Abans Group Commodity World Round Up

31 Jan – 4 Feb

1. Bank of England hikes rates in clamour to contain spiralling inflation

Feb 03 , 2022

The Bank of England raised interest rates to 0.5% on Thursday and nearly half of its policymakers wanted a bigger increase to contain rampant price pressures, as the central bank warned inflation will soon top 7%. In a surprise split decision, four of the nine members of the Monetary Policy Committee wanted to raise interest rates by half a percentage point to 0.75%. This would have been the biggest increase in borrowing costs since the BoE became operationally independent 25 years ago.

Source: Reuters

2. ECB opens door to 2022 rate hike in policy turnaround

Feb 03 , 2022

The European Central Bank finally acknowledged mounting inflation risks and even opened the door a crack to an interest rate increase this year, marking a remarkable policy turnaround for one of the world's most dovish central banks. Lagarde, however, insisted that the sequence of the ECB's future policy moves will not change, so asset buys, now set to run indefinitely, will have to end before borrowing costs can be increased.

Source: Reuters

3. A major winter storm in US threatening to delay oil supplies further

Feb 04 , 2022

A massive winter storm swept across the central and Northeast United States on Thursday where it was delivering heavy snow and ice, making travel treacherous if not impossible, knocking out power to thousands and closing schools in several states. Tight oil supplies pushed the six-month market structure for WTI into steep backwardation of $8.08 a barrel on Friday. Backwardation occurs when prices for prompt spot trade are at a premium to future prices, and usually encourages traders to take oil out of storage.

Source: Reuters

4. U.S. heating oil, diesel stocks dwindle as demand rises

Feb 04 , 2022

U.S. supplies of fuels such as diesel and heating oil have dwindled and refiners are having trouble replenishing that supply, which could keep prices elevated for months. Demand for diesel, heating oil and other products has been running ahead of pre-pandemic levels for months. However, production has not kept up as some refineries have closed since the coronavirus pandemic began while others put off maintenance. U.S. distillate demand in 2021 has been running at about 5% above pre-pandemic levels, putting inventories at 15% less than the five-year moving average. U.S. refiners are still running plants at lower rates than the five-year average to avoid producing too much jet fuel, where demand still lags 2019 levels.

Source: Reuters

5. OPEC Holds Steady on Output Increases

Feb 03 , 2022

OPEC affirmed moderate crude oil output increases of 400,000 barrels per day, not buckling to pressure from consuming countries to accelerate production. A lack of spare capacity by OPEC members has further complicated agreed-upon output targets. Meanwhile, a report prepared for the cartel's meeting cited by Reuters showed global oil demand growth remaining unchanged this year at 4.2 million B/D and forecast that demand would reach pre-pandemic levels in the second half of 2022.

Source: Investopeida

6. Global copper smelting surges in January

Feb 03 , 2022

Smelting activity powered to a 13-month peak in January as operations in China ramped up ahead of seasonal construction demand, data from satellite surveillance of copper plants showed. The number of inactive smelters fell to the lowest level since February 2018, according to a statement on Thursday from commodities broker Marex and SAVANT, a satellite analytics service it launched with Earth-i in 2019. Earth-i, which specialises in geospatial data, tracks 94 smelters representing 80% to 90% of global production. In nickel, smelting activity slipped, largely due to power restrictions in China ahead of the Winter Olympics, the statement said.

Source: Reuters

7. Copper inventories in LME-approved warehouses have fallen more than 60% from the 2021 peak

Feb 04 , 2022

Copper inventories in LME-approved warehouses, at 82,400 tonnes, have fallen more than 60% from the 2021 peak scaled in August. Copper prices rose on Friday, on course for a weekly gain, as a weaker U.S. dollar and low inventories provided strong support despite muted trading during a week-long holiday in top metals consumer China.

Source: Reuters

8. China's metals imports boomed in 2021, so did its exports: Andy Home

Feb 03 , 2022

China imported a record amount of primary and alloy aluminium in 2021 tapping the international market for the second consecutive year. Imports of refined nickel doubled year-on-year and the country continued to step up purchases of a widening range of nickel raw materials. Refined copper imports dropped from the previous year's record highs but remained robust with flows of "scrap" accelerating after a relaxation of purity thresholds.

Source: Reuters