(Bloomberg) — Houthi attacks on merchant shipping in the Red Sea continue to menace global trade, threatening food supplies and delaying oil deliveries to Europe as tankers switch routes to travel the longer way around Africa. Even so, crude futures remain subdued as are charter rates to at least one destination. Meanwhile, a price slump deepens for minerals critical to electric-vehicle batteries just as Tesla Inc. is poised to report quarterly earnings, shedding light on EV adoption. Agriculture traders will be closely monitoring the US Department of Agriculture’s monthly cold storage report Wednesday for clues on demand.
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Here are five notable charts to consider in global commodity markets as the week gets underway.
Tensions in the Middle East remain front and center with no let-up in attacks by the Iran-backed Houthi militants in the oil-rich region despite US-led airstrikes. Still, crude futures are taking little notice as the crisis has yet to take a direct hit on production in a world of ample supplies. West Texas Intermediate futures traded in a $4.41 range last week, while the global benchmark Brent remains below $80 a barrel. Oil edged higher Monday, following the broader market.
Attacks on vessels in the Red Sea have raised concern about an escalating situation in the region, but charter rates for massive oil tankers to at least one destination are painting a slightly different picture. So far, those ships don’t appear to have been purposely targeted and that’s putting a lid on transport costs for the key Arab Gulf-to-China route. While the cost to charter Very Large Crude Carriers (VLCC) spiked after Hamas’s attack of Israel in early October, rates are now below $40,000 a day and heading back down toward the five-year average, according to data from Galbraiths. The Middle East produces about a third of the world’s crude and most is sent to Asia.
Spot prices of lithium carbonate — a refined form of lithium — continue to slide. After surging to a record in late 2022 on the promise of electrification in the automotive sector, prices have plunged more than 80% as the market grappled with shortage fears to oversupply. That has forced Albermarle Corp. — the world’s biggest lithium producer — to reduce project spending and costs. Even so, the appetite for the indispensable metal in the making of EV batteries is set to grow. Investors will be keenly watching fourth-quarter results from Tesla on Wednesday for insight on sales and the demand outlook. The automaker’s profitability continues to be eroded by vehicle price cuts.
Chilled US stockpiles of pork bellies, the cut used to make bacon, are trending below average. That comes amid a decline in overall pork production that’s helping push up wholesale prices, which are at the highest since late September. Traders will be focused on the USDA’s monthly cold storage report for the latest on pork demand, as well as other meats, dairy goods, poultry, fruits and vegetables.
At a time of frigid temperatures in the US, one would expect to see soaring prices of natural gas — the heating and power fuel. Not so. Unusually high inventory levels and shifting forecasts to warmer weather have kept prices in check. Futures tumbled 24% last week, capping the biggest weekly selloff since December 2021, after a lower-than-expected storage withdrawal renewed concerns over a supply glut. Still, volatility will likely remain with two months of winter remaining in the Northern Hemisphere. Natural gas traded lower on Monday.
–With assistance from Millie Munshi.
(Updates with Monday’s oil prices in third paragraph and natural gas prices in final. Refreshes oil, shipping, lithium and natural gas charts.)
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