Pakistan Commodities_Gaining steam from market disruptions, (AKD Daily, Mar 11, 2021)
AKD Daily
Pakistan Commodities: Gaining steam from market disruptions
- The recovery cycle of global commodities, initiated in 3QCY20, seems to be in full throttle in Feb’21, marked by crude benchmarks (up 13%MoM) returning to pre-pandemic levels and demand from China driving scrap prices higher (up 7.5%MoM). Meanwhile, coal prices are heading towards a breather (down 4%MoM).
- Factors driving crude benchmarks above US$65/bbl include: (i) cold rush in US regions leading to 2mn bpd decline in production amid (ii) Saudi Arabia’s unilateral cut of oil production by 1mn bpd in Feb-Apr’21. While global crude stocks continue to fall, the rebalancing of oil markets would continue to remain fragile.
- Coal prices have sustained the high ground, currently trading at USD88.1/ton against average of USD87.6/ton for Feb'21 as high winter demand dissipating has been offset by increased offtakes from China with the country coming back from New Year holidays.
- DAP prices have averaged at US$510/MT in Feb’21, up 73%YoY and 24%MoM amid global shortage of the commodity. However, current prices hover at US$580/MT, translating into local DAP price of PkR5,750/bag vs. current dealer transfer price of approximately PkR5,400/bag.
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