1、Pandemic,war,recession:Drivers of aluminum and copper prices Commodity Markets OutlookA World Bank ReportOCTOBER 2022AprAprOctOctOCTOBER 2022 Commodity Markets Outlook 2022 International Bank for Reconstruction and Development/World Bank 1818 H Street NW,Washington,DC 20433 Telephone:202-473-1000;In

2、ternet:www.worldbank.org Some rights reserved.This work is a product of the staff of The World Bank with external contributions.The findings,interpretations,and conclusions expressed in this work do not necessarily reflect the views of The World Bank,its Board of Executive Directors,or the governmen

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12、,The World Bank Group,1818 H Street NW,Washington,DC 20433,USA;e-mail:pubrightsworldbank.org.The cutoff date for the data used in this report was October 21,2022.iii Table of Contents Figures Acknowledgments.v Executive Summary.1 Special Focus Pandemic,war,recession:Drivers of aluminum and copper pr

13、ices.7 Commodity Market Developments and Outlook.17 Energy.19 Agriculture.27 Fertilizers.35 Metals and Minerals.36 Precious Metals.39 1 Commodity price developments.2 SF.1 Recent developments in global aluminum and copper markets.10 SF.2 Dynamics of aluminum and copper prices.12 SF.3 Decomposition o

14、f aluminum and copper price volatility.13 SF.4 Drivers of aluminum and copper prices during global recessions.14 SF.5 Drivers of aluminum and copper prices since their pandemic trough.15 2 Oil market developments.19 3 Oil production.20 4 Oil market outlook.22 5 Natural gas market developments.24 6 C

15、oal market developments.26 7 Agricultural price developments.28 8 Global supply conditions for grains and edible oils.29 9 Risks to the food commodity outlook.30 10 Domestic food price inflation.31 11 Food insecurity.32 12 Beverage commodity market developments.33 13 Agricultural raw materials marke

16、t developments.34 14 Fertilizer market developments.35 15 Metals and minerals marketsupply structure and price forecasts.37 16 Metals and minerals market developments.38 17 Precious metals market developments.39 Table 1 World Bank Commodities Price Forecast(nominal U.S.dollars).5 v Many people contr

17、ibuted to the report.The Special Focus on“Pandemic,war,recession:Drivers of aluminum and copper prices”was authored by Christiane Baumeister,Guillermo Verduzco-Bustos,and Franziska Ohnsorge.Section authors include Peter Nagle(energy),John Baffes(agriculture),Francisco Arroyo Marioli(metals),and Wee

18、Chian Koh(fertilizers and precious metals).Shane Streifel provided input and reviewed the report.Kaltrina Temaj provided research assistance and managed the database.Maria Hazel Macadangdang produced the forecast table.Design and production were handled by Adriana Maximiliano.Graeme Littler produced

19、 the accompanying website.Hanane Ahmed,John Paxton Dearborn,Betty Dow,Graeme Littler,Patrick Alexander Kirby,Franz Ulrich Ruch,and Garima Vasishtha reviewed the report.External affairs for the report were managed by Joseph Rebello and Nandita Roy,supported by Paul Blake,Sandya Deviah,Jose Carlos Fer

20、reyra,and Torie Smith.Staff of the Translation and Interpretation Services unit provided translations of dissemination materials.The World Banks Commodity Markets Outlook is published twice a year,in April and October.The report provides detailed market analysis for major commodity groups,including

21、energy,agriculture,fertilizers,metals,and precious metals.Price forecasts for 46 commodities are presented.Commodity price data updates are published separately at the beginning of each month.The report and data can be accessed at:www.worldbank.org/commodities For inquiries and correspondence,email

22、at:commoditiesworldbank.org Acknowledgments This World Bank Group Report is a product of the Prospects Group in the Equitable Growth,Finance,and Institutions(EFI)Vice Presidency.The report was managed by John Baffes under the general guidance of Ayhan Kose and Franziska Ohnsorge.EXECUTIVE SUMMARY CO

23、MMODITY MARKETS OUTLOOK|OCTOBER 2022 1 Recent trends Most commodity prices have retreated from their peaks in the aftermath of the post-pandemic demand surge and war in Ukraine as global growth slows and worries about a global recession intensify.However,individual commodities have seen divergent tr

24、ends amid differences in supply conditions and their response to softening demand(figure 1.A).Moreover,currency depreciations in many countries have resulted in higher commodity prices in local currency terms compared to the price in U.S.dollars(figure 1.B).For example,from February 2022 to Septembe

25、r 2022,the price of Brent crude oil in U.S.dollars fell nearly 6 percent.Yet,because of currency depreciations,almost 60 percent of oil-importing emerging market and developing economies saw an increase in domestic-currency oil prices during this period.Nearly 90 percent of these economies also saw

26、a larger increase in wheat prices in local-currency terms compared to the rise in U.S.dollars.As a result,commodity-driven inflationary pressures in many countries with depreciating currencies may be more persistent than indicated by recent declines in global commodity prices.Tis could prolong the f

27、ood and energy crises already affecting many developing economies.A sharp global growth slowdown and concerns about an impending global recession are weighing on commodity prices.In many economies,however,prices in domestic-currency terms remain elevated because of currency depreciations.This could

