Recession fears unleash carnage across commodity markets

Recession fears have hit commodity markets combined with the energy crisis which is unfolding worldwide. As commodity prices crash  the carnage across commodity markets has dragged the $A to a two-year low of US67.62¢ , down 1 per cent. The safe haven US Dollar Index jumped 1.3 per cent to 106.5, a new two-decade high.

Those companies with cheap energy will overtake all others that are now no longer competitive due to higher power costs. China will benefit to a degree as Chinese power costs are considerably lower than those in Europe.
The Chinese power cost plus the Chinese export tax however will ensure that OM Sarawak smelters will now become the cheapest alloy producer in the world. As other companies such as OFZ in Slovakia and Ferroglobe in Spain and France close due to low commodity prices and higher power costs the void will be filled by OM Holdings as the smelter is expanded to become the largest in SE Asia (outside China).

Recession fears unleash carnage across commodity markets
Jul 6, 2022 – 10.26am

Commodity prices collapsed and the Australian dollar plunged to a two-year low as anxiety about a global recession zapping demand for raw materials hit fever pitch.
Traders were spooked as the US 10-year and two-year bond yields inverted again overnight, flashing a recession alert. That meant short-term rates briefly exceeded long-term rates, indicating a growth shock ahead.

European gas prices surging to a four-month high as oil workers in Norway launched a strike due to a dispute over wages. The strike was forcibly concluded with government intervention.
“The energy crisis overlay could explain the more bearish tone evident in Europe,” National Australia Bank analysts said.
Fears about the European economy, combined with US dollar strength, dragged the euro to a 20-year low against the greenback. The European currency is moving closer to parity with the US dollar, with 1 euro trading at about $US1.027.