Geopolitics and Commodity Markets Marcel Baartman 28 June 2017 - PowerPoint PPT Presentation

Geopolitics and Commodity Markets Marcel Baartman 28 June 2017

Turbulent Times

• Geopolitical Events & Trends • Geopolitics and Commodity Markets • Conclusions

Complex business: many types of commodities: energy, metals, agri, minerals, etc. Own characteristics Megatrends: Accidental: - Urbanisation - Weather - Demography - Disasters - Climate Change - … - Technology - … Market Specs: Cyclical: - Financialisation - Economic growth - Stock - (Geo-)political - … developments - …

Economic Growth Engines World Trade China’s Growth Contribution Source: CEPR/EIU Source: IMF Credit Cycle Commodity Super Cycle Source: IndexMundi Source: BIS

Geopolitical events: production, transportation and consumption Oil Production Oil Transport - Maritiem Oil Transport - Pipelines Oil Consumption

EUROPE UK : Brexit, ‘lost‘ election NORTH AMERICA EURASIA EU : Brexit, Macron, restructure USA : America First !, protectionism, Russia : revisionist policy, Ukraïne, European project investigations on administration Middle East, demonstrations Greece : debt issues Mexico : elections in 2018, NAFTA Germany : elections Italy : elections Geopolitical Events ASIA China : economic transformation, MENA corruption fighting, CCP congres, Iran : sanctions, regional hegmony OBOR, window of opportunity Saudi Arabia : regional hegemony Japan : Qatar : isolated by SA and Gulf North Korea : missile launches States Philippines : ISIS, authoritarian Morocco : social unrest LATAM leadership Brazil : corruption leads to political Syria : civil war Indonesia : Religious clashes Lybia : political instability, refugees instability Venezuela : increasing social unrest Turkey : authoritarian regime, refugees

International Power Shift Economic Military Source: IISS Source: IMF Source: Goldman Sachs Source: PEW Research

Geopolitical Trends Order Actors Mood Rules Relationships

EUROPE: reform EU project, inward EURASIA: revisionism, insecurity looking, threatening periphery, Russia : revisionist policy, more usage of NORTH AMERICA: growing social and political populism, strong institutions, trans- ‘gray zone’military tactics, more domestic pressures, change of US global role? atlantic relationship, demographic coercion, nationalism, economic USA : inward-looking, highly polarized politics, pressures vulnerable and constrained , ‘spoiler’. populism, budget-constrained UK : Brexit, political instability Eurasia : more Chinese involvement, Mexico : succes or failure of Mexican reforms? EU : Brexit, populism, restructure resolution of Ukraïne conflict European project Geopolitical Trends MENA: security competition, demographic pressures, less possibilities to manage public discontent, possible more violent radicalization, contagion to Africa, Europe and Asia, USA committment? ASIA: security competition, regime Iran : sanctions, regional hegemony stability & economic cooperation, Saudi Arabia : regional hegemony uncertainty US committment China : slowing economy, window of strategic opportunity, growing middle class, westward developments (OBOR), aging population, control by SUB-SAHARAN AFRICA: demographic CCP pressures, migration flows, insufficient India : Hedge China’s ambitions, LATAM: public dissatisfaction in economic growth, fragile states and deepening economic integration, governments, crime as top concern, radicalization, generational transition in tension with Pakistan, growing commodity dependent, rightward turn politics, consolidate gains, increasing prosperity vs environmental Brazil : political instability, rise of religious affiliation, increasing Chinese challenges, demographics evangelican Christianity influence Japan : More international Venezuela : increasing social unrest, engagement humanitarian crisis? Indonesia : Rise of Islam ALBA : continue support from China and Russia

Scarce Commodities

Conclusions: • Long-term: • increasing demand commodities • whereby countries will secure supply (China) • Short-term: • Vulnerable economic growth • More (geo)political tensions • For Commodities: • Changing patterns • More incidents and volatility

Q&A ?