World Commodity Prices to mid-2017 AIECE General Meeting Brussels, - - PowerPoint PPT Presentation

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World Commodity Prices to mid-2017 AIECE General Meeting Brussels, - - PowerPoint PPT Presentation

Nov 11, 2022 29 likes •289 views

World Commodity Prices to mid-2017 AIECE General Meeting Brussels, November 5, 2015 Paavo Suni, ETLA ELINKEINOELMN TUTKIMUSLAITOS THE RESEARCH INSTITUTE OF THE FINNISH ECONOMY Recent Developments ELINKEINOELMN TUTKIMUSLAITOS, ETLA

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ELINKEINOELÄMÄN TUTKIMUSLAITOS THE RESEARCH INSTITUTE OF THE FINNISH ECONOMY

World Commodity Prices to mid-2017

AIECE General Meeting Brussels, November 5, 2015 Paavo Suni, ETLA

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ELINKEINOELÄMÄN TUTKIMUSLAITOS, ETLA THE RESEARCH INSTITUTE OF THE FINNISH ECONOMY

Recent Developments

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ELINKEINOELÄMÄN TUTKIMUSLAITOS, ETLA THE RESEARCH INSTITUTE OF THE FINNISH ECONOMY

80 90 100 110 120 130 40 80 120 160 200 240 2000/1 2002/1 2004/1 2006/1 2008/1 2010/1 2012/1 2014/1

World Industrial Production and Non-Energy Raw Material Prices

HWWI non-energy raw material prices, scale to the left Industrial production

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ELINKEINOELÄMÄN TUTKIMUSLAITOS, ETLA THE RESEARCH INSTITUTE OF THE FINNISH ECONOMY

  • 20,0
  • 15,0
  • 10,0
  • 5,0

0,0 5,0 10,0 15,0 20,0 25,0 30,0 2001/1 2003/1 2005/1 2007/1 2009/1 2011/1 2013/1 2015/1 %-change, yoy

Industrial Production in the US, EU27, G7 and China

EU28 G7 China USA

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ELINKEINOELÄMÄN TUTKIMUSLAITOS, ETLA THE RESEARCH INSTITUTE OF THE FINNISH ECONOMY

2 4 6 8 10 12 14 25 50 75 100 125 150 175 2008/1 2010/1 2012/1 2014/1

%-change, yoy HWWI-index, 2010=100

Non-energy Commodity Prices and the Change in Chinese GDP

Non-energy commodity prices GDP, rhs

HWWI, NBSC, Frances&Meese, ETLA

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ELINKEINOELÄMÄN TUTKIMUSLAITOS, ETLA THE RESEARCH INSTITUTE OF THE FINNISH ECONOMY 5 6 10 10 11 11 17 22 23 28 30 30 31 40 45 46 46 48 50 54

10 20 30 40 50 60 Barley Natural gas Sugar Palm oil Sorghum Crude oil Wheat Corn Gold Soyabean meal Rice Soyabean oil Cotton Lead Steel Zinc Tin Copper Nickel Aluminium

Prometeia

Share of World Commodity Consumption, %

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ELINKEINOELÄMÄN TUTKIMUSLAITOS, ETLA THE RESEARCH INSTITUTE OF THE FINNISH ECONOMY

20 40 60 80 100 120 140 160 3/1/2000 3/1/2002 3/1/2004 3/1/2006 3/1/2008 3/1/2010 3/1/2012 3/1/2014

Daily Crude Oil Prices, Brent, spot

EUR USD

Dollars/ euros per barrel

Bloomberg. ETLA

OPEC (SA) decides to defend Mkt shares; Shale producers as swing producers

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ELINKEINOELÄMÄN TUTKIMUSLAITOS, ETLA THE RESEARCH INSTITUTE OF THE FINNISH ECONOMY

50 100 150 200 250 300 350 400 450 500 2000/01 2002/01 2004/01 2006/01 2008/01 2010/01 2012/1 2014/1 HWWI ndex, 2000=100