28、deepen the food and energy crises already underway in a number of countries.As the global growth slowdown intensifies,commodity prices are expected to ease in the next two years,but they will remain considerably above their average over the past five years.Energy prices are expected to fall by 11 pe

29、rcent in 2023 and 12 percent in 2024.Agricultural and metal prices are projected to decline 5 and 15 percent,respectively,in 2023 before stabilizing in 2024.This outlook,however,is subject to numerous risks both in the short-and medium-term.Energy markets face an array of supply concerns as worries

30、about the availability of energy during the upcoming winter intensify in Europe.Higher-than-expected energy prices could pass through to non-energy prices,especially food,prolonging challenges associated with food insecurity.A sharper slowdown in global growth presents a key downside risk,especially

31、 for crude oil and metal prices.A Special Focus section suggests that concerns about a possible global recession have already contributed to a decline in copper prices from their peak in March 2022,and a shift in demand from aluminum has contributed to lower aluminum prices.Prices will likely remain

32、 volatile as the energy transition unfolds and demand moves from fossil fuels to renewables,which will benefit some metal producers.Metal-exporting countries can make the most of the resulting opportunities for growth over the medium-term,while limiting the impact of price volatility by ensuring the

33、y have well-designed fiscal and monetary frameworks.Executive Summary Energy prices have diverged widely and have been extremely volatile since the outbreak of the war in Ukraine.Brent crude oil prices fell sharply during 2022Q3(nearly one-quarter lower in September 2022 relative to its June 2022 pe

34、ak)due to concerns about a global recession in 2023 and tightening financing conditions.Prices partially rebounded in October following the announcement by OPEC+members on October 5th to reduce their production target by 2 million barrels per day(mb/d)but have been volatile since.Natural gas prices

35、in Europe reached all-time highs in August 2022 due to aggressive actions by several countries to rebuild their inventories as well as reduced flows of gas from Russia.Prices have since dropped sharply as inventories reached their target levels and demand has fallen.Coal prices continued to increase

36、 in 2022Q3,as many countries turned to coal as a substitute for natural gas.During the past four quarters,natural gas prices in Europe and seaborne coal prices have averaged 420 and 180 percent higher,respectively,than their average over the past five years.Non-energy prices declined 13 percent in 2

37、022Q3(q/q).Metal prices declined the most,largely reflecting weaker global growth and concerns about a slowdown in China(figure 1.C).Precious metal prices fell 9 percent(q/q)as global interest EXECUTIVE SUMMARY COMMODITY MARKETS OUTLOOK|OCTOBER 2022 2 rates rose sharply.Agricultural commodity prices

38、 fell 11 percent in 2022Q3(q/q).Fears about food shortages earlier in the year gradually eased.Exports from Ukraine restarted and inventories of key crops remain above historical levels,thereby providing a buffer for the ongoing 2022-23 season.Notwithstanding the decline in agricultural commodity pr

39、ices from their March 2022 highs,they remain nearly 9 percent higher than a year ago.Expected supply shortfalls in the current season for some key commodities,especially maize,coupled with adverse weather and high energy prices,could keep prices high during the current season(figure 1.D).Outlook and

40、 risks After surging by an expected 60 percent in 2022,energy prices are projected to decline 11 percent in 2023 and a further 12 percent in 2024.Key drivers of the outlook include slower global growth,weaker demand for natural gas as households and industry reduce consumption,and some supply respon

41、ses,primarily for coal.However,prices will remain more than 50 percent above their five-year average through 2024.Persistently high energy prices will continue to have inflationary implications,particularly through second-round effects such as higher transport and electricity costs for businesses.In

42、flationary pressures stemming from commodity prices will be further exacerbated in countries that have had sizeable currency depreciations against the U.S.dollar.Brent crude oil prices are forecast to average$92/bbl in 2023,down from a projected$100/bbl in 2022,before easing to$80/bbl in 2024(Figure

43、 1.E).Oil consumption is expected to continue to increase by just under 2 percent in 2023 as China gradually reopens,and as switching from natural gas to oil continues,especially in electricity generation.A sharper-than-expected slowdown in global growth and continued COVID restrictions in China are

44、 the key downside risks to oil consumption.During previous global recessions oil demand has declined by about 2 percent in the first year and 1 percent in the second,although with wide variation(figure 1.F).FIGURE 1 Commodity price developments Commodity prices have diverged since the start of the w

45、ar in Ukraine,with energy prices remaining elevated and non-energy prices declining.In many countries,however,most commodity prices are much higher in local currency terms because of the strength of the U.S.dollar.Metal demand growth has fallen in most regions as the global economy has decelerated.T

46、he production of grains was robust in 2021-22 but is expected to decline in 2022-23.Looking ahead,oil prices are expected to ease in 2023-24,but there is much uncertainty to the outlook;a key downside risk is the possibility of a global recession.B.Changes in oil and wheat prices in local currencies

