(Bloomberg) — Gasoline consumption in the US continues to increase as the summer driving season gets underway. Elsewhere, stockpiles of thermal coal at Chinese ports are on the rise, while surging copper inventories signal a softening market. Here are five charts to consider in global commodities this week.
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Thermal coal stockpiles at China’s ports are at the highest levels since April 2020 as companies import the power-plant fuel to meet summer demand. A slowdown in consumption of the fuel in Europe means more supplies are seeking a home in Asia. That’s coinciding with higher rail shipments of domestic coal from Chinese mines. Qinhuangdao port’s inventories surged in May after the key Daqin railway line ended a month of repairs.
Americans are driving more as the summer season kicks off, as suggested by the latest weekly gasoline-product supplied figures from the US Energy Information Administration. Implied demand on a four-week average basis climbed 1.3% in the most recent period to 9.2 million barrels a day. That’s the highest level since December 2021 and above the five-year average. The increased demand comes as national pump prices have remained just above $3.50 a gallon since April and are about 25% lower than a year ago. Meanwhile, total gasoline inventories continue to slide.
It’s no coincidence that the worst month for copper prices in almost a year took place as global inventories of the metal jumped by 54% in May. To be sure, stockpiles held in London Metal Exchange warehouses had slumped to an 18-year low in mid-April, standing at less than a week’s worth of consumption, amid high expectations for China’s emergence from Covid-related lockdowns. The inventory surge since then reflects the Asian nation’s stuttering recovery. The inverse correlation between prices and stockpiles has continued in the past week, with a modest drawdown in stocks coinciding with the futures market snapping a six-week losing streak as China works on new measures to support the property market. Copper prices are up about 2% in June.
American wheat, corn and soybeans will be in focus Friday when the US Department of Agriculture releases its monthly World Agricultural Supply and Demand Estimates report. Futures prices have retreated this year amid favorable weather for farmers, with wheat especially hard hit, slumping for an eighth straight month in May. But hefty declines could lure importers and provide support for prices in the weeks ahead. Torrential rains in top wheat consumer China have waterlogged crops in parts of Henan, the biggest producing province, potentially bolstering the need for more overseas supplies, while Saudi Arabia’s main grain-buying agency said last week it’s seeking to purchase wheat for September-October delivery.
Bullion-backed exchange-traded funds have attracted three straight months of inflows, providing crucial support to prices that have been kept in check by global central banks’ aggressive monetary policy tightening. Positive fund flows were a key pillar in spot gold’s rally to a record high in August 2020. And while gold has recently retreated from the closely watched level of $2,000 an ounce, it’s still up almost 7% this year. Focus will now turn to the Federal Reserve’s June 14 meeting, with investors expecting policymakers to hold steady on interest rates. A mixed US jobs report last week did, however, push traders to up their bets of the Fed raising rates by the end of July. Higher rates diminish the investment appeal of non-interest bearing assets like gold, so the precious metal will likely continue to see some volatility in the months ahead.
–With assistance from Ann Koh, Yvonne Yue Li, James Attwood, Dominic Carey and Liezel Hill.
(Updates with June copper prices in fourth paragraph and refreshes agriculture chart with Monday trading.)
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