INVESTMENTS & PENSIONS
WHERE DO WE STAND ?
Despite challenges in the Chinese economy , commodities markets have remained resilient . The bedrock of demand for metals has structurally strengthened in the wake of the new transition policies . In the short term , commodities are expected to follow the gradual manufacturing rebound and potential reflationary measures by Chinese authorities . Copper , gold , and uranium are the most favoured commodities in the current environment , with investments focused on single stocks , Brazil and Chile , and inflation-sensitive fixed income instruments and FX markets .
Source : Carmignac , Bloomberg , 11 / 03 / 2024
Source : Carmignac , Bloomberg , 11 / 03 / 2024
OIL
Demand is relatively resilient across the world . Indeed the US economy has enjoyed ( and continues to enjoy ) strong fundamentals . Demand is good in Latin America and China and even excellent in India and South-East Asia . While in Europe it remains average , but showing signs of improvement along the slow start of a manufacturing rebound . Whereas supply remains constrained be it due to geopolitical tensions or OPEC cuts . Current oil prices at ~ 80 USD per barrel fairly reflect the opposition between this sustained demand environment versus recession risk concerns which would likely see oil prices at 60 USD / BBL .
NATURAL GAS
Winter is expected to end with record levels of gas storages – indeed the picture has radically changed from 2 years ago where concerns were of potential gas shortages .
The combination of government policies aiming at reducing consumption and one of the warmest winters of the past 30 years have weighed on demand . And current gas inventories can cover more than half of gas consumption of a typical winter in Europe or of 4 months ahead . While immediate supply has been secured in the aftermath of the Russian invasion of Ukraine , inventories are high and demand has been subdued pushing natural gas prices to pre-crisis level in Europe ( close to 3 year lows ) and US gas prices at all-time lows !
URANIUM
There has been a clear resurgence for nuclear energy across the world over the past few years . Output from nuclear power plants is expected to rise by about 3 % this year and next . China is ramping up its nuclear generation capabilities , now representing 16 % of global nuclear generation versus 5 % 10 years ago . And on the supply side , political uncertainties in Niger ( 5 % of global production ) have added to a tightly supplied market constraints . Further fuelled by the creation of physically backed ETFs on the fissile metal . Both provide for a favourable backdrop for the commodity .
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