47、 A.Commodity prices Sources:Bloomberg;Consensus Economics;U.S.Department of Agriculture;World Bank;World Bureau of Metal Statistics.A.Monthly data.Last observation is September 2022.B.Percent change in prices in local currency terms between February 2022 and September 2022.C.Year-on-year growth of m

48、etal demand.Monthly data.Last observation is August 2022.D.Supply is the sum of beginning stocks and production.Years refer to crop seasons(for example,2022 refers to 2022-23).E.Consensus forecasts taken from the October 2022 survey.Futures prices average of October 3 to October 21,2022.F.Figure sho

49、ws episodes of oil demand contractions around recessions.Year t is the peak in oil demand prior to contractions.Dashed line shows IEA forecast for 2022 and 2023 from its Oil Market Report,October 2022 D.Grains supply C.Metal demand growth F.Changes in oil demand around recessions E.Oil price forecas

50、ts-02002502005200720092000221990-2021 averagemmt,annual changeEXECUTIVE SUMMARY COMMODITY MARKETS OUTLOOK|OCTOBER 2022 3 Oil markets are expected to tighten over the next few months as additional sanctions restrict exports from Russia,releases of oil from strategi

51、c reserves in several countries come to an end,and as OPEC+members cut production(even if somewhat less than the announced 2 mb/d since many of the OPEC+members are already producing below quota).This will more than offset the effect of rising production in a few countries,primarily the United State

52、s.The outlook is subject to numerous risks,especially on the supply side.First,production in the United States could disappoint as producers prioritize returning cash to shareholders over increasing output,and higher input costs constrain new investment.Second,the outlook for Russias production depe

53、nds on the impact of trade measures.Russias exports next year could be as much as 2 mb/d lower,as the EU embargo on Russian oil and oil products(as well as restrictions on access to EU insurance and shipping services)comes into effect.The proposed G7 oil price cap could affect the flow of oil from R

54、ussia,but it is an untested mechanism and would need the participation of large emerging market and developing economies to achieve its objectives.Third,releases of crude oil from strategic reserves,including the U.S.are due to end this year;while these could be extended further,it would risk leavin

55、g strategic inventories at very low levels.Amid low levels of inventories,limited spare production capacity,and ongoing geopolitical events,the oil market is susceptible to price spikes.The materialization of some of these risks could intensify challenges associated with energy security in many coun

56、tries.Natural gas and coal prices are also expected to ease in 2023 and 2024 but remain at much higher levels than their pre-pandemic averages.By 2024,Australian coal and U.S.natural gas prices are expected to be double their average over the past five years,while European natural gas prices could b

57、e four times higher.The expected easing of prices next year is due to weaker demand for natural gas as households and industries curtail their consumption and switch to substitutes,while coal production is expected to increase as China,India,and seaborne exporters boost output.The near-term outlook

58、for natural gas and coal prices will depend heavily on the severity of the winter in Europe.As with crude oil,slower global growth is a key downside risk to the outlook for next year.Concerns about energy shortages,particularly in Europe,will require careful policy coordination among key importers t

59、o ensure the burden of high energy prices,or future energy disruptions,is equitably shared.Recent government policy announcements to sharply increase the installation of renewable energy and reduce overall energy consumption may feed through into lower energy prices,but this will take time,and a wor

60、sening supply outlook in the winter of 2023 is possible.Furthermore,the current high inflation and high-interest rate environment will make financing investment in new energy production(both fossil fuels and renewables)more challenging,even if recent declines in metal prices provide some reduction i

61、n project costs.In the longer term,the prospect of persistently high energy prices may require a shift in industrial models in Northern European countries that have historically relied on natural gas imports by pipeline.Indeed,high energy prices have already led to the closure of some facilities in

62、energy-intensive industries,including fertilizer and chemical plants,as well as shifts in manufacturing patterns in others.Together,these changes should lead to reduced carbon emissions from the EU and may help accelerate its energy transition.In other countries,however,the implications for carbon e

63、missions are less clear.A reduction in carbon intensity globally,not simply a shift in activities between countries,is needed to achieve climate change objectives.Following an estimated decline of nearly 2 percent,metal prices are forecast to fall more than 15 percent in 2023 before stabilizing in 2

64、024.The weakness reflects the deterioration of global growth prospects along with Chinas softening demand(due to its zero COVID policy and the slowdown of its real estate sector).Risks to the short-term outlook for metals are on the downside EXECUTIVE SUMMARY COMMODITY MARKETS OUTLOOK|OCTOBER 2022 4

65、 and reflect slower-than-expected global growth and a further deterioration of Chinas property sector.One upside risk is higher-than-expected energy prices which could lead to increased production costs for metal refiners.In the longer term,however,metal demand is expected to increase,stimulated by

66、recent government policies to accelerate the energy transition and boost renewables,which are metals intensive.Agricultural prices are forecast to decline by 5 percent in 2023 before stabilizing in 2024.The projected decline in 2023 reflects a better-than-expected global wheat crop,stable supplies i

67、n the rice market,and the resumption of grain exports from Ukraine(although the maize crop is expected to contract materially during the 2022-23 season).However,there are numerous upside risks to the price forecast.First,disruptions in exports from Ukraine or Russia,both key grain exporters,could on

