Recent Developments of the Commodity Prices Katrin Knauf - - PowerPoint PPT Presentation

▶
recent developments of the commodity prices
SMART_READER_LITE
LIVE PREVIEW

Recent Developments of the Commodity Prices Katrin Knauf - - PowerPoint PPT Presentation

Jul 19, 2023 24 likes •380 views

Recent Developments of the Commodity Prices Katrin Knauf Hamburgisches WeltWirtschaftsInstitut (HWWI) Structure 1. Overview commodity price index 2. Selection of commodities 3. Development of the commodity price index 4. Recent developments

slide-1
SLIDE 1

Recent Developments of the Commodity Prices

Katrin Knauf

Hamburgisches WeltWirtschaftsInstitut (HWWI)

slide-2
SLIDE 2

page 2

Structure

  • 1. Overview commodity price index
  • 2. Selection of commodities
  • 3. Development of the commodity price index
  • 4. Recent developments on the oil market
  • 5. Summary

Hamburgisches WeltWirtschaftsInstitut (HWWI)

slide-3
SLIDE 3

Overview commodity price index

page 3 Hamburgisches WeltWirtschaftsInstitut (HWWI)

Food Cereals Oilseeds Beverages, sugar Industrial raw materials Agricultural raw materials Non-ferrous metals Iron ore, scrap Energy raw materials Coal Crude oil Gas HWWI Commodity Price Index

slide-4
SLIDE 4

Overview commodity price index

  • The Index is divided in three main pillars. Each

pillar is subdivided in several subparts of commodities and represents commodity groups.

  • The index gives an overview of the current price

trends in primary commodity markets.

  • It shows the importance cost for consumer

countries and an important factor in export returns

  • f emerging economies.

page 4 Hamburgisches WeltWirtschaftsInstitut (HWWI)

slide-5
SLIDE 5

Overview commodity price index

  • Industry & decision makers of the monetary policy are

using the HWWI-index

  • Is included in statistical databases of national and

international institutions – Figures are calculated weekly and monthly – Historical background: Is one of the oldest commodity-indices

  • It is updated regularly with daily figures being

calculated once every week and is available on a paid subscription basis

page 5 Hamburgisches WeltWirtschaftsInstitut (HWWI)

slide-6
SLIDE 6

page 6

Example for the use of the commodity price index

Hamburgisches WeltWirtschaftsInstitut (HWWI)

Source: Deutsche Bundesbank, monthly report February 2018

  • Deutsche Bundesbank uses

the HWWI commodity price index regularly for publications

slide-7
SLIDE 7

page 7

Example for the use of the commodity price index

Hamburgisches WeltWirtschaftsInstitut (HWWI)

Another example of the use of the HWWI commodity price index Source: ECB Economic Bulletin, Issue 8 / 2017 – Boxes What is driving metal prices

slide-8
SLIDE 8

page 8

Mathematical background

  • Calculated by the Laspeyres-formula
  • The weighted sum of the prices of the current period is

divided by the corresponding sum of the base period, where in both cases weights are given by the corresponding quantities of the base period.

Hamburgisches WeltWirtschaftsInstitut (HWWI)

slide-9
SLIDE 9

page 9

Selection of commodities

  • Only unprocessed or little-processed goods included,

thus excluding labour costs and other factors

  • Availability of international market prices
  • Commodities subject to market distortions like import-

taxes were excluded:

  • Products strongly influenced by the Common

Agricultural Policy (CAP) of the EU

  • Precious metals due to speculation

Hamburgisches WeltWirtschaftsInstitut (HWWI)

slide-10
SLIDE 10

Index-Weights

page 10 Hamburgisches WeltWirtschaftsInstitut (HWWI)

