Analys
Ingen tvärbroms på råvarornas supercykel
När Kina ställer om ekonomin till att drivas mer av inhemsk konsumtion lär det leda till både lägre tillväxttal och ändrad råvarukonsumtion. Betyder det att råvarornas så kallade supercykel är över? Både ja och nej.
Kina håller i snabb takt på att ställa om ekonomin från infrastrukturinvesteringar och export av lågförädlade varor som största drivkrafter, till en mer uthållig tillväxt driven av inhemsk konsumtion. Det kommer att leda till lägre tillväxttal framöver, och till en helt annan profil på Kinas råvarukonsumtion.
I det stora perspektivet kan omställningen av Kinas tillväxtmodell bara beskrivas som helt naturlig. Det är en utveckling som ska komma när människor får det bättre, blir bättre utbildade, ökar medvetenheten om miljöpåverkan och så vidare. Drivkraften hos invånarna skiftar: Från att arbeta maximalt för att kunna skicka hem pengar till anhöriga, arbetar de för att njuta mer av livet eller kunna leva lite mer västerländskt.
Men utvecklingen har också lett till resonemang runt att råvarornas så kallade ”supercykel” (se faktaruta), skapad av Kinas oerhörda tillväxt de senaste tio åren, är över. Det finns ett väldigt tydligt samband mellan å ena sidan hur nationer tar sig ur fattigdom och utvecklar en medelklass, och å andra sidan hur efterfrågan på råvaror ser ut. Förenklat kan man säga att industrialisering leder till stigande ekonomiskt välstånd som bygger på att en fysisk infrastruktur utvecklas, med allt från bostäder och vägar till fabriker, bilar, broar, järnvägar och flygplatser. I Kina har dessa infrastrukturprojekt antagit närmast ofattbara proportioner under de senaste två decennierna. Det har skapat en gigantisk efterfrågan på råvaror, som i sin tur lett till kraftiga prisökningar. Det mest framträdande exemplet är koppar som under de senaste tio åren stigit med 390 procent.
Kina har under de senaste tio åren gått från cirka 3 000 dollar i BNP per capita till strax under 10 000 dollar. Just det intervallet brukar vara den mest råvaruintensiva fasen i ett lands utveckling. Efter att BNP per capita överstigit 12 000 dollar planar råvarukonsumtionen normalt ut, och ändrar framför allt karaktär.
Det kan dock visa sig vara lite tidigt att dra slutsatser angående den kinesiska drakens aptit på de mer basala råvarorna såsom metaller och annat som behövs för infrastrukturbyggen. Kina är som bekant en gigantisk nation. Det är dessutom en nation med stora regionala skillnader. Detta gör att det kan vara vanskligt att använda samma analys som i andra, mindre länder. De regioner i Kina som nått längst i ”industrialiseringen” och som vid utgången av 2012 låg över 20 000 dollar i BNP per capita är Beijing och Shanghai, samt de regioner som ligger i dessa megastäders närhet. Det är dock viktigt att ha i åtanke att i dessa regioner bor ”endast” cirka 60 miljoner invånare. Tittar man på hur stor del av Kinas befolkning som ligger över 12 000 dollar i BNP per capita så landar summan på strax under en halv miljard invånare. Det är närmast ofattbart stora siffror.
Men – det betyder i sin tur att 850 miljoner människor, framför allt i inlandet, ligger kvar på väldigt låga nivåer när det gäller välstånd, utveckling och urbanisering. Det är 100 miljoner fler invånare än vad som bor i hela Europa (inklusive Ryssland). Dessa 850 miljoner har inte gjort den resa som den mer utvecklade delen av Kina gjort, och det är dit som en allt större del av tillverkning och ysselsättning nu flyttar.
Megastäderna har nämligen blivit väldigt dyra för arbetssökande att flytta till, och löneinflationen har varit mycket hög i de heta regionerna. Det skapar ett tryck att utveckla nya regioner inne i landet, och öka urbaniseringsgraden där. Och just urbanisering är inte bara väldigt en väldig drivkraft i efterfrågan på råvaror – det är också en av de starkaste trender vi ser i världen. Enligt FN:s prognoser kommer det redan år 2030 finnas 221 städer i Kina som är större än Stockholm, och det kommer att finnas 23 städer med fler än fem miljoner invånare.
Urbaniseringstakten är i princip lika hög var man än tittar i Asien, oavsett urbaniseringsgraden. Med andra ord finns det få anledningar att tro att urbaniseringen i Kina ska avstanna, även om landet nu nått en bit över 50 procents urbaniseringsgrad. Som jämförelse ligger motsvarande siffra i Japan runt 90 procent, och där fortsätter folk att flytta till städer. Liksom här i Sverige…
Biltätheten, som är intimt knuten till den ekonomiska aktiviteten, är också den ojämnt spridd mellan den utvecklade delen av landet och de delar som inte kommit lika långt. En växande bilflotta kommer inte bara att påverka förbrukningen av bensin och diesel – den kräver också fortsatta stora investeringar i infrastruktur som vägar, broar och tunnlar.