68、ce again interrupt global supplies,as they did in the early stages of the war in Ukraine.Second,further increases in energy prices or disruptions in energy supplies(especially natural gas and coal,which are key inputs to fertilizers)could exert upward pressure on grain and edible oil prices.Third,ad

69、verse weather patterns can reduce yields;indeed,2023 is likely to be the third La Nia year in a row,potentially reducing yields of key crops in South America and Southern Africa.On the downside,weaker-than-expected growth,espe-cially in China,could affect the prices of certain agricultural commoditi

70、es such as maize and soybeans,which are used as animal feed.As a result of developments in food markets following the Russian invasion of Ukraine,the number of people subject to severe food insecurity is projected to exceed 200 million in 2022.Populations facing food crises are typically in countrie

71、s with conflict or countries that are facing extreme weather events,especially in Sub-Saharan Africa.Materialization of the upside risks to food prices outlined above could result in even larger increases in the number of people suffering from food insecurity.Special Focus.Pandemic,war,recession:Dri

72、vers of aluminum and copper prices Over the past three years,the pandemic,the war in Ukraine,and concerns about an impending global recession caused large swings in prices of aluminum and copper.Record price rebounds from pandemic lows in April 2020 were followed by renewed steep declines starting i

73、n March 2022.The price rebound after the pandemic was mainly driven by the economic recovery but,in contrast to the increase in prices after the global financial crisis,supply factors also contributed about one-quarter to the rebound.Since March 2022,a steep global growth slowdown,an unwinding of su

74、pply constraints,and concerns about an imminent global recession(especially for copper)contributed to the plunge in prices.Prices will likely remain volatile as the energy transition unfolds and as global commodity demand shifts from fossil fuels to renewables,which are metals intensive.For metal-ex

75、porting countries,the energy transition may bring windfalls,but it could also increase their exposure to price volatility.In this regard,policymakers need to design strong fiscal and monetary frameworks nowand foster an environment for diversificationto make the most of the resulting opportunities f

76、or growth while limiting the impact of price volatility.EXECUTIVE SUMMARY COMMODITY MARKETS OUTLOOK|OCTOBER 2022 5 Commodity Unit 2020 2021 2022f 2023f 2024f 2022f 2023f 2022f 2023f Price indexes in nominal U.S.dollars(2010=100)Energy a/52.7 95.4 151.7 134.7 118.3 59.1-11.2 8.1 8.9 Non-Energy Commod

77、ities 84.4 112.0 123.7 113.7 113.0 10.5-8.1-9.8-8.0 Agriculture 87.5 108.7 123.2 117.7 117.5 13.4-4.5-4.7-0.3 Beverages 80.4 93.5 108.7 101.5 101.5 16.3-6.6 5.2 1.8 Food 93.1 121.8 143.6 134.7 134.1 17.9-6.2-6.1 0.5 Oils and Meals 89.8 127.1 145.7 134.3 133.7 14.7-7.8-19.2-7.6 Grains 95.3 123.8 149.

78、3 141.0 139.8 20.6-5.6 0.3 7.4 Other food 95.5 113.1 135.7 129.5 129.4 19.9-4.5 5.4 4.7 Raw Materials 77.6 84.5 81.2 84.7 85.4 -4.0 4.3-6.0-3.1 Timber 86.4 90.4 79.8 86.4 87.6 -11.8 8.3-6.6-3.1 Other raw materials 67.9 78.0 82.7 82.7 82.9 5.9 0.1-5.4-3.2 Fertilizers 73.2 132.2 219.5 192.2 174.1 66.1

79、-12.4-4.2-6.1 Metals and Minerals b/79.1 116.4 113.8 96.5 96.9 -2.3-15.2-21.0-24.1 Base Metals c/80.2 117.7 121.2 103.0 103.8 2.9-15.0-22.7-28.9 Precious Metals 133.5 140.2 134.6 129.7 126.7 -4.0-3.6-9.8-1.8 Price in nominal U.S.dollars Energy Coal,Australia$/mt 60.8 138.1 320.0 240.0 212.3 131.8-25

80、.0 70.0 70.0 Crude oil,Brent$/bbl 42.3 70.4 100.0 92.0 80.0 42.0-8.0 0.0 0.0 Natural gas,Europe$/mmbtu 3.2 16.1 40.0 32.0 28.0 148.2-20.0 6.0 7.0 Natural gas,U.S.$/mmbtu 2.0 3.9 6.6 6.2 6.0 71.4-6.1 1.4 1.4 Liquefied natural gas,Japan$/mmbtu 8.3 10.8 18.4 17.0 15.9 71.0-7.6-0.6 3.0 Non-Energy Commod

81、ities Agriculture Beverages Cocoa$/kg 2.37 2.43 2.35 2.30 2.34 -3.2-2.1-0.10-0.20 Coffee,Arabica$/kg 3.32 4.51 5.90 5.50 5.41 30.8-6.8 0.40 0.20 Coffee,Robusta$/kg 1.52 1.98 2.35 2.10 2.11 18.6-10.6 0.10 0.10 Tea,average$/kg 2.70 2.69 3.10 2.80 2.82 15.3-9.7 0.40 0.20 Food Oils and Meals Coconut oil

