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AKD Securities Limited – AKD Daily (January 13, 2023)

Karachi, January 13, 2023 (PPI-OT): Pakistan Commodities: China re-opening stirs major commodities

After starting the year off with weakness, crude oil prices have rebounded in the near past, driven by fears regarding China’s subdued demand easing off following recent data.

Global refining margins have continued to tick upwards amidst drop in refinery utilization due to snow storms in Texas, offsetting demand lows from holiday season resulting in larger than anticipated fuel inventory declines.

Richard’s Bay coal prices have continued to decline, currently hovering at US$167/ton compared to Dec’22/2QFY23 avg. of US$231/239/ton. Lower than anticipated heating demand due to milder winters in Europe and buildup of coal stockpiles in anticipation of winters has resulted in laggard demand for coal, leading decline in prices, particularly since mid-Dec’22.

Even with the winter season beginning to settle (seasonal construction slowdown), scrap has rallied 22% from lows of US$340/ton in Nov’22, to currently hover around ~US$418/ton compared to FYTD/ CYTD avg. of US$377/402/ton.