Kinas enorma storlek i sig gör alltså att nationella jämförelser blir svåra. Skillnaderna mellan olika provinser är väldigt stora och skillnaderna mellan stad och landsbygd är enorma. Det finns all anledning att tro att Kina kommer att ha väldigt stor påverkan på den globala råvaruefterfrågan under lång tid ännu. Därför måste vi svara både ja och nej på frågan om supercykeln är över: Ja, den är över för de utvecklade och industrialiserade regionerna. Men också nej: För en gigantisk del av befolkningen har den bara börjat.
Market is starting to take US/Iran headlines with a pinch of salt. Brent crude rose $2.8/b yesterday to an official close of $112.1/b. But after that it traded as low as $108.05/b before ending late night at around $109.7/b. Through the day it traded in a range of $106.87 – 112.72/b amid a flurry of news or rumors from Iran and the US. ”US temporary sanctions during negotiations” (falls alarm). ”We will bomb Iran” (not anyhow),… etc. While the market is still fluctuating to this kind of news flow, it is starting to take such headlines with a pinch of salt.
We’ll see. Maybe, maybe not. The Brent M1 contract is trading at $110.2/b this morning which very close to the average ticks through yesterday of $110.4/b.
Trump with bearish, verbal intervention whenever Brent trades above $110/b it seems. What seems to be a pattern is that Trump states something like ”very good negotiations going on with Iran”, ”New leaders in Iran are great,..”, ”Great progress in negotiations,…”, ”Deal in sight,..” etc whenever the Brent M1 contract trades above $110/b. An effort to cool the market. These hot air verbal interventions from Trump used to have a heavy bearish impact on prices, but they now seems to have less and less effect unless they are backed by reality.
As far as we can see there has been no real progress in the negotiations between the US and Iran with both sides still standing by their previous demands.
Iran is getting stronger while the cease fire lasts making a return to war for Trump yet harder. Iran is naturally in constant preparation for a return to war given Trump’s steady threats of bombing Iran again. Iran is naturally doing what ever is possible to prepare for a return to war. And every day the cease fire lasts it is better prepared. This naturally makes it more and more difficult and dangerous for the US to return to warring activity versus Iran as the consequences for energy infrastructure in the Persian Gulf will be more and more severe the longer the cease fire lasts. Israel seems to see it this way as well. That the war is not won and that current frozen state of a cease fire gives Iran opportunity to rebuild military and politically.
Global inventories are drawing down day by day. How much? In the meantime the Strait of Hormuz stays closed. There is varying measures and estimates of how much global inventories are drawing down. Our rough estimate, back of the envelope, is that global inventories are drawing down by at least some 10 mb/d or about 300 mb/d in a balance between loss of supply versus demand destruction. Other estimates we see are a monthly draw of 250-270 mb/d. The IEA only ’measured’ a draw in global observable stocks of 117 mb in April with oil on water rising 53 mb while on shore stocks fell 170 mb. But global stocks are hard to measure with large invisible, unmeasured stocks. As such a back of the envelope approach may be better.
Oil products is what the world is consuming. Oil product prices likely to rise while product stocks fall. Strategic Petroleum Reserves (SPR) are predominantly crude oil. Discharging oil from OECD SPR stocks, a sharp reduction in Chinese crude imports and a reduction in global refinery throughput of 6-7 mb/d has helped to keep crude oil markets satisfactorily supplied. But global inventories are drawing down none the less. And oil products is really what the world is consuming. So if global refinery throughput stays subdued, then demand will eventually have to match the supply of oil products. The likely path forward this summer is a steady draw down in jet fuel, diesel and gasoline. Higher prices for these. Then, if possible, higher refinery throughput and higher usage of crude in response to very profitable refinery margins. And lastly sharper draw in crude stocks and higher prices for these. But some 6 mb/d of oil products used to be exported through the Strait of Hormuz. And it may not be so easy to ramp up refinery activity across the world to compensate. Especially as Ukraine continues to damage Russian refineries as well as Russian crude production and export facilities.
Watch oil product stocks and prices as well as Brent calendar 2027. What to watch for this summer is thus oil product inventories falling and oil product premiums to crude rising. Another measure to watch is the Brent crude 2027 contract as it rises steadily day by day as the Strait of Hormuz stays closed and global oil inventories decline. The latter is close to the highest level since the start of the war and keeps rising.
The Brent M1 contract and the Brent 2027 prices and current price of jet fuel in Europe (ARA). All in USD/b
Our back of the envelope calculation of the global shortage created by the closure of the Strait of Hormuz. Note that 3.5 mb/d of discharge from SPR is also a draw. Note also that ’Forced demand loss’ of 2.5 mb/d is probably temporary and will fall back towards zero as logistics are sorted out leaving ’Price demand loss’ to do the job of balancing the market. Thus a shortfall of at least 9 mb/d created by the closure. More if SPR discharge is included and more if Forced demand loss recedes.
Brent is climbing higher. Front-month is at USD 106.3/bl this morning, close to a weekly high and a USD 9/bl jump from Mondays open. This is the move we flagged as a risk earlier in the week: the market shifting from ”a deal is around the corner” to ”this is going to take longer than we thought”.
Analyst Commodities, SEB
During April, rest-of-year Brent remained remarkably stable around USD 90/bl. A stability which rested on one single assumption: the SoH reopens around 1 May. That assumption is now slowly falling apart.
As we highlighted yesterday: every week of delay beyond 1 May adds (theoretically) ish USD 5/bl to the rest-of-year average, as global inventories draw 100 million barrels per week. i.e., a mid-May reopening implies rest-of-year Brent closer to USD 100/bl, and anything pushing into June or July takes us meaningfully higher.
What’s changed in the last 48 hours:
#1: The US military has formally warned that clearing suspected sea mines from SoH could take up to six months. That is a completely different timescale from what the financial market is pricing. Even a political deal tomorrow does not immediately reopen the strait.
#2: Trump has shifted his tone from urgency to ”strategic patience”. In yesterday’s press conference: ”Don’t rush me… I want a great deal.” The market is reading this as a president no longer feeling pressured by timelines, with the naval blockade running in the background.
#3: So far, the military activity is escalating, not de-escalating. Axios reports Iran is laying more mines in SoH. The US 3rd carrier strike group (USS George H.W. Bush) is arriving with two countermine vessels. Trump yesterday ordered the US Navy to destroy any Iranian boats caught laying mines. While CNN reports that the Pentagon is actively drawing up plans to strike Iranian SoH capabilities and individual Iranian military leaders if the ceasefire collapses. i.e., NOT a attitude consistent with an imminent deal!
Spot crude and product prices eased off the early-April highs on a combination of system rerouting and deal optimism. Both now weakening. Goldman estimates April Gulf output is reduced by 14.5 mbl/d, or 57% of pre-war supply, a number that keeps getting worse the longer this drags on.
Demand-side adaptation is ongoing: S. Korea has cut its Middle East crude dependence from 69% to 56% by pulling more from the Americas and Africa, and Japan is kicking off a second round of SPR releases from 1 May. But SPRs are finite.
Ref. to the negotiations, we should not bet on speed. The current Iranian leadership is dominated by genuine hardliners willing to absorb economic pain and run the clock to extract concessions. That is not a setup for a rapid resolution. US/Israeli media briefings keep framing the delay as ”internal Iranian divisions”, the reality is more complicated and points toward weeks and months, not days.
Our point is that the complexity is large, and higher prices have only just started (given a scenario where the negotiations drag out in time). The market spent April leaning on the USD 90/bl rest-of-year assumption; that case is diminishing by the hour. If ”early May reopening” is replaced by ”June, July or later” over the next week or two, both crude and products have meaningful room to reprice higher from here. There is a high risk being short energy and betting on any immediate political resolution(!).
Down on Friday. Up on Monday. The Brent June crude oil contract traded down 5.1% last week to a close of $90.38/b. It reached a high of $103.87/b last Monday and a low of $86.09/b on Friday as Iran announced that the Strait of Hormuz was fully open for transit. That quickly changed over the weekend as the US upheld its blockade of Iranian oil exports while Iran naturally responded by closing the SoH again. The US blew a hole in the engine room of the Iranian ship TOUSKA and took custody of the ship on Sunday. Brent crude is up 5.6% this morning to $95.4/b.
The cease-fire is expiring tomorrow. The US has said it will send a delegation for a second round of negotiations in Islamabad in Pakistan. But Iran has for now rejected a second round of talks as it views US demands as unrealistic and excessive while the US is also blocking the Strait of Hormuz.
While Brent is up 5% this morning, the financial market is still very optimistic that progress will be made. That talks will continue and that the SoH will fully open by the start of May which is consistent with a rest-of-year average Brent crude oil price of around $90/b with the market now trading that balance at around $88/b.
Financial optimism vs. physical deterioration. We have a divergence where the financial market is trading negotiations, improvements and resolution while at the same time the physical market is deteriorating day by day. Physical oil flows remain constrained by disrupted flows, longer voyage times and elevated freight and insurance costs.
Financial markets are betting that a US/Iranian resolution will save us in time from violent shortages down the road. But every day that the SoH remains closed is bringing us closer to a potentially very painful point of shortages and much higher prices.
The US blockade is also a weapon of leverage against its European and Asian allies. When Iran closed the SoH it held the world economy as a hostage against the US. The US blockade of the SoH is of course blocking Iranian oil exports. But it is also an action of disruption directed towards Europe and Asia. The US has called for the rest of the world to engaged in the war with Iran: ”If you want oil from the Persian Gulf, then go and get it”. A risk is that the US plays brinkmanship with the global oil market directed towards its European and Asian allies and maybe even towards China to force them to engage and take part. Maybe unthinkable. But unthinkable has become the norm with Trump in the White House.
Oil product price pain is set to rise as the Strait of Hormuz stays closed into summer
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