Commodity markets

Chemicals sector continues downward trend

The export burden of the German economy has become a problem in recent months. Even the local chemical industry cannot escape this problem due to its high dependence on foreign markets. After incoming orders had already fallen by more than 1% in 2018, the first nine months of this year saw a further sharp decline. In view of this development, it is not surprising that production in the industry also had to be cut back significantly: in the period from January to September it fell by 3.2% compared with the same period of the previous year. Capacity utilization at German chemical companies also tended to decline slightly last year. However, the decline was much more pronounced this year. Current capacity utilization, for example, is just over 80%; an even lower figure was recorded in the first quarter of 2010. Order backlogs were somewhat more positive, averaging the previous year’s level…

Rare earths: Beijing’s pledge of fist

  China exported so few rare earths in September as it has not done for more than two years. Australia, on the other hand, intends to significantly expand its exports of rare earths in the near future, with sales in the United States in particular set to increase. The USA is currently working on a cooperation agreement with Australia to promote the production of rare earths. This is intended to make the worldwide, but above all the US demand for the important metals more independent of the Chinese supply supremacy. For there is great concern that Beijing could impose an embargo on the export of raw materials against the USA, thus using its dominant position as a „weapon“ in the trade dispute – even if the two sides have recently come a little closer to settling the conflict. Rare earths are indispensable for today’s technologies, although metals are only needed…

Attack on oil production in Saudi Arabia

At the weekend there was a drone attack in Saudi Arabia on the largest worldwide oil refinery („Abkaik“) and the oil field („Khurais“). The state-owned company Aramco then reported a production loss of 5.7 MMBD, which is about half of the kingdom’s total production and about 5 percent of the world’s oil supply. In the history of oil, there was no such event in the history of production loss. Even the war in Iraq and the Iranian Revolution had less influence on oil production. The price of oil rose sharply due to the news and peaked at over USD 70. In the course of the day, however, the price fell noticeably and currently stands at around USD 66. It is to be expected that a) Aramco will be able to restart a good portion of production in a few days and b) the inventories of the state-owned company will be…

Geopolitical conflict does not raise oil price permanently

Tensions in the Persian Gulf are causing turbulence on the crude oil market. In the Strait of Hormus, Iran put an oil tanker sailing under the British flag on the chain. About one third of the crude oil transported by sea crosses the strait on the southern coast of Iran. The events are therefore being watched very closely. However, there is no sustained increase in the price of crude oil. One reason for this is that no further escalation is to be expected. Iran will only span the arc of conflict so far that a military conflict can be avoided. The USA is predominantly relying on the sanctions policy it has adopted against Iran and also wants to avoid a military escalation. The fixing of the tanker is also seen by many market participants as a return carriage on the Iranian tanker moored off Gibraltar. Tehran, meanwhile, is sending more…

Gold profiting from uncertainties

The price of gold has risen by around 9% since its low of 2018. Besides the rise in volatility on global stock markets, this increase is attributable to the current economic uncertainties. With the trade conflict between the USA and China still unresolved, investors are more greatly perceiving the risks to global economic development. Compounding this uncertainty are the political problems which are proving lengthy and complicated to resolve: besides the US budget blockade, the growing probability of a disorderly Brexit must also be mentioned in this regard. This general sense of uncertainty is thus being nurtured by greater financial market volatility, the current risks to global economic development and political quarrelling. This combination has significantly boosted investors‘ interest in gold. ETF investors alone have increased their stocks by 160 tonnes since the beginning of October 2018 – an increase of 7%. In addition to the greater need for investors…

Oil: How dependent is Saudi Arabia on US goodwill?

 The Brent crude spot price declined of late to as low as USD 58 per barrel. The main factor driving this renewed price slide was speculation that Saudi Arabia may expand production – in return for the recent public backing which the United States has given Riyadh in connection with the “Khashoggi affair.“ Saudi energy minister Khalid Al Falih announced that the desert state had ramped up its crude output from 10.6 mbd in October to “more than 10.7 mbd“ last month, explicitly in response to customer demand. However, anonymous speculation is flying around the market in the teeth of this official statement, claiming that production has been boosted to more than 11 mbd. In the context of the current “surplus supply debate“ and of market expectations that a supply cut by OPEC+ is in the immediate offing, it would obviously be extremely counterproductive for the price of black…

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