“Stockpiles of some of the global economy’s most important commodities are at historically low levels, as booming demand and supply shortages threaten to fuel inflationary pressures around the world.
“From industrial metals to energy to agriculture, the rush for raw materials and food staples has been reflected in futures markets, where a large number of commodities have flipped into backwardation — a pricing structure that signals scarcity…
“Battery grade lithium carbonate soared more than 400 per cent in 2021 to above $50,000 a tonne. With limited inventory, analysts at Citigroup believe “extreme” pricing will be needed to “destroy demand” and bring the market into balance.”
https://www.ft.com/content/d4766d00-75ee-4382-9373-f326c89630e1
“The cost of bunker fuel for the majority of commercial ships trading today is just $10.75 per tonne away from the all-time highs recorded in July 2008 with shipping warned to expect high fuel bills for the duration of 2022 and into next year…
“The global fuel mix for shipping is also changing thanks to the sky high prices for LNG.”
https://splash247.com/bunker-prices-near-all-time-highs/
“$100 Oil Threatens to Compound World Economy’s Inflation Shock.
“…much of the world will take a hit as companies and consumers find their bills rising and spending power squeezed by costlier food, transportation and heating… “The oil shock feeds into what is now a broader inflation problem,” said long-time Fed official Peter Hooper.”
“The world has been using a lot more oil than we thought: Remember all that missing oil I wrote about last month?
“…Well, those barrels are missing no more. As I feared, it turns out they’ve already been used up — in the refineries and petrochemicals plants of China and Saudi Arabia. That means oil balances are a lot tighter than the International Energy Agency previously thought.”
“Yield Spread Oil Ratio-Signaling Bear Market And Recession…
“This morning, the spread between the ten and two-year U.S Treasury yields has narrowed to just .405%, and oil (WTI) has moved above $92… when the ratio of these two financial indicators fell to zero (yields compressing faster than oil price is rising) in 1990, 2000, 2007 and 2020, a bear market and recession were in process.”
https://seekingalpha.com/article/4486913-yield-spread-oil-ratio-signaling-bear-market-and-recession
“Eurozone living standards are at risk of permanent damage if supply chain disruption does not ease soon, the European Central Bank has warned.
“Globalisation could be partially undone if businesses are ultimately forced to abandon their low-cost suppliers and shift to more expensive but closer sources of goods and materials.”
“European printers have warned that industries such as food and consumer goods could suffer significant disruption to their supply chains because of a growing shortage of paper.
“Strikes by thousands of workers at mills owned by forestry group UPM-Kymmene in Finland have exacerbated paper shortages…”
https://www.ft.com/content/6430685f-2754-4e76-a940-eaad4e32bcdb
“Europe’s Gas-Crunch Anxiety. Russia is showing no signs of increasing gas flows to Europe as tensions with the West over Ukraine enter a critical period.
“Supplier Gazprom again opted not to book any pipeline space for March to send gas to Germany via the key Yamal-Europe link, auction results showed.”
https://www.bloomberg.com/news/newsletters/2022-02-15/europe-s-gas-crunch-anxiety
“EU deepens investigation into Gazprom’s European business amid supply concerns.
“European Union antitrust regulators will knuckle down and boost information gathering on Gazprom’s European business, amid the continent’s escalating supply crisis and growing fears of a Russian invasion of Ukraine.”
“Germany Plans to Force Gas Firms to Secure Reserves for Winter…
“The plan — to be presented in spring — would put the onus on companies including energy giants Uniper SE, RWE AG and Gazprom PJSC to safeguard stockpiles in Europe’s top natural gas consumer, said the people, who asked not to be identified…”
“Last orders for Britain’s pubs as energy crisis strikes.
“Exorbitant energy prices could mean last orders for thousands of pubs already battling to survive with reduced takings and depleted cash reserves. A third of publicans have no cash to fall back on, according to a recent survey by the British Institute of Innkeeping…”
https://www.telegraph.co.uk/money/consumer-affairs/last-orders-britains-pubs-energy-crisis-strikes/
“UK petrol and diesel prices hit new record high.
“The AA, which provided the data, conducted a poll of 15,335 of its members. It found that 43 per cent are cutting back on car use due to inflated fuel prices – this figure rises to 59 per cent for young drivers and 53 per cent for motorists on lower incomes.”
https://www.autoexpress.co.uk/news/93906/uk-petrol-and-diesel-prices-hit-new-record-high
“London Tube and bus fares face biggest hike for a decade.
