¹⁴

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 02/07/2024. 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.}