War and Net Zero offer opportunities across the commodity universe

Wednesday 27 April 2022

Commodity trends are driven by fundamental, geopolitical, structural and cyclical factors. Today, these are all supportive. Our constructive structural view on commodities is based on the green transition and potentially long-lasting demand supply mismatches among those base metals that are key to it. If we adjust the main commodity valuations for growth and inventories, they remain cheap (despite the recent rally) and are among the cheapest asset classes. Moreover, sanctions on Russia and impaired activity in Ukraine ports are creating a generalised shortage across a wide spectrum of commodities. The most acute issue for the Eurozone is the huge dependency on Russian natural gas for several European countries, exacerbated by increasing competition among buyers in markets such as China...

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