(Bloomberg) — A crisis in China’s steel industry is causing iron ore prices to fall. At the same time, soy stocks in the Asian country have reached a record high. In the United States, a hot summer is increasing demand for natural gas.
Here are five key charts from the global commodity markets to keep an eye on as the week begins.
Iron ore
Iron ore is trading at its lowest level since 2022, making the steel industry staple one of the worst-performing commodities this year. Shanghai futures for rebar have fallen to a seven-year low as demand from China, the world’s biggest steel market, wanes while authorities grapple with a housing crisis. Leading producer China Baowu Steel Group Corp. warned of an even bigger challenge for the industry than the major economic downturns in 2008 and 2015. Market observers such as Macquarie Group Ltd. expect iron ore to remain under pressure as global supply appears to outstrip demand.
natural gas
The U.S. reported the first weekly draw in summer natural gas supplies since 2016, and the first for this time of year in at least a decade. A hot summer has prompted people to run their air conditioners at full blast, increasing demand for gas to power the power plants that feed the grid. The drop in supply is a telltale sign that gas, traditionally considered a heating fuel, is becoming increasingly important in the hotter months to keep the lights on and air conditioners running.
China Soybeans
China last week made its biggest purchase of U.S. soybeans for the new crop since 2023, adding to a mountain of stockpiles. Yet the Asian country has been slow to secure U.S. supplies for the crop that farmers will harvest next month, with outstanding volumes at their lowest since the years of trade war under Donald Trump. China has steered clear of U.S. purchases in recent years, benefiting from Brazil’s bumper crops. The country will begin the 2024-25 marketing year with enough soybeans to meet more than a third of its needs for the season – the most since at least 2004.
Nuclear energy
The global nuclear industry has experienced a renaissance in recent years, with more than 80 small modular reactor (SMR) designs in development. However, BloombergNEF does not expect SMRs to be introduced into the grid until the 2030s due to costs and regulatory challenges. Meanwhile, reactor projects, particularly in the West, are continually falling behind schedule and costing more than anticipated. Electricite de France SA’s Hinkley Point C plant is still under construction and NuScale Power Corp’s Idaho-based project was canceled due to high costs.
Mexican oil
Oil production at Mexico’s Petroleos Mexicanos has fallen to about half its peak 20 years ago, a bad sign for the state-owned oil company, which is running out of conventional assets as it tries to dig its way out of a nearly $100 billion debt burden. Now it may shift its focus to working more closely with the private sector, and has struck a deal with oil major CME Oil and Gas to move deeper into two mature fields in the Gulf of Mexico, with the aim of increasing production there tenfold by 2028.
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