“Cost of using passenger services in capital to climb 4.8% as mayor seeks to rebuild TfL finances after pandemic… The increase comes amid an escalating cost of living crisis in the capital and followed petrol prices hitting record levels on Monday and ahead of looming rises to rail fares across the UK.”
https://www.ft.com/content/5a3f74f1-05ca-4279-9543-e418a87bed51
“A storm of protest swept Britain at the weekend when thousands of demonstrators took to the streets to vent anger at a cost-of-living crisis driving millions …into poverty.
“From Edinburgh to London, Manchester to Birmingham and Sheffield to Southampton, demonstrations took place in more than 40 towns and cities on Saturday.”
“China’s Property Woes Engulf London with Stalled Projects, Sales…
““China’s debt-saddled private developers face growing risks of a liquidity crunch, with home buyers and bondholders’ shattered confidence raising the specter of broader financial contagion,” Bloomberg Intelligence senior analyst Patrick Wong wrote in a note last week.”
https://finance.yahoo.com/news/china-property-woes-engulf-london-050022581.html
“Rapid Plunge in Developer’s Bonds Shows Transparency Risk in Chinese Property.
“Zhenro Properties Group Ltd.’s spiraling bond prices show just how risky it is to invest in Chinese developer debt — even when a repayment looks imminent. The firm’s $200 million perpetual bond was trading at 93 cents on the dollar before it plunged 59.3 cents Friday…”
“Premier Li Keqiang said China will increase support for agriculture in spring, in an effort to ensure the nation’s “stable and healthy” economic development, the official Xinhua News Agency reported.
“China will ensure adequate supplies of fertilizers and other goods used in farming, and stabilize their prices, Li said in written remarks to a national agriculture meeting held Sunday.”
“Omicron’s Threat to Global Economy Increasingly Runs Through China…
““Increased pandemic restrictions could lead to additional supply-chain disruptions, hold back the normalization of the global economy, and fuel global inflation, while capping Chinese economic growth.””
“Why supply chain crisis is a ‘big’ problem for furniture.
“Big, bulky and heavy. Furniture has been one of the biggest casualties of the global shipping and supply chain crisis as costs to transport a sofa or table are much higher than a pocket-sized iPhone or a pair of trainers.”
https://www.ft.com/content/10805068-2891-407f-827a-e446485a5d96
“How Supply Chain Issues Continue To Impact The Restaurant Industry.
“… receiving replacement parts and new equipment on time… has been tricky and challenging… keeping up with the soaring number of foodservice supply chain delays and interruptions …has been a huge roadblock… continued demand for takeout has exacerbated shortages of items, such as coffee cups, plastic straws, and to-go containers.”
“‘Sell What You Can’ Mood Grips Credit as Goldman Says Hold Cash.
“Credit investors are in a “sell what you can” mood in an environment of rising rates and political tensions, a Bank of America Corp. survey showed, with Goldman Sachs Group Inc. strategists telling clients to switch to cash.”
“Central banks should be cautious in calibrating a response to inflation…
“The US and the UK economies, it is said, are overheating as the threat from the pandemic recedes… This might seem a compelling argument but the idea that the US, the UK and the big economies of the eurozone are in the middle of a rampant boom doesn’t square with the facts.”
“Beware central bankers on monetarist war path.
“The state of the world economy is reminiscent of the period after the first world war in Europe… don’t be surprised if central banks cause a recession as they move into macho interest rate-hiking mood.”
https://www.omfif.org/2022/02/beware-central-bankers-on-monetarist-war-path/
“Hardship deepens amidst Syria’s frozen conflict.
“…while the frontlines have been largely frozen for years, an economic crisis is exacting an increasingly heavy toll across the fractured nation.
“The United Nations says the number of people in need of humanitarian support is greater than at any point since the war began.”
https://mobile.reuters.com/article/topNews/idUSKBN2KI075
“WFP: Rising food prices push Yemenis into ‘extreme poverty’.
“The humanitarian situation in Yemen is aggravated by the depreciation of the local currency, which reached more than 1,200 riyals against the US dollar in 2022. Before the outbreak of the Yemeni conflict in 2014, the dollar price was 215 Yemeni riyals in the local market.”
https://www.middleeastmonitor.com/20220213-wfp-rising-food-prices-push-yemenis-into-extreme-poverty/
“Starving Afghanistan families sending children to work as incomes plummet after Taliban takeover…
“A survey of 1,400 households across seven provinces of Afghanistan found that 82 per cent of Afghans have lost their income since the collapse of the former government and the Taliban takeover last August. Almost a third reported that they had no choice but to send their children out to work.”
You can read the previous ‘Economic’ thread here. I’ll be back tomorrow with a ‘Climate’ thread.
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