Raw materials, in general in this 2021, stood out positively, recording the best annual performance of the last twenty years, mainly driven by the energy sector. Prudent OPEC + policies have supported oil prices, while scarce supplies coupled with reduced Russian flows signal that gas prices should continue to be supported in the coming months.
Starting from these premises, ING experts outline what could be the possible scenarios in the making over the next year. INg’s Outlook 2022 on the commodity front highlights how change is coming. The supply of many raw materials is increasing e any economic slowdown, whether linked to Covid or not, will weigh on prices. Also an US dollar stronger and greater monetary policy tightening will play an important role.
Ing’s outlook focuses on three commodities in particular.
The oil market can go back into surplus
Ing believes that in 2022 we will see a drop in oil prices from high levels achieved in recent months. Ing’s expectation is that the strong growth in non-OPEC supply, combined with further easing of OPEC + supply cuts, will bring the global oil market back into profit next year. Our view is that the market starts building stocks again in the first quarter. Consequently, Brent is estimated on average at $ 76 / bbl for the entire year 2022. “The Omicron variant is a clear downside risk”, remarks Ing.
European gas prices will remain high with so much volatility
Concerns about low gas storage levels in Europe have not abated and this could be a problem all winter as the demand for heating only increases. “These rigidity concerns should mean that prices remain high, but volatile for the remainder of this year and early next year,” says Ing. gas prices in Europe will begin to decline once the peak of winter demand has passed, but will remain seasonally high for much of 2022.
Aluminum with an edge among metals
Most metals markets are expected to be better supplied in 2022, says Ing. This suggests that prices will tend to decline. Monetary tightening and a stronger US dollar should provide further obstacles. However, aluminum is likely to be the outlier. “The aluminum market is entering a structural deficit, given the lack of investment from foundries. While we will see some foundries recover production capacity over the course of 2022, it will not be enough to ease the squeeze on the market. As a result, we expect prices to approach on average US $ 3,000 / mt in 2022“.