Commodities Market Review: Oil and China’s Steel Rebar Price Surge
Summary:
- Gasoline (CME_RB1) has seen a price increase of 12.01% over the past month
- Shanghai Steel Rebar Futures (SHFE_RB2) are up on the rise with a 8.43% increase
- Brent Crude Futures (ICE_B1) are up on the rise with a 7.72% increase
Ending Sanctions Led to Surge in Oil Prices
Gasoline (CME_RB1) are up on the rise with a 12.01% increase over the past month from 31 March to 1 May, in good agreement with the I Know First Forecast. There was a surge in oil prices after the Trump administration pledged to end all the sanctions allowing countries to import Iranian oil. This included large nations such as China and India who expressed their concerns.
However, the US secretary of state, Mike Pompeo said, “We’re going to zero. We will continue to enforce sanctions and monitor compliance. Any nation or entity interacting with Iran should do its diligence and err on the side of caution. The risks are simply not going to be worth the benefits.” This decision was made to cut out Iran’s major source of revenue with the aim of forcing political change across the Middle East.
As large nations that include China and India do not purchase gasoline, this creates a huge surplus in gasoline in Iran. The large supply could possibly drive gasoline prices down in the future, leading to higher future prices.
Shanghai Construction Steel Rebar
Shanghai Steel Rebar Futures (SHFE_RB2) are up on the rise with a 8.43% increase over the past month from 31 March to 1 May, in good agreement with the I Know First Forecast. China’s steel industry has seen a strong growth in steel production in the first quarter as a result of pro-growth policies from the Chinese government, increasing demands from the infrastructure sector.
Production of steel in China, climbed steadily and is up 10% in March with a production of 80.3 million tons. Government investments in railways, subways, water and sewage systems will be the key drivers for this surge in demand. Winter cuts in Tangshan which lasting from July 2018 until March 2019 removed 20 million tons of steel, in a bid to reduce air pollution by up to 40%.
With these two policies in place by the government; according to Shanghai Steelhome Information Technology, steel prices are predicted to rise by 1.8% this year to a new record, with the third quarter having an even greater growth.
Brent Crude Futures
Brent Crude Futures (ICE_B1) are up on the rise with a 7.72% increase over the past month from 31 March to 1 May, in good agreement with the I Know First Forecast. Similar to Gasoline, Brent Crude prices rose because of the Trump Administration ending the sanctions waivers that allowed major countries to purchase oil from Iran and Venezuela, reducing the supplies in the global markets.
I Know First’s Successful Forecast
On Mar 31th, I Know First algorithm issued bullish predictions for commodities for a 1-month horizon. CME_RB1 was the top performing prediction with a return of 12.01%. SHFE_RB2 and ICE_B1 saw outstanding returns of 8.43% and 7.72%.
