Gardiner & Theobald LLP’s Post

#commoditymarkets 📈heating up. The current scarcity of capex juxtaposed with the upsurge in #construction expenditure fueling #materials #demand. Higher commodity prices will balance these markets in the face of these structural #supply #constraints.

During 2023, the OW Lead Indicator switched back to green again, indicating that the industry should start recovering from Q2 2024. The current decline in demand can be attributed to multiple factors, including the normalization of growth rates after the post-COVID, weak demand in Europe and China, and supply chain crisis rebound. Additionally, the increased interest rates are particularly affecting the industrial goods industry, with sectors heavily dependent on the construction industry being especially impacted. https://lnkd.in/gguUDPAY

In Q1 2024, the industrial sector saw rising vacancy rates and slowing rent growth after a period of record demand. New supply continued to increase vacancy rates, but construction is expected to slow. Demand is declining due to factors like interest rate hikes and supply chain issues. Despite increased touring activity, economic uncertainty and rising producer prices pose challenges for the sector's outlook. Read more via Connect CRE: https://bit.ly/4aqFY9d. 

Domestic commodities experienced volatile market fluctuations last week as the anticipated LPR cut did not materialize, dampening market sentiment. On the other hand, automobile demand remained strong, though more automobile dealers exited the ongoing price war. Project construction remained slow despite improved funding utilization rate. With housing sales during the peak season falling short of expectations and prices continuing to decline, expectations for further policy relaxations strengthened by the end of September.  Infrastructure activity accelerated, with a primary focus on water conservancy projects, driven by the faster issuance of local government bonds. Read the full report below https://lnkd.in/gPw2YqJB #ChinaMacro #ChinaEconomy #ChinaGrowth #Commodities #CommodityMarkets #EconomicTrends #GlobalEconomy #Macroeconomics

The new spotrate date from Drewry’s WCI was released today. Not surprisingly the Asia-Europe rates continued to decline, but the pace of the decline slowed. It could be early to call, but if the current pattern and slow-down continues we might see Asia-North Europe go towards a level around 4000 USD/FFE. This is to be compared with 1500 USD/FFE before the crisis and around 5000 USD/FFE at the peak 3 weeks ago. Similarly, the Asia-Med rates, if they continue the present trajectory, at going for a level around 5000 USD/FFE, which compares to 1700 USD/FFE before the crisis and 6400 USD/FFE at the peak. Note that this is purely based on the trajectory seen presently. On the Pacific both USEC and USWC have reached a plateau but are not yet showing any material decline. The westbound Atlantic headhaul continues the successful rate resosoration. Keep in mind that spot rates here had collapsed last year and were at unsustainable levels. Over the past two weeks we have seen the spot rate level according to WCI increase from approx. 1600 to approx. 2200 USD/FFE. In 2018-2019 before the pandemic the spot rate levels in this trade fluctuated between 2000-2500 USD/FFE.

In its latest short-range outlook, worldsteel said the demand will decrease to 1,751 million tonnes (mt) in 2024 but would climb to 1,772 mt in 2025. Earlier in the year, worldsteel in its short-range outlook had forecast that demand will see a 1.7 per cent this year rebound this year to reach 1,793 mt. The association had pegged 2023 crude steel at 1,831.5 mt, up 1.8 per cent compared with 2022. The ongoing weakness in housing construction — which is driven by tight financing conditions and high costs — has been cited as the reason for the sluggish demand for steel. Martin Theuringer, Managing Director, German Steel Association and Chair of the worldsteel Economics Committee, said, “2024 has been a difficult year for global steel demand as the global manufacturing sector continued to grapple with persistent headwinds such as declining household purchasing power, aggressive monetary tightening, and escalating geopolitical uncertainties.” #SteelDemand #GlobalSteelMarket #SteelIndustry #SteelProduction #SteelOutlook #ManufacturingTrends #ConstructionSector #EconomicTrends #HousingMarket #GeopoliticalUncertainty #GlobalEconomy #MonetaryPolicy #RawMaterials #2024Forecast #worldsteel #SteelAssociation #SustainableSteel #SteelGrowth

Figure 1 provides a bird’s eye view of the current state of the economy. On a month-on-month basis, several sectors were weaker in May. Mining, manufacturing, electricity generation, construction (buildings reported as completed to larger municipalities), wholesale trade, retail trade, motor trade and road transport all recorded a weaker ⬇ month. On the upside ⬆  tourist accommodation; restaurants, catering & fast-food; and rail transport were stronger. https://lnkd.in/dk3BHCYc

The SCSI has released their latest Tender Price Index. Some of the key findings of the report include: - National annual rate of commercial construction inflation is now running at 3% - down from 6.2% this time last year - Median Tender Price Inflation for the first 6 months of 2024 by region: Connacht/Ulster 1.5%, Dublin 0%, Leinster (excluding Dublin) 1.5%, Munster 2.5%.  - Commercial construction tender prices increased by 1.5% in the first half of 2024 (similar to the 1.5% recorded for the last 6 months of 2023) - Reduction in rate due to reduced price volatility for construction materials https://lnkd.in/eqXb3vWb

The slower year-on-year growth in construction materials wholesale prices in Metro Manila may have to do with lower global crude oil and other global commodity prices. Higher global interest rates could have slowed global trade and economic activity, leading to lower demand for commodities including those used in construction. https://lnkd.in/guVaWQEK