HWWI commodity price index continues to rise
- HHWWI overall index increases by 18.7% (US dollar basis)
- Crude oil price rises by 27.3%
- Slight increase of 1.3% in the price of food and beverages
(Hamburg, 15 July 2020) The recovery of the HWWI commodity price index after the decline caused by the corona crisis continued in July. The HWWI commodity price index rose by an average of 18.7 % (euro basis: +14.9 %) compared with the previous month and stood at 77.5 points (euro basis: 76.4 points). Crude oil prices rose sharply. The sub-index for energy commodities rose in June by 21.9 % (euro basis: +18.1 %) to 72.7 points (euro basis: 71.7 points). The index for industrial raw materials also increased in June by 9.3% (euro basis: +5.9%) to 120.8 points (euro basis: 119.2 points). The index for food and beverages rose slightly by 1.3% (Euro basis: -1.9%) to 88.1 points (Euro basis: 86.8 points). Thus, the index excluding energy climbed by an average of 6.5% (Euro basis: +3.1%) and stood at 107.4 points (Euro basis: 105.9 points).
Index for energy commodities: +21.9 % (euro basis: +18.1 %)
As in the previous month, crude oil prices rose sharply in June following the losses in the first few months of the year. The three types of crude oil listed in the Commodity Price Index increased in price by an average of 27.3 % (euro basis: +23.4 %) and traded at USD 40.00 per barrel. This means that prices are still significantly below the level of the previous year.
The prices were driven on the one hand by positive current economic data from China and Europe and optimistic prospects for a further recovery in demand in the second half of the year. On the other hand, oil production in the OPEC countries fell to its lowest level in almost 30 years. This means that the OPEC+ countries are implementing the production cuts of 9.7 million barrels per day that they agreed on in April. The positive price development continues to be slowed down by the Corona crisis and the associated uncertainties.
In comparison, coal prices rose only slightly. In Indonesia and Australia in particular, production remains at a high level, while demand in the largest importing countries China and India is recovering only slowly.
On the markets for natural gas, the development typical of the summer months is evident. On average, prices fell by more than 5 %. After a mild winter, natural gas reserves are well filled. Demand from energy suppliers has fallen in recent months, resulting in oversupply. In addition to the seasonal development, a longer-term trend is also apparent. Compared to the same month last year, the price of British natural gas fell by more than half.
Overall, the sub-index for energy commodities rose by 21.9 % (euro basis: +18.1 %) to 72.7 points (euro basis: 71.7 points).
Index for industrial raw materials: +9.3% (Euro basis: +5.9%)
The sub-index for industrial raw materials is divided into the index for agricultural raw materials, the index for non-ferrous metals and the index for iron ore and steel scrap. As in May, prices for industrial raw materials continued to rise in June, reflecting the recovery of Chinese industry and the prospect of state-financed infrastructure projects as measures against the global corona crisis.
In particular, Chinese steel production increased and caused iron ore prices to rise significantly. A similar development with higher prices can also be observed on the markets for non-ferrous metals, with copper in particular increasing sharply in price. In addition to increased demand, reduced supply is also having an impact on prices. Due to strict hygiene measures in the copper mines in Chile, which is responsible for about a quarter of the world’s copper mining, production is expected to decline by 3.5 % in 2020.
The index for agricultural commodities also continued its rise. As the Chinese textile industry is ramping up production again after the relaxation of corona-related restrictions, demand for cotton increased and prices rose accordingly.
Overall, the index for industrial raw materials rose by 9.3 % (euro basis: +5.9 %) to 120.8 points (euro basis: 119.2 points) on a monthly average.
Index for food and beverages: +1.3% (euro basis: -1.9%)
The index for food and beverages rose slightly in June. The prices of all oilseeds and oils listed in the index rose, while the prices of cereals and luxury foods did not present a uniform picture.
The prices for soybeans and palm oil benefited from two factors. In addition to higher soybean exports from the USA to China and the slow lifting of the lockdown measures in the USA and Europe, the increased crude oil price ensures that biodiesel from oilseeds is once again a lucrative alternative to conventional petroleum products. In contrast, prices for coffee and cocoa fell. Low demand for both these semiluxury items is meeting with good harvest prospects in the main growing countries Brazil and Ivory Coast, which is lowering the price. In contrast, the lockdown and a rainy June in India reduced the tea harvest and drove up the price. The price of wheat fell for the second consecutive month. Before the forthcoming harvest, traders are selling their old stocks to create new storage capacity. A higher global yield is expected for the upcoming harvest period.
Overall, the index for food and beverages rose by 1.3 % on a monthly average (euro basis: -1.9 %) and stood at 88.1 points (euro basis: 86.8 points).
Source: www.hwwi.org