Weighting of Commodities and Commodity Groups in the HWWI Index Index, total (all commodities) 2015 = 100 Weights HWWI-Index¹ Weights HWWI-Index 'Euroland'² HWWI Index, total 100,00 100,00 HWWI Index, total excl. Energy 13,80 19,60 Food total 5,70 8,20 Cereals 1,30 1,70 Oilseed, oils 2,10 3,90 Tropical beverages, sugar 2,30 2,60 Industrial raw materials 8,10 11,40 Agriculture raw materials 2,00 2,60 NFB metal³ 3,90 5,60 Iron ore, scrap 2,20 3,30 Energy raw materials 86,20 80,40 ¹ World imports of OECD countries minus Intra-OECD trade, 2015 ² Imports of EU17 countries from other countries, 2015 ³ non-ferrous base metals

slide-11
SLIDE 11

page 11

Index-Weights

  • The Total Index weights reflect share in total raw

material imports of the OECD countries, excluding OECD-internal trade

  • Index 'Euroland‘ weights reflect EU17 imports from

third countries (non-EUR17 countries)

  • Weights of the individual commodities are updated

every 5 years:

  • based on the total value imported into the OECD as

reported by OECD market statistics (HWWI Index)

  • based on the total value imported into the EU17

from Non-Euro countries (Euroland Index)

Hamburgisches WeltWirtschaftsInstitut (HWWI)

slide-12
SLIDE 12

Development of the HWWI-Index

page 12

60 70 80 90 100 110 120 130 140 15 Q1 15 Q2 15 Q3 15 Q4 16 Q1 16 Q2 16 Q3 16 Q4 17 Q1 17 Q2 17 Q3 17 Q4 18 Q1 Total (all commodities) Total excl. energy Food total Industrial raw materials Energy raw materials

HWWI-Index USD monthly average

source: HWWI

Index 2015=100

slide-13
SLIDE 13

Development of the HWWI-Index Since the last meeting in April 2017:

  • Since Q2/2017 divided development of the commodity

prices

  • From Q3/2017 price for energy and industrial raw

materials started to rise

  • Prices for food dropped in Q3/2017 and Q4/2017
  • Good harvests in 2017 resulted in higher supply

despite ongoing high demand

  • Food prices began to rise in Q1/2018
  • Concerns of poor harvest due to bad weather

resulted in higher prices

page 13 Hamburgisches WeltWirtschaftsInstitut (HWWI)

slide-14
SLIDE 14

Summary of recent Index development

Hamburgisches WeltWirtschaftsInstitut (HWWI) page 14

2015=100

04/17 04/18 % change

Total Index 103.5 128.4 24 Food total 98.4 101.0 3 Industrial raw materials 115.3 126.9 10 Energy raw materials 102.7 130.4 27 Crude oil 102.5 134.8 32 Crude oil (in USD/Barrel) 52.5 69.1

slide-15
SLIDE 15

Summary of recent Index development

  • All pillars increased
  • The biggest increase is observed for Energy raw

materials

  • And crude oil was the main price driver
  • Increase of the industrial raw materials is 2nd most

important factor

  • Only small increase for food

page 15 Hamburgisches WeltWirtschaftsInstitut (HWWI)

slide-16
SLIDE 16

Recent development crude oil

Hamburgisches WeltWirtschaftsInstitut (HWWI) page 16

source: HWWI, own calculation, macrobond

25,00 35,00 45,00 55,00 65,00 75,00 01-01-16 01-01-17 01-01-18

average crude oil price (2016 – 2018)

USD/barrel

slide-17
SLIDE 17

Recent development crude oil

  • On 20 January 2016:
  • the average oil price reached a 13-year low of

26.63 USD per barrel

  • At the beginning of 2017, the agreement on

production cuts between OPEC and Russia came into force:

  • the average price of crude oil on January 02, 2017

was 55.09 USD per barrel

  • In the first half of 2017 the average crude oil price

drops down:

  • the average price of crude oil on June 21, 2017

was 43.58 USD per barrel

page 17 Hamburgisches WeltWirtschaftsInstitut (HWWI)

slide-18
SLIDE 18

Recent development crude oil

Hamburgisches WeltWirtschaftsInstitut (HWWI) page 18

source: HWWI, own calculation, macrobond

40,00 45,00 50,00 55,00 60,00 65,00 70,00 75,00 01-05-17 01-05-18

average crude oil price (May 2017 – May 2018)

