It’s looking good for the transitory inflationists as energy prices free fall around the world. The oil price has flamed out as the US and China combine to thwart Goldman Sachs with releases of strategic reserves. Europe’s COVID outbreak and the Chinese property bust are not helping:
Even Goldman admits a surplus now looms in the near future:
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Chinese coal continues to correct at pace. Inventories are rising fast despite rising winter consumption as mine output booms:
China will have a thermal coal glut in a matter of months.
Seaborne thermal coal prices will kee falling and should be below $100 in H2, 2022:
Coking coal is looking even weaker. Front-month futures are now getting creamed:
I expect to be back at $120 or below in H2, 2022. If China doesn’t stimulate it will keep on falling,
Finally, there is gas, which also fell Friday. JKM was whacked:
As European panic eased:
The base case now is that global energy prices fully normalise over the next six months. The corollary is how low prices will need to go to shake out too much supply?
This should contribute a lot to deflating metals prices as well.