Real Prices of World Raw Materials

Energy Total Total excl. energy

HWWI, ETLA

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ELINKEINOELÄMÄN TUTKIMUSLAITOS, ETLA THE RESEARCH INSTITUTE OF THE FINNISH ECONOMY

Table 1. Spring 2015 forecasts and realisations

Forecast Actual Forecast Actual Forecast Actual Forecast Actual All commodities* 12 11 5

  • 16

16 13 5

  • 16

Total excl. energy

  • 1
  • 3

1

  • 7

2

  • 1

1

  • 7

Food total

  • 4
  • 5
  • 1
  • 1
  • 3
  • 1

Cereals

  • 4
  • 5
  • 1
  • 3
  • 1

Tropical beverages, sugar

  • 4
  • 5

1

  • 2
  • 1
  • 4

1

  • 3

Oilseeds, vegetable oils

  • 4
  • 5
  • 1

1

  • 1
  • 3
  • 1

Industrial raw materials

  • 3

1

  • 9

3

  • 1

1

  • 10

Agricultural raw materials

  • 1
  • 3
  • 4

2

  • 1
  • 5

Non-ferrous metals 6 2

  • 12

10 1 2

  • 13

Ferrous raw materials

  • 17
  • 9
  • 2
  • 8
  • 14
  • 7
  • 2
  • 9

Energy raw materials 17 15 6

  • 19

20 18 6

  • 19

USD/EUR 1.09 1.11 1.09 1.11

* HWWI index, total

USD terms EUR terms Quarterly percentage changes 2015 Q2 2015 Q3 2015 Q2 2015 Q3

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ELINKEINOELÄMÄN TUTKIMUSLAITOS, ETLA THE RESEARCH INSTITUTE OF THE FINNISH ECONOMY

Price Forecasts

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ELINKEINOELÄMÄN TUTKIMUSLAITOS, ETLA THE RESEARCH INSTITUTE OF THE FINNISH ECONOMY

20 40 60 80 100 120 140 160 00/1 02/1 04/1 06/1 08/1 10/1 12/1 14/1 16/1

Total Non-energy Energy

HWWI index in US $, 2010 =100

World Commodity Prices in 2000-2017

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ELINKEINOELÄMÄN TUTKIMUSLAITOS, ETLA THE RESEARCH INSTITUTE OF THE FINNISH ECONOMY

Energy, Metals and Minerals

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ELINKEINOELÄMÄN TUTKIMUSLAITOS, ETLA THE RESEARCH INSTITUTE OF THE FINNISH ECONOMY

Oil and coal prices: different profiles

20 40 60 80 100 120 140 160 00/1 02/1 04/1 06/1 08/1 10/1 12/1 14/1 16/1 Steam coal Crude oil Total excl. Energy HWWI - Index 2010 =100

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ELINKEINOELÄMÄN TUTKIMUSLAITOS, ETLA THE RESEARCH INSTITUTE OF THE FINNISH ECONOMY

  • 2
  • 1

1 2 3 4 5 6 82 84 86 88 90 92 94 96 98 2010/1 2011/1 2012/1 2013/1 2014/1 2015/1 2016/1 Million barrels per day

World Oil Balance

Surplus, scale to the right Demand Supply

IEA, ETLA

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ELINKEINOELÄMÄN TUTKIMUSLAITOS, ETLA THE RESEARCH INSTITUTE OF THE FINNISH ECONOMY

Break even Quantity Supply 0 P0 P1 Supply 1 B/E OPEC Shale oil production Q0 = Q1

Industry Cost Curve and Pricing of Crude Oil

E0 E1 Cumulative peak production in order of cost Ptemp

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ELINKEINOELÄMÄN TUTKIMUSLAITOS, ETLA THE RESEARCH INSTITUTE OF THE FINNISH ECONOMY

500 700 900 1100 1300 1500 1700 5000 5500 6000 6500 7000 7500 8000 8500 9000 9500 10000

7/01/2011 7/01/2012 7/01/2013 7/01/2014 7/01/2015 Numer of active oil rigs OIl production, 1000 b/d