USD/barrel

slide-19
SLIDE 19

Recent development crude oil

  • In July 2017, the price of crude oil began to rise as the

supply cuts of OPEC and Russia began to have an impact:

  • Production overhang has been inversed
  • Demand accelerated
  • Output cuts reduced stocks
  • In November 2017 US crude oil production surpasses

10m barrel per day

  • In February 2018 Venezuela crude oil production

drops to 30-year low

  • In May 2018 crude oil hits 75 USD per barrel for the

first time since 2014

page 19 Hamburgisches WeltWirtschaftsInstitut (HWWI)

slide-20
SLIDE 20

Recent development crude oil

Hamburgisches WeltWirtschaftsInstitut (HWWI) page 20

source: OPEC

  • 800
  • 600
  • 400
  • 200

200 400 600 Saudi Arabia Venezulea UAE Iraq Kuwait Algeria Angola Qatar Gabon Eucador Iran Nigeria Lybia

  • utput change [millions of barrel per day] since Dec 2016
slide-21
SLIDE 21

Recent development crude oil

  • OPEC continues to cut daily oil output since the end of

the year 2016:

  • Total net cut: - 1.3m barrels per day (target:

1.8mb/d: 1.2 mb/d OPEC, 0.6 mb/d Russia)

  • Libya and Nigeria are exempt from OPEC oil cuts
  • Less than 10% change:
  • Algeria, Angola, Ecuador, Gabon, Iran, Iraq,

Kuwait, Qatar, and Saudi Arabia

  • Saudi Arabia reduced the most, evens out surplus
  • f other countries
  • Russia is interested in price over 70 USD per barrel
  • USA increased the crude oil production

page 21 Hamburgisches WeltWirtschaftsInstitut (HWWI)

slide-22
SLIDE 22

Future Development Crude oil 2018

page 22 Hamburgisches WeltWirtschaftsInstitut (HWWI)

slide-23
SLIDE 23

Future Development Crude oil 2018

  • Crude oil is taken out of stock since Q2 2017 to satisfy

demand

  • Demand is about 0.8 mb/d higher than supply
  • According to IEA: Recent development is going to

continue in the nearer future

page 23 Hamburgisches WeltWirtschaftsInstitut (HWWI)

slide-24
SLIDE 24

Geopolitical risks on the crude oil market However, the current price trend is subject to a range of supply-side risks:

  • Most immediate risk, US president, Donald Trump,

choosing to withdraw from the Iran nuclear deal and reimposing sanctions on its oil exports

  • 2nd is Venezuela
  • Elections on May 20
  • 3rd is Yemen
  • Fellow OPEC member and rival to Saudi Arabia,

Houthi rebels targeting oil production

  • 4th is Libya, still unstable after civil war

The risks are greater than they were during the Arab Spring

page 24 Hamburgisches WeltWirtschaftsInstitut (HWWI)

slide-25
SLIDE 25

page 25

Summary

  • Increasing oil prices with increasing demand
  • Uncertain political development
  • Indications for increasing food prices
  • Growing prices for industrial raw materials, growing

demand expected

Hamburgisches WeltWirtschaftsInstitut (HWWI)

slide-26
SLIDE 26

Thank you for your attention!

Visit www.hwwi.org

Dziękuje Państwu bardzo za uwagę !

slide-27
SLIDE 27

Recent development crude oil

Hamburgisches WeltWirtschaftsInstitut (HWWI) page 27

source: HWWI, macrobond

40,00 45,00 50,00 55,00 60,00 65,00 70,00 75,00 01-05-17 01-05-18

crude oil prices by type (May 2017 – May 2018)

Dubai Brent WTI USD/barrel

slide-28
SLIDE 28

page 28

Recent Industrial Raw Materials Price Development

Hamburgisches WeltWirtschaftsInstitut (HWWI)

80 90 100 110 120 130 140 150 160 janv-17 févr-17 mars-17 avr-17 mai-17 juin-17 juil-17 août-17 sept-17

