(Bloomberg) — A crisis in China’s steel industry is causing iron ore prices to plummet. Meanwhile, soybean stocks are at a record high in the Asian country. In the US, a hot summer is increasing demand for natural gas.
Most read from Bloomberg
Here are five notable charts in global commodity markets to consider as the week gets underway.
Iron ore
Iron ore is trading at its lowest level since 2022, making steel production one of the worst performing commodities this year. Shanghai rebar futures have collapsed to their lowest level in seven years amid declining demand from China, the world’s largest steel market, as officials grapple with a real estate crisis. Top producer China Baowu Steel Group Corp. warned of a bigger challenge for the sector than major recessions in 2008 and 2015. Market watchers including Macquarie Group Ltd. expect iron ore to remain under pressure as global supply looks to exceed demand.
Natural gas
The U.S. reported its first weekly decline in summer natural gas inventories since 2016, and the first for this time of year in at least a decade. A hot summer has caused people to blast their air conditioners, increasing demand for gas for the power plants that support the electric grid. The drop in supply is a telltale sign that gas, traditionally seen as a heating fuel, is becoming increasingly important for keeping the lights on and the air conditioning blowing in the warmer months.
Chinese soybeans
China last week made the biggest purchase of U.S. soybeans for the new crop since 2023, adding to a mountain of stockpiles. Still, the Asian country has been slow to secure U.S. supplies of the crops that farmers will begin harvesting next month, with excellent volumes at their lowest levels since Donald Trump’s trade war years. China has moved away from American purchases in recent years and benefited from Brazil’s bumper harvests. The country will start the 2024-2025 marketing year with enough soybeans to meet more than a third of the season’s demand – the highest since at least 2004.
Nuclear energy
The global nuclear industry has undergone a renaissance in recent years, with more than 80 small modular reactor (SMR) designs in development. But BloombergNEF doesn’t expect SMR to hit the grid until the 2030s, due to costs and regulatory challenges. Meanwhile, reactor projects, especially in the West, are continually behind schedule and cost more than expected. Electricite de France SA’s Hinkley Point C plant is still under construction and NuScale Power Corp.’s Idaho-based project. was discontinued due to high costs.
Mexican oil
Oil production at Mexico’s Petroleos Mexicanos has fallen to about half of its peak two decades ago. It’s a bad sign for the state-owned drilling company, whose conventional assets are drying up as it tries to dig itself out from under a nearly $100 billion debt burden. The focus may now shift to closer cooperation with the private sector, with an agreement being reached with drilling company CME Oil and Gas to drill deeper into two mature oil fields in the Gulf of Mexico, a plan that aims to increase production tenfold by 2028.
Most read from Bloomberg Businessweek
©2024 BloombergLP