Karachi, December 06, 2022 (PPI-OT): Pakistan Commodities: Geopolitics rein heavy on commodities

Oil prices have been under pressure of late, with Brent prices having traded down from a recent high of US$98.57/bbl reached at the start of Nov’22 – indicating a 15.7% retracement since then.

Going forward into 2023, we expect coal prices to recover back to levels preceding the Russia-Ukraine war in the medium term, as the winter season recedes and power generation based on renewable energy takes the forefront, which along with the expected global economic slowdown will reduce the demand for coal.

International scrap prices have shown major weakness since peaks in mid-April’22, declining by 40% since then, to currently hover around ~US$350/ton compared to FYTD/CYTD avg. of US$373/447/ton.

Cotton prices have continued to remain elevated in the global market with cotton trading in a narrow band of USc99/lb – Usc101.3/lb over the last few months. However, there are questions whether there will be enough demand to sustain prices at higher levels. A slowdown in the Chinese economy has led to fears of lower demand for oil in the near term, which has recently led to weakness in crude oil prices.