  • ct-17

nov-17 déc-17 janv-18 févr-18 mars-18 avr-18

Industrial raw materials

Industrial raw materials Agricultural raw materials Non-ferrous metals Iron ore, steel scrap

HWWI index USD 2015=100

source: HWWI

slide-29
SLIDE 29

page 29

Recent Industrial Raw Materials Price Development

Hamburgisches WeltWirtschaftsInstitut (HWWI)

  • Iron Ore and steel scrap are most volatile
  • Important Influenced by the Chinese environment

policy, they want to improve the air for their own citizens in the winter month

  • Reduced steel production in China
  • The price for Iron Ore and steel scrap

increase, because the steel stock is reduced

slide-30
SLIDE 30

page 30

Recent Industrial Raw Materials Price Development

Hamburgisches WeltWirtschaftsInstitut (HWWI)

5000 10000 15000 20000 25000 janv-17 févr-17 mars-17 avr-17 mai-17 juin-17 juil-17 août-17 sept-17

  • ct-17

nov-17 déc-17 janv-18 févr-18 mars-18 avr-18

Non-ferrous base metals (1/2)

Copper Nickel Tin

  • avg. US$/ton

source: HWWI, macrobond

slide-31
SLIDE 31

page 31

Recent Industrial Raw Materials Price Development

Hamburgisches WeltWirtschaftsInstitut (HWWI)

500 1000 1500 2000 2500 3000 3500 4000 janv-17 févr-17 mars-17 avr-17 mai-17 juin-17 juil-17 août-17 sept-17

  • ct-17

nov-17 déc-17 janv-18 févr-18 mars-18 avr-18

Non-ferrous base metals (2/2)

Aluminium Lead Zinc

  • avg. US$/ton

source: HWWI, macrobond

slide-32
SLIDE 32

page 32

Recent Food Price Development

Hamburgisches WeltWirtschaftsInstitut (HWWI)

80 85 90 95 100 105 110 115 120 janv-17 févr-17 mars-17 avr-17 mai-17 juin-17 juil-17 août-17 sept-17

  • ct-17

nov-17 déc-17 janv-18 févr-18 mars-18 avr-18

Food prices

Food total Cereals Oilseeds, oils Beverages, sugar

HWWI index USD 2015=100

source: HWWI

slide-33
SLIDE 33

Historical Development of the HWWI- and Euroland-Index

page 33 Hamburgisches WeltWirtschaftsInstitut (HWWI)

60 70 80 90 100 110 120 130 140 15 Q1 15 Q2 15 Q3 15 Q4 16 Q1 16 Q2 16 Q3 16 Q4 17 Q1 17 Q2 17 Q3 17 Q4 18 Q1 Total (all commodities) Total excl. energy Food total Industrial raw materials Energy raw materials

HWWI-Euroland Index USD monthly average

source HWWI

Index 2015=100

slide-34
SLIDE 34

Future Development Crude oil 2018

  • Decreased supply because of OPEC agreement
  • Increasing supply because of fracking in the USA

based on the current environmental policy

  • Currently, US shale oil production does not seem

to have a significant impact on world market crude

  • il prices due to transportation problems
  • US-president Trump seeks to open most U.S.

coastal waters to new drilling, would increase crude oil production, easy export possible

page 34 Hamburgisches WeltWirtschaftsInstitut (HWWI)

slide-35
SLIDE 35

Sources

  • https://www.bundesbank.de/Redaktion/DE/Downloads/Veroeffentlichungen/Monat

sberichte/2018/2018_02_monatsbericht.pdf?__blob=publicationFile

  • https://www.ecb.europa.eu/pub/pdf/other/ebbox201708_01.en.pdf?d349e8891e7

9b01732c5188a21fd7803

  • https://www.iea.org/topics/oil/
  • https://www.bloomberg.com/news/articles/2018-01-04/trump-seen-urging-all-u-

s-coastal-waters-be-opened-to-drilling

Hamburgisches WeltWirtschaftsInstitut (HWWI) page 35