Commodity Calls: Week Ending 11 October 2024

Korea helps the Philippines with its nuclear reactors, oil prices fall as hopes of ceasefire diminish war risk, and Rio Tinto makes a record-breaking lithium acquisition.

Join Global X each week for ‘Commodity Calls’ to explore all the recent signals and developments that occurred in the world of commodities.

Looking for more? Check out this week’s Market Moves and Thematic Spotlight.

Uranium

Bullish

• The US Department of Energy (DOE) has awarded six companies with contracts upwards of US$2 million each to provide deconversion services in the US.¹ These contracts will last for a decade, with up to US$800 million available for the employment of these services. Deconversion is a process in the production of enriched uranium fuel.
• Korea Hydro & Nuclear Power (KHNP) will conduct a feasibility study on behalf of the Philippine government to evaluate the possible start up of a 40-year-old nuclear power plant.² The Bataan nuclear plant was completed in 1984 as a response to global oil crisis but was never loaded with fuel or operated due to earthquake concerns.
• More than 70% of Kazakhstanis have voted in favour of the construction of nuclear power plants during Kazakhstan’s recent referendum.³ Kazakhstan is the world’s leading producer of uranium but does not use nuclear energy.

Bearish

• China is planning to build the world’s first ever thorium-based nuclear power station by 2030.⁴ According to experts in the industry, thorium is “inherently safer” than uranium fuel, but scientists have thus far struggled to make the technology feasible.

Explore uranium with ATOM.

Crude Oil

Bullish

• Hurricane Milton, initially forecasted to be a once-in-a-century weather disaster, pushed oil demand higher as residents flee its path of destruction.⁵ Florida, the area most affected by the disaster, saw record gasoline demand due to huge numbers of residents looking to evacuate.

Bearish

• Crude oil prices fell after the Chinese National Development and Reforms Commission failed to announce any policy support for the economy.⁶ A slowing Chinese economy will likely have negative effects on oil demand over the next few months.
• Crude oil’s war risk premium is falling after Reuter’s reported that the Hezbollah may be open to a ceasefire that is not contingent on a truce in Gaza.⁷ The possibility of an end to the hostilities has eased the risk of disrupted supply.

Explore crude oil with BCOM.

Lithium

Bullish

• Mining giant Rio Tinto has acquired Arcadium Lithium in an all-cash transaction valued at US$6.7 billion. The move catapults Rio Tinto into one of the world’s premier lithium miners behind only world no.1 Albermarle and Chile’s SQM.
• Zimbabwe is looking to introduce incentives to encourage mining companies operating in the country to process their output locally.⁸ The country has already banned the export of multiple critical metals including lithium over the past two years.

Bearish

• The US Department of State has accused Chinese lithium producers of ‘flooding’ the global market in order to eliminate competing projects.⁹ China currently accounts for two-thirds of global lithium output, which is mainly used in the production of EV batteries.

Explore lithium with ACDC.

^{Forecasts are not guaranteed and undue reliance should not be placed on them. This information is based on views held by Global X as at 14/10/2024. Investing involves risk, including the possible loss of principal. Diversification does not ensure a profit nor guarantee against a loss.}

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^{This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. This information is not intended to be individual or personalised investment or tax advice and should not be used for trading purposes. Please consult a financial advisor or tax professional for more information regarding your investment and/or tax situation.}