The US Rig Count and Crude Oil Production

Crude oil production Number of rigs

Baker&Hughes, EIA, ETLA

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ELINKEINOELÄMÄN TUTKIMUSLAITOS, ETLA THE RESEARCH INSTITUTE OF THE FINNISH ECONOMY

Prices of Metals and Minerals

20 40 60 80 100 120 140 00/1 02/1 04/1 06/1 08/1 10/1 12/1 14/1 16/1 Total excl. energy Non-ferrous metals Ferrous raw materials (iron ore and steel scrap) HWWI index in US $, 2010 =100

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ELINKEINOELÄMÄN TUTKIMUSLAITOS, ETLA THE RESEARCH INSTITUTE OF THE FINNISH ECONOMY 70,0 75,0 80,0 85,0 90,0 95,0

800.000 900.000 1.000.000 1.100.000 1.200.000 1.300.000 1.400.000 1.500.000 1.600.000 1.700.000 1.800.000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

1000 tonnes

World Steel Production

Production Capacity utilization, %

OECD, Worldsteel, ETLA

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ELINKEINOELÄMÄN TUTKIMUSLAITOS, ETLA THE RESEARCH INSTITUTE OF THE FINNISH ECONOMY

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ELINKEINOELÄMÄN TUTKIMUSLAITOS, ETLA THE RESEARCH INSTITUTE OF THE FINNISH ECONOMY

200 400 600 800 1000

1990/1 1995/1 2000/1 2005/1 2010/1 2015/1

Steel Scrap and Iron Ore Prices, 2000 = 100

Iron ore Steel scrap

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ELINKEINOELÄMÄN TUTKIMUSLAITOS, ETLA THE RESEARCH INSTITUTE OF THE FINNISH ECONOMY https://www.fool.com.au/2015/07/17/the-mining-investors-handbook-part-3-iron-ore/

A Global Cost Curve of Iron Ore

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ELINKEINOELÄMÄN TUTKIMUSLAITOS, ETLA THE RESEARCH INSTITUTE OF THE FINNISH ECONOMY

Soft Commodities

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ELINKEINOELÄMÄN TUTKIMUSLAITOS, ETLA THE RESEARCH INSTITUTE OF THE FINNISH ECONOMY

20 40 60 80 100 120 140 160 180 00/1 02/1 04/1 06/1 08/1 10/1 12/1 14/1 16/1 Total excl. energy Textile fibres Wood products HWWI index in US $, 2010 =100

Prices of Agricultural Commodities

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ELINKEINOELÄMÄN TUTKIMUSLAITOS, ETLA THE RESEARCH INSTITUTE OF THE FINNISH ECONOMY

Food Prices: Wheat and Rice

100 200 300 400 500 600 700 800 900 1000 1100 00/1 02/1 04/1 06/1 08/1 10/1 12/1 14/1 16/1 Wheat (in US $ cents / bushel) Rice (in US $ / ton)

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ELINKEINOELÄMÄN TUTKIMUSLAITOS, ETLA THE RESEARCH INSTITUTE OF THE FINNISH ECONOMY

Beverages’ Prices: Coffee and Cocoa

600 1000 1400 1800 2200 2600 3000 3400 3800 40 60 80 100 120 140 160 180 200 220 240 260 280 300 00/1 02/1 04/1 06/1 08/1 10/1 12/1 14/1 16/1 <-- coffee (in US $ cents / lb) cocoa --> (in US $ / ton)

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ELINKEINOELÄMÄN TUTKIMUSLAITOS, ETLA THE RESEARCH INSTITUTE OF THE FINNISH ECONOMY

Conclusions:

World commodity prices at all-time-high in 2011

  • China’s rise, inadequate supply response

 Trend-wise decline after the peak until Oct. 15

  • Except oil, which fluctuated in 110 USD/bbl until June14
  • Slowing growth of China, lagged supply rises

Commodity prices to slow rise during the winter Strong inflation impacts (mainly from energy)

  • Strong negative contribution in moderation, turning into

moderate rise after Q2 in 2016

Risks: Growth in China, US MoPo, El Niño