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Key Charts to Monitor in Global Commodity Markets This Week

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Key Charts to Monitor in Global Commodity Markets This Week

The global commodity markets are presenting several noteworthy trends and indicators to watch this week. Here are five key charts that provide insights into the current state of these markets:

Jet Fuel Demand

With the holiday season approaching, it is essential to monitor air travel and its impact on global passenger jet fuel demand. Forecasts suggest a 25% increase in demand in 2023 compared to the previous year, indicating a continued recovery for the industry, particularly in Asia. Higher costs may be expected due to elevated jet fuel prices and supply tightness.

Shipping Rates

Global freight rates are facing pressure due to reduced demand, excess supplies, and an economic slowdown. Trade volume shrinkage for metals, grains, and plastic goods has led to a decrease in container and bulk freight indexes. The Drewry World Container Index has even reached pre-pandemic levels. This decline prompted A.P. Moller-Maersk A/S, a significant player in global trade, to cut jobs in preparation for a subdued environment ahead.

Oil Prices

Oil prices have experienced a decline in recent weeks due to softer demand. Factors such as US stockpile builds and the containment of the Israel-Hamas war have offset concerns over tightening global supplies. Monitoring oil prices is crucial as they continue to be influenced by various market dynamics.

Power Generation

California's renewable energy sector, dominated by solar and wind power, is facing challenges related to grid congestion. The state's grid operator has been curtailing electricity generation from these sources due to capacity limitations. The increasing curtailment of utility-scale wind and solar output poses obstacles to the growth of renewable energy in the state.

US Offshore Wind Industry

The US offshore wind industry is encountering setbacks as major developers, including Orsted A/S, BP Plc, and Equinor ASA, face significant writedowns on projects. These impairments may impact future investments and hinder President Joe Biden's goal of deploying 30 gigawatts of offshore wind capacity by 2030. Challenges such as higher turbine costs, supply chain bottlenecks, and financing difficulties are contributing to the industry's struggles. In conclusion, monitoring these key charts in global commodity markets provides valuable insights into the trends and challenges facing various sectors. Understanding these dynamics is essential for businesses and investors operating in these markets.

The Impact of Global Commodity Market Trends on New Businesses

The current trends in global commodity markets, as highlighted in the key charts, can have significant implications for new businesses.

Jet Fuel Demand and Shipping Rates

For startups in the aviation and shipping industries, the projected increase in jet fuel demand and the decrease in global freight rates could influence operational costs and profit margins. With jet fuel prices expected to rise due to increased demand and supply tightness, new airlines may face higher operational costs. Conversely, the reduced demand and excess supplies causing pressure on global freight rates could potentially lower costs for new businesses in the shipping sector.

Oil Prices and Power Generation

The recent decline in oil prices due to softer demand and the challenges facing California's renewable energy sector could also impact new businesses. Startups in industries reliant on oil for their operations could benefit from lower prices, while those in the renewable energy sector may face obstacles due to grid congestion and curtailed electricity generation.

US Offshore Wind Industry

For new businesses in the US offshore wind industry, the current setbacks faced by major developers could pose significant challenges. These difficulties could deter future investments and impede growth, especially given President Joe Biden's ambitious goal of deploying 30 gigawatts of offshore wind capacity by 2030. In conclusion, understanding these global commodity market trends is crucial for new businesses to navigate potential challenges and seize opportunities.
Story First Published at: https://financialpost.com/pmn/business-pmn/five-key-charts-to-watch-in-global-commodity-markets-this-week-26
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