By Peng Qiang, 21st Century Business Herald Beijing
This week (Nov. 28-Dec. 2), crude oil prices rebounded from a low level shock, with WTI returning to the $80/barrel mark, and the European Union rushed to reach a consensus before the effective date of sanctions, agreeing to set the limit on Russian seaborne oil at $60/barrel, while Russia objected. Prices of natural gas and coal also saw gains as temperatures in the northern hemisphere dropped and heating demand picked up.
During the week, gold prices rose strongly, with the World Gold Council saying that gold remains a stable performing investment option amid growing global uncertainty risks; meanwhile, nickel and copper prices rose significantly due to a boost in the macro environment, while lithium prices continued to top out and fall. Steel market, steel prices rose slightly, raw material cost support is still strong, but the off-season effect is also gradually emerging.
Crude oil prices rebound from shocks
International oil prices rebounded from their lows this week with Brent crude oil futures closing at $85.511/barrel and WTI crude oil futures closing at $80.271/barrel. In terms of news, investors are currently in a wait-and-see mood ahead of the official implementation date of G7 crude oil sanctions against Russia and the OPEC+ meeting.
In the past November, OPEC crude oil production fell by the largest amount since 2020 to meet the latest production cut agreement previously reached by OPEC+. According to data cited by commodity information agency GoldLink, all OPEC members combined cut production by slightly more than 1 million barrels per day in November, bringing the organization’s total output down to 28.97 million barrels per day. The U.S. side has been urging OPEC to increase crude oil supply, but the market is expected to see little change in OPEC’s output policy.
EU Capped Price of Russian Crude Oil at $60/barrel
On Dec. 2, after a long argument and tug-of-war, EU governments finally reached a consensus and agreed to cap the price of Russian seaborne oil at $60 per barrel and will conduct regular reviews of the price cap to ensure that it is at least 5% lower than the average price of Russian oil.
This price limit proposal was endorsed by the G7 and Australia, among others, which hope to gradually reduce domestic imports of Russian crude oil and to push for the implementation of the price limit through sanctions pressure on shipping and insurance, thereby limiting the revenue Russia can earn from the sale of energy products. However, this price limit is also considered to be of little significance as the price level is not much different from the current selling price of Russian Urals crude oil.
At the same time, Russia has also stated that it will not accept oil price limits proposed by the G7, the EU and Australia, and is studying the introduction of corresponding measures.
Global Gas Prices Continue to Rebound
Natural gas prices continued to rebound in many parts of the world this week as temperatures in the northern hemisphere continued to fall. Data provided by Huatai Futures shows that on Friday, TTF gas futures on the Intercontinental Exchange settled at 135.562 EUR/MWh, up 9% from last Friday; NBP gas futures settled at 336.31 pence/Thm, up 16.59% from last Friday; LNG JKM main contract futures on the New York Mercantile Exchange settled at $31.76 per million British thermal units, up 6.01% from last week. This is 6.01% higher than last week.
Huatai Futures pointed out that in the Northwest European market, cooling expectations stimulated a rebound in heating demand, and a drop in wind power output stimulated gas and electricity demand, leading to a continued rebound in local gas prices; in the Northeast Asian market, falling temperatures boosted end consumption, but weak downstream demand in the Chinese market, coupled with high inventories in the Northeast Asian region, limited the extent of price increases.
Gold prices rose strongly
Gold prices have shaken lower since mid-November after being significantly higher, returning to strong growth this week. This week, New York gold futures prices rose to a high of $1818.7/oz and closed at $1812.13/oz on Friday, up 3.3% from last Friday; London spot gold peaked at $1804.34/oz this week and closed at $1797.71/oz on Friday, up 2.5% from last week.
At present, the expectation of the Fed’s monetary policy adjustment is still the main factor dominating the trend of precious metals. The World Gold Council commented that the risk of global uncertainty has grown significantly so far this year, and gold continues to receive attention from central banks, sovereign funds, pensions, funds and other institutional investors. On the domestic front, driven by both uncertainty and the devaluation of the yuan, yuan gold has been one of the best performing assets during the year.
Coal prices bottom out
With the arrival of winter and the opening of the heating season, the coal market is warming up again, CCTD China Coal Market Network pointed out that this week’s plunge in national temperatures brought expectations of better daily coal consumption and gradually improving downstream demand, but the main coal production areas are still affected by the epidemic disturbance, and the supply has declined in phases, overlapping with the inversion of shipping, traders cover the goods to sell, and market quotes rose by about 80 yuan/ton compared with last weekend.
CCTD pointed out that after this cold wave, the average temperature in most areas will have a significant drop from November, winter heating demand will drive the seasonal demand for coal to rise further. However, this winter peak season is short, the downstream inventory is high, if there is no high intensity and duration beyond the expected cold winter and serious production disturbance of the origin, coal prices continue to rebound or limited strength.
In the first three quarters, domestic raw coal production reached 3.32 billion tons, up 11.2% year-on-year. The National Development and Reform Commission issued a paper on November 30, pointed out that since the full-scale entry into the heating season, the national power plants under the control of the supply of coal to maintain a high level, for many days in a row than the consumption of coal, coal stocks remain at a record high of about 175 million tons.
Steel cost continues to strengthen
This week, Lange Steel’s national steel comprehensive price was 4163 yuan/ton, up 20 yuan/ton compared with last week, and the main varieties of prices were mainly stronger by oscillation. This week, the domestic steel mills blast furnace opening rate rose slightly, social inventory began to rise; iron ore prices rose slightly, scrap prices rose steadily, coke prices remained stable.
Lange Steel analysis pointed out that, due to the cost of raw materials again higher, making the profit margin of steel mills is compressed, limiting the release of steel production capacity; demand side, the rush demand gradually into the end of the epidemic factors also exist disturbances, steel social library again rose also shows the gradual emergence of the off-season demand effect, steel prices are expected to show next week will also be shockingly strong market.
Iron ore prices rose slightly
This week, iron ore prices continued to rise, with the price of the main domestic iron ore futures contract closing at 797.5 yuan/ton, up 39.5 yuan/ton from Friday; Platts iron ore price index rose to 107.3 U.S. dollars/ton, back to the 100 U.S. dollar mark. Lange Steel analysis pointed out that this week, with the domestic steel price shock rebounded slightly, as well as the steel production side of a small expansion, the price of imported iron ore has rebounded. At present, iron ore supply maintains a rebounding trend, the supply of domestic ore is gradually recovering, the arrival of iron ore ports is relatively stable, and port inventory continues to rise.
Lange Steel research data show that this week, 34 ports iron ore inventory is 123.17 million tons, an increase of 1.85 million tons from last week, and 5.31 million tons from the end of October. On the demand side, the current steel downstream demand is gradually weakening, coupled with the heating season environmental restrictions on production, steel production scale rebound space is limited, the demand for imported iron ore to maintain a low level. Overall, the current iron ore supply and demand pattern has not changed much, still remains relatively loose, is expected next week, the import iron ore price index will be narrowly oscillating.
Lithium prices retreated slightly
Lithium carbonate prices continued to fall this week. As of Friday, the price of battery-grade lithium carbonate in Shanghai Steel Union fell by 3,000 yuan/ton, with the average price reported at 575,000 yuan/ton; the price of lithium hydroxide fell by 2,500 yuan/ton, with the average price reported at 575,000 yuan/ton.
Center futures research report pointed out that the average price of lithium carbonate and lithium hydroxide fell this week, or due to the slowdown in downstream demand. According to the non-ferrous network research, downstream cathode material plant in November ternary materials 5, 6 series production reduction is more obvious, driving the overall lithium carbonate demand trend weakened.
Nickel prices rebounded slightly
This week, the price of nickel rebounded again, closing at $28,229 / ton.
Huatai Futures pointed out that the center of gravity of nickel prices moved up significantly this week, industry supply and demand did not change much, and price fluctuations are mainly affected by capital sentiment. The current global refined nickel explicit inventory increased slightly to 65,110 tons, but the absolute value is still at a historical low.
Copper prices rise sharply
After a continuous decline, copper prices bottomed out this week, Friday copper closed at $ 8472.8 / ton, up 9.4% from last Friday. Yangtze River non-ferrous metals network analysis pointed out that this week’s copper price trend first depressed after rising, mid-week by the macro-positive boost to the strong upward trend, the recent domestic and international macro situation is warm, boosting non-ferrous metals run on the strong side.
Post time: Dec-06-2022