'Not a supercycle, but a supersqueeze': HSBC warned of a sudden spike in commodity prices
Energy and industrial metals prices are rising, but this growth is no longer demand-driven, according to the UK's largest bank
As long as the blockade of Hormuz remains in place, prices of industrial raw materials could soar at any moment / Photo: AustralianCamera/Shutterstock.com
Commodity markets are in a "super-squeeze": the longer the Strait of Hormuz is closed, the faster stocks are depleted and the closer the critical deficit, at which prices will go up sharply, warned HSBC. Analysts of the leading British bank emphasized that it is difficult to accurately predict the moment of such a jump.
Details
According to HSBC's assessment, commodity markets as a whole remain in a "super bullish" phase, but the current upswing is different from previous commodity booms: it is driven primarily by supply shortages rather than demand. "Instead of a 'supercycle,' we call it a 'supersqueeze,'" said HSBC analysts led by Paul Bloxham(quoted by Bloomberg). As long as the Strait of Hormuz is virtually closed, oil inventories risk shrinking to an irreducible operating balance, risking "non-linear price increases and real shortages," experts warned.
What about metals?
For aluminum HSBC sees steady demand, but the positive price dynamics is explained not only by it. "A key factor recently has been the damage to smelting capacity in the Middle East," the analysts pointed out.
With copper, according to the bank, the situation is different: "The growth of copper prices is primarily dictated by the demand factor".
Context
The risk that the blockade of energy supplies from the Persian Gulf will be prolonged keeps the oil market volatile, according to Trading Economics. On June 2, WTI crude futures fell 1% to $91 per barrel, after rising 4% a day earlier. ExxonMobil Senior Vice President Neil Chapman expects a new jump to $160 in a few weeks.
Meanwhile, copper prices - a leading indicator of the state of the global economy - approached $14,000 per ton, and the cost of aluminum soared to the maximum for more than four years, Bloomberg reports. The growth of quotations is accompanied by "bullish" forecasts from Wall Street. This week Goldman Sachs raised its forecast for copper at the end of the year by more than 10%, and Citibank in May said that the aluminum market is the most favorable environment for higher prices for at least the last half century.
This article was AI-translated and verified by a human editor
