{"id":8883,"date":"2024-02-26T16:07:55","date_gmt":"2024-02-26T21:07:55","guid":{"rendered":"https:\/\/www.fundamentalanalytics.com\/?p=8883"},"modified":"2024-02-27T16:13:42","modified_gmt":"2024-02-27T21:13:42","slug":"no-china-no-honey","status":"publish","type":"post","link":"https:\/\/www.fundamentalanalytics.com\/es\/no-china-no-honey\/","title":{"rendered":"No China, No Honey"},"content":{"rendered":"

Andreas Anastasiadis<\/p>\n

\n

With the Russia-Ukraine war and conflicts in the Middle East persisting alongside OPEC’s implemented production cuts, it’s reasonable to expect that commodity prices would hover close to historic peaks; this should be the case especially for energy and metals. In reality, WTI is trading -11.8% below highs (Figure 1) since Hamas attacked Israel and drumbeats of war were heard. Furthermore, copper and silver prices are relatively flat on a YTD basis (Figures 2 and 3). While we should have been expecting higher commodity prices given the geopolitical environment, there are forces that are keeping them down, with one important one being China.<\/p>\n

\"\"
Figure 1: WTI crude oil futures, current month contract<\/em><\/figcaption><\/figure>\n
\"\"
Figure 2: COMEX copper futures, current month contract<\/em><\/figcaption><\/figure>\n
\"\"
Figure 3: COMEX silver futures, current month contract<\/em><\/figcaption><\/figure>\n

For oil, part of the explanation is attributed to surging US crude oil production after mid-January (Figure 4), partially offsetting OPEC\u2019s cuts. However, the primary factor behind the lack of a commodity rally can be succinctly summarized in one word: China. China stands as the globe’s largest consumer of raw materials, importing approximately 40% of industrial metals worldwide and 10% of global crude oil. Many commodity producers had anticipated stronger growth in China’s economy, only to find it hasn’t materialized as expected.\u00a0In the previous year, China saw a 5.2% annual growth rate, which may appear favorable at first glance. However, it’s important to recall that this growth figure is relative to 2022, a year marked by extensive lockdown measures across China. China’s economy has grappled with substantial debt, plummeting real estate values, sluggish industrial output and consumer expenditure, and a significant decline in imports and exports. These factors have reverberated throughout commodity markets, typically mirroring China’s growth trajectory with a lag of around one year.<\/p>\n

\"\"
Figure 4: US crude oil production, thousand Bpd<\/em><\/figcaption><\/figure>\n

Nevertheless, the recent Chinese stimulus actions provide an additional favorable tailwind for improved US crude oil exports. Moreover, copper and silver futures anticipate a hike after China\u2019s decision to cut its reserve ratio, but additional measures need to be taken to create a new bull market in the industrial metal sector.<\/p>","protected":false},"excerpt":{"rendered":"

Andreas Anastasiadis With the Russia-Ukraine war and conflicts in the Middle East persisting alongside OPEC’s implemented production cuts, it’s reasonable to expect that commodity prices would hover close to historic peaks; this should be the case especially for energy and metals. In reality, WTI is trading -11.8% below highs (Figure 1) since Hamas attacked Israel […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"default","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"set","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"footnotes":""},"categories":[1],"tags":[],"class_list":["post-8883","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"_links":{"self":[{"href":"https:\/\/www.fundamentalanalytics.com\/es\/wp-json\/wp\/v2\/posts\/8883","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.fundamentalanalytics.com\/es\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.fundamentalanalytics.com\/es\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.fundamentalanalytics.com\/es\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.fundamentalanalytics.com\/es\/wp-json\/wp\/v2\/comments?post=8883"}],"version-history":[{"count":2,"href":"https:\/\/www.fundamentalanalytics.com\/es\/wp-json\/wp\/v2\/posts\/8883\/revisions"}],"predecessor-version":[{"id":8889,"href":"https:\/\/www.fundamentalanalytics.com\/es\/wp-json\/wp\/v2\/posts\/8883\/revisions\/8889"}],"wp:attachment":[{"href":"https:\/\/www.fundamentalanalytics.com\/es\/wp-json\/wp\/v2\/media?parent=8883"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.fundamentalanalytics.com\/es\/wp-json\/wp\/v2\/categories?post=8883"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.fundamentalanalytics.com\/es\/wp-json\/wp\/v2\/tags?post=8883"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}