Coal, gas lead 2022 commodities rally; recession fears greet New Year

Coal and natural gas markets were poised on Friday to end 2022 with strong gains after a global energy crisis triggered by the Russia-Ukraine war stoked a sharp upswing in prices, while tighter supplies expected in 2023 could fuel more gains. | Reuters

“From a fundamental perspective, the setup for most commodities next year is more bullish than it has been at any point since we first highlighted the supercycle in October 2020.”Global gas markets were roiled this year after Russia cut supplies to Europe and a major pipeline was damaged amid the war in Ukraine, leading European countries to import record volumes to ensure winter supplies.

Because Europe will continue importing LNG to rebuild gas inventories next year after winter, gas prices are expected to remain elevated amid limited new supplies coming on-stream. As for industrial metals, three-month copper on the London Metal Exchange has dropped more than 13 percent in 2022 and aluminium is down about 15 percent, even though both metals reached record highs in March.

“Iron ore is expected to remain strong in the near term and could follow through in the bull case of a major China credit easing …,” they said in a note. Nickel, the big outperformer in the metals segment, is on course for a 45- percent rise, its largest since 2010, partly due to a shortage of metal that can be delivered against the LME contract and partly because the market has been volatile since volumes shrank after a trading fiasco in March.Benchmark Chicago wheat futures jumped to an all-time high of $13.

“U.S. winter wheat is facing harsh cold weather and, even if the crop improves, we will have those supplies in the second half of 2023,” said a Singapore-based trader at an international trading company.

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