82、$/mt 1,010 1,636 1,660 1,670 1,672 1.4 0.6-540-230 Groundnut oil$/mt 1,672 2,200 2,100 2,091 -4.5-100 200 Palm oil$/mt 752 1,131 1,275 1,050 1,054 12.8-17.6-375-350 Soybean meal$/mt 394 481 550 540 539 14.4-1.8-40-10 Soybean oil$/mt 838 1,385 1,675 1,550 1,537 20.9-7.5-125 150 Soybeans$/mt 407 583 6

83、80 650 641 16.6-4.4-20 50 Grains Barley$/mt 98 200 175 172 -12.5 35 25 Maize$/mt 165 260 315 290 287 21.4-7.9 5 10 Rice,Thailand,5%$/mt 497 458 435 435 436-5.1 0.0 10 20 Wheat,U.S.,HRW$/mt 232 315 430 410 405 36.4-4.7-20 30 Other Food Bananas,U.S.$/kg 1.22 1.21 1.50 1.40 1.39 24.4-6.7 0.20 0.10 Beef

84、$/kg 4.67 5.39 5.90 5.80 5.82 9.5-1.7-0.30 0.00 Chicken$/kg 1.63 2.26 3.35 3.10 3.07 48.5-7.5 0.20 0.10 Oranges$/kg 0.60 0.65 0.88 0.85 0.85 34.8-3.4 0.10 0.10 Shrimp$/kg 12.67 13.70 13.50 14.00 14.30 -1.5 3.7-1.00-0.80 Sugar,World$/kg 0.28 0.39 0.40 0.38 0.38 2.7-5.0 0.00 0.00 TABLE 1 World Bank Co

85、mmodity Price Forecasts Differences in levels from April 2022 projections Percent change from previous year EXECUTIVE SUMMARY COMMODITY MARKETS OUTLOOK|OCTOBER 2022 6 Commodity Unit 2020 2021 2022f 2023f 2024f 2022f 2023f 2022f 2023f Price in nominal U.S.dollars Non-Energy Commodities Raw Materials

86、Timber Logs,Africa$/cum 399 414 365 390 395 -11.9 6.8 -25-30 Logs,S.E.Asia$/cum 279 271 230 250 254 -15.2 8.7 -25-10 Sawnwood,S.E.Asia$/cum 700 750 670 725 735 -10.7 8.2 -50-25 Other Raw Materials Cotton$/kg 1.59 2.23 2.95 2.90 2.86 32.2-1.7 -0.10 0.00 Rubber,RSS3$/kg 1.73 2.07 1.80 1.90 1.94 -13.1

87、5.6 -0.30-0.30 Tobacco$/mt 4,336 4,155 4,200 4,100 4,116 1.1-2.4 0 0 Fertilizers DAP$/mt 312 601 790 750 650 31.5-5.1 -110-50 Phosphate rock$/mt 76 123 270 200 175 119.1-25.9 95 40 Potassium chloride$/mt 218 210 520 500 479 147.4-3.8 0 30 TSP$/mt 265 538 735 650 550 36.6-11.6 -15 0 Urea,E.Europe$/mt

88、 229 483 720 650 600 49.0-9.7 -130-100 Metals and Minerals Aluminum$/mt 1,704 2,473 2,700 2,400 2,434 9.2-11.1 -700-700 Copper$/mt 6,174 9,317 8,700 7,300 7,361 -6.6-16.1 -1,400-2,400 Iron ore$/dmt 108.9 161.7 120.0 100.0 98.0 -25.8-16.7 -20-5 Lead$/mt 1,825 2,200 2,100 1,900 1,917 -4.6-9.5 -200-200

89、 Nickel$/mt 13,787 18,465 25,000 21,000 20,708 35.4-16.0 -3,000-1,000 Tin$/mt 17,125 32,384 31,000 22,000 22,257 -4.3-29.0 -10,000-13,000 Zinc$/mt 2,266 3,003 3,500 2,800 2,771 16.6-20.0 -200-400 Precious Metals Gold$/toz 1,770 1,800 1,775 1,700 1,650 -1.4-4.2 -105 0 Silver$/toz 20.5 25.2 21.3 21.0

90、21.0 -15.6-1.2 -2.9-1.5 Platinum$/toz 883 1,091 940 1,000 1,050 -13.9 6.4 -170-180 TABLE 1 World Bank Commodity Price Forecasts(continued)Source:World Bank.Note:a/=Energy price index includes coal(Australia),crude oil(Brent),and natural gas(Europe,Japan,U.S.).b/=Base metals plus iron ore.c/includes

91、aluminum,copper,lead,nickel,tin,and zinc.f=forecast.Differences in levels from April 2022 projections Percent change from previous year SPECIAL FOCUS Pandemic,war,recession:Drivers of aluminum and copper prices SPECIAL FOCUS COMMODITY MARKETS OUTLOOK|OCTOBER 2022 9 Introduction Aluminum and copper p

92、rices have undergone sizable swings in the past three years.The COVID-19 pandemic triggered a severe global recession and,in the three months from January 2020,global aluminum and copper prices suffered record declines.This episode was followed by the strongest economic rebound in eight decades and

93、steep rebounds in prices(figures SF.1A,B).By March 2022,inflation-adjusted copper and aluminum prices had reached their highest and second-highest levels,respectively,in a decade.Since then,aluminum and copper prices have fallen again by 36 and 24 percent,respectively.These swings were the outcome o

94、f a confluence of different shocks caused by the pandemic.Global economic activity contracted by more than 3 percent in 2020,but then rebounded by almost 6 percent in 2021(figure SF.1C).In China,which accounts for about 60 percent of global aluminum and copper demand,growth slowed sharply from 6 per

95、cent in 2019 to 2 percent in 2020 before rebounding to 8 percent in 2021(figure SF.1D).Since metals are heavily used in cyclical sectors,such as construction,the swings in global and Over the past three years,the pandemic,the war in Ukraine,and concerns about global recession buffeted global aluminu

96、m and copper markets and contributed to large swings in global prices.Record price rebounds from pandemic lows in April 2020 were followed by renewed steep declines starting in March 2022.The price rebound after the pandemic was mainly driven by the economic recovery but,in contrast to the rebound a

97、fter the global financial crisis,supply-side factors also contributed about one-quarter to the rebound.Since March 2022,a steep global growth slowdown,an unwinding of supply constraints,a shutoff of energy-intensive smelters amid record high energy cost(especially for aluminum),and concerns about an

98、 imminent global recession(especially for copper)contributed to the plunge in prices.More price volatility can be expected as the energy transition unfolds and global commodity demand shifts from fossil fuels to metals.Appropriate policies can help metal exporters make the most of the resulting oppo

99、rtunities for growth while limiting the impact of price volatility.Pandemic,war,recession:Drivers of aluminum and copper prices This Special Focus was prepared by Christiane Baumeister,Guillermo Verduzco-Bustos,and Franziska Ohnsorge.Research assistance was provided by Kaltrina Temaj.Helpful comment

100、s were provided by Alain Kabundi,Francisco Arroyo Marioli,Jeetendra Khadan,Ayhan Kose,and Peter Nagle.Chinese growth led to a collapse and rebound in global demand for metals.As global economic activity shifted online and demand gravitated towards consumer durables,demand for copper and aluminumheav

101、ily used in consumer electronics,household appliances,and carsincreased disproportionately(figure SF.1E).Meanwhile,COVID-19 restrictions,strikes and political tensions,trade restrictions,and rapidly rising energy prices disrupted mining,refining,or shipments of metals in Australia,Chile,China,Guinea

102、,and Peru(figure SF.1F).As global metal price swings buffet economies,metal exporters will need to understand the sources,features,and impacts of these swings to design appropriate policy responses.Different types of shocks may cause price swings of different magnitudes and duration.More permanent s

103、hocks may warrant economic adjustments while the impact of temporary shocks may be smoothed with countercyclical policies.This Special Focus explores how different types of shocks affect global prices for copper and aluminum.Specifically,it addresses the following questions:How large and persistent

104、is the impact of different types of shocks on copper and aluminum prices?Which shocks play the largest role in copper and aluminum price variations?SPECIAL FOCUS COMMODITY MARKETS OUTLOOK|OCTOBER 2022 10 How did the evolution of aluminum and copper prices during the pandemic-induced global recession

105、 in 2020 compare with that during the global financial crisis-induced global recession in 2009?This Special Focus builds on a rapidly growing literature that,thus far,has focused on oil markets.Baumeister and Hamilton(2019)identified four shocks as the main drivers of oil pricesaggregate demand shoc

106、ks(“econom-ic activity shock”),commodity-specific de-mand shocks(“consumption demand shock”),commodity-specific supply shocks,and speculative demand shocks(“inventory demand shocks”).Their methodology is now widely used for oil prices but has not yet been applied to metal prices.A variant that ident

107、ifies only a subset of these shocks has been applied to metal prices by Stuermer(2018)and Kabundi et al.(2022).Stuermer(2018)identifies only long run(“commodity demand”)shocks and short run(“commodity supply”)shocks without any further decomposition of short run shocks.Kabundi et al.(2022)neglect sp

108、eculative demand shocks,which turn out to be an important driver of short run volatility in the analysis presented here.This Special Focus offers the following main findings.First,inventory and consumption demand shocks cause much volatility in metal prices in the very short term,accounting for abou

109、t one-third of global metal price volatility on impact.However,these shocks are small,reverse quickly,and have modest price impacts.Second,a negative economic activity shock that reduces copper or aluminum prices by 1 percent on impact would continue to put downward pressure on prices such that thre

110、e quarters later prices would be more than 5 percent below the baseline before the effect begins to dissipate.Over a one-year horizon,economic activity shockswhich capture the global business cycleare the single most important driver of copper and aluminum prices,accounting for 74 and 91 percent of

111、the variance in these prices,respectively.Third,during global recessions and their recoveries,economic activity shocks have been the FIGURE SF.1 Recent developments in global aluminum and copper markets In early 2020,aluminum and copper prices underwent one of their steepest three-month declines in

112、a decade,followed by one of their strongest increases in more than three decades.This in part reflected the steep global recession and subsequent economic rebound as well as a shift in demand towards goods and away from services from mid-2020.B.Copper price A.Aluminum price Source:UNComtrade;World B

113、ank Pink Sheet Global Economic Prospects(June 2022);World Bureau of Metal Statistics.A.B.Grey shades show global recessions.C.GDP-weighted average at 2010-19 average prices and exchange rates.“e”stands for estimated value.E.Export values.Electronics and vehicles include Harmonized System categories

114、85(electrical machinery and equipment and parts thereof;sound recorders and reproducers;television image and sound recorders and reproducers,and parts and accessories of such articles),87(vehicles;other than railway or tramway rolling stock,and parts and accessories thereof),and 90(Optical,photograp

115、hic,cinematographic,measuring,checking,medical or surgical instruments and apparatus;parts and accessories).F.Refined aluminum and copper production.Monthly data until August 2022.D.Share of China in aluminum and copper demand,2021 C.Economic growth F.Aluminum and copper production E.Global goods ex

116、ports SPECIAL FOCUS COMMODITY MARKETS OUTLOOK|OCTOBER 2022 11 main drivers of price changes.However,in the recovery from the pandemic-induced global recession of 2020,supply shocks also contributed,on average,one-quarter to the rebound in aluminum and copper prices.This contrasts with the price swin

117、gs during the financial crisis-induced global recession of 2009 when supply shocks played a negligible role in price swings.Methodology and data Shocks are estimated in a Bayesian vector autoregression of aluminum or copper prices,production,and inventories as well as global economic activity.Sign r

118、estrictions and estimates of elasticities from the literature are used to identify four types of shocks.Economic activity shockssuch as global recessionsimply a reduction in global economic activity,metal prices,and production but an increase in metal inventories.Consumption demand shockssuch as a s

119、hift in demand caused by substitution from one commodity to another,or an unanticipated drop in construction activity in China,the worlds largest consumer of aluminum and copperimply a reduction in metal prices and production but an increase in metal inventories and global economic activity.Commodit

120、y supply shockssuch as the opening of new minesimply an increase in metal production,inventories and economic activity,but a reduction in metal prices.Inventory demand(speculative)shockssuch as metal sales in anticipation of slowing construction activity in Chinaimply a reduction in metal prices,pro

121、duction,and inventories but an increase in global economic activity.The methodology corrects for the unusual nature of the pandemic as in Ng(2021)and allows for the possibility of measurement error in inventories data as in Baumeister and Hamilton(2019).Details of the methodology are presented in Ba

122、umeister et al.(forthcoming).The Special Focus relies on monthly data from January 1995 to July 2022.This is a period when Chinas role in global metal markets surged such that,by 2019,China alone accounted for about one-half of global metal demand.Aluminum and copper prices are from the World Banks

123、Pink Sheet.Aluminum and copper production is from the World Bureau of Metal Statistics.Aluminum and copper inventories are registered mineral inventories as reported by the London Metal Exchange and the World Bureau of Metal Statistics.Global economic activity is proxied by the GDP-weighted average

124、of the OECDs index of industrial production in OECD countries and industrial production in six major non-OECD economies(Brazil,China,India,Indonesia,the Russian Federation,and South Africa).Drivers of aluminum and copper prices Aluminum and,especially,copper prices are highly sensitive to the global

125、 business cycle(World Bank 2018).Consequently,economic activity shocks that reduced aluminum and copper prices on impact by 1 percent had a considerably larger and longer-lasting impact on prices than any of the other three types of shocks.Three quarters after such a shock,aluminum and copper prices

126、 were still more than 5 percent below the baseline(figure SF.2A,B).1 The impact of the economic activity shock on copper prices was somewhat larger initially than on aluminum prices but dissipates sooner.For copper prices,the effect dissipated and became statistically insignificant after about a yea

127、r.For aluminum prices,the effects lessened over time but continued to be statistically significant even 18 months later.The more pronounced swings in copper prices may reflect the fact that copper is used considerably more intensively than aluminum in highly cyclical infrastructure construction acti

128、vity,especially in China,which now accounts for more than half of global copper and aluminum consumption 1 A 1 percent decline in aluminum and copper prices on impact due to an economic activity shock is associated with a decline in global industrial production by 1.0 and 1.3 percent,respectively,on

129、 impact.SPECIAL FOCUS COMMODITY MARKETS OUTLOOK|OCTOBER 2022 12 (Kabundi et al.2022;Kabundi,Vasishtha,and Zahid 2022).In contrast,consumption demand shocks,inventory demand shocks,or commodity supply shocks that also reduced copper or aluminum prices by 1 percent on impact had much smaller impacts(f

130、igure SF.2C-F).2 At their peak impacts,they reduced aluminum and copper prices by 1.2 percent(for inventory demand shocks),1.2 and 1.6 percent(consumption demand shocks),and by 1.6 and 2.5 percent(supply shocks),respectively.The effects of these shocks were persistent:estimated impulse responses are

131、 statistically significant even 18 months after the initial shocks.The impacts of consumption demand and inventory demand shocks peaked two to four months earlier than the impacts of economic activity shocks.The impact of global aluminum supply shocks remained statistically significant for two years

132、 after the shock but more than halved in magnitude,whereas those for copper supply shocks remained broadly steady.The decline in the impact of supply shocks on aluminum prices may in part reflect the larger share of Chinaand its proactive policies to stabilize marketsfor aluminum than copper(Kabundi

133、 et al.2022).Consistent with these impulse responses,longer-term fluctuations in aluminum and copper prices were predominantly driven by economic activity shocks whereas inventory,consumption demand and supply shocks mostly caused short-term volatility in prices.A forecast error variance decompositi

134、on suggests that supply shocks accounted for about one-quarter of aluminum and copper price fluctuations on impact,and inventory and consumption demand together for another one-third(figure SF.3A,B).In contrast,over a one-year horizon,economic activity shocks,which capture the global business cycle,

135、were the single most important driver of copper and FIGURE SF.2 Dynamics of aluminum and copper prices Economic activity shocks that reduced aluminum and copper prices on impact by 1 percent had a considerably larger and longer lasting effect on prices than the other types of shocks:consumption dema

136、nd,supply,and inventory demand.Consistent with these impulse responses,longer-term fluctuations in aluminum and copper prices were predominantly driven by economic activity shocks whereas the other shocks mostly caused short-term volatility in prices.B.Impulse response of copper price to economic ac

137、tivity shock A.Impulse response of aluminum price to economic activity shock Source:World Bank.Note:Solid lines represent median responses,dotted lines represent upper and lower bounds of 68 percent confidence intervals.A.B.Impulse response of aluminum(A)and copper(B)prices to economic activity shoc

138、k that lowers the price on impact by 1 percent.A 1 percent decline in aluminum and copper prices on impact due to an economic activity shock is associated with a decrease in global industrial production by 1.0 and 1.3 percent,respectively,on impact.C.-F.Impulse response of aluminum(C,E)and copper(D,

139、F)prices to supply shock(C,D)and consumption demand and inventory demand shocks(E,F)that lower the price on impact by 1 percent.A 1 percent decline in aluminum and copper prices on impact due to a supply shock is associated with a 1.1 percent increase in aluminum or copper production.A 1 percent dec

140、line in aluminum and copper prices on impact due to an inventory demand shock is associated with a 0.7 percent decline in aluminum inventories and 0.6 percent decline in copper inventories.D.Impulse response of copper price to supply shock C.Impulse response of aluminum price to supply shock F.Impul

141、se response of copper price to consumption demand shock and inventory demand shock E.Impulse response of aluminum price to consumption demand shock and inventory demand shock 2 A 1 percent decline in aluminum and copper prices on impact due to a supply shock is associated with a 1.1 increase in alum

142、inum or copper production on impact.A 1 percent decline in aluminum and copper prices on impact due to an inventory demand shock is associated with a 0.7 percent decline in aluminum inventories and 0.6 percent decline in copper inventories.-10-505121416MonthsPercentage points-10-505101502

143、46810121416MonthsPercentage pointsSPECIAL FOCUS COMMODITY MARKETS OUTLOOK|OCTOBER 2022 13 pandemic.During this period,demand in China,which accounts for about 60 percent of aluminum and copper demand,continued to expand,although at a much reduced pace,whereas it contracted steeply elsewhere amid pan

144、demic lockdowns(IWCC 2022;Statista 2022).In the subsequent twelve months between May 2020 and May 2021,the rebound in economic activity lifted aluminum and copper prices by 39 and 42 percent,respectively.Supply disruptions,such as mine closures,added another 11 and 17 percentage points to the increa

145、se in aluminum and copper prices,respectively.The role of supply shocks during the pandemic differed from their role during the global financial crisis.Both the pandemic and the global financial crisis were accompanied by steep global recessions,in 2020 and 2009,respectively,that drove down prices.I

146、n contrast to the global recession of 2009,when supply shocks played a negligible role,supply shocks contributed about one-quarter to the price rebounds following the pandemic.Aluminum and copper supply disruptions are part of a broader phenomenon of severe supply bottlenecks,shipping disruptions,an

147、d global value chain dislocations over the past two years.This largely demand-driven rebound in aluminum and aluminum prices,accounting for 74 and 91 percent of the variance in these prices,respectively.Drivers of aluminum and copper prices during global recessions Over the past three years,a series

148、 of shocks have buffeted global metal markets.A steep pandemic-induced global recession was followed by a sharp rebound in global economic activity,which then slowed sharply again amid policy tightening;COVID-19 restrictions closed mines and intermittently disrupted activity in China,the worlds larg

149、est metals consumer;global demand initially shifted from services to goods followed by a reversal;and pandemic policies,the war in Ukraine,and the recent policy tightening to rein in inflation caused much speculation about commodity market prospects.In the three months between January and April 2020

150、,aluminum and copper prices declined by 18 percent and 16 percent,respectively,their steepest drops over a corresponding period in more than a decade.Subsequently,between April 2020 and March 2022,aluminum and copper prices more than doubledtheir steepest increases over a corresponding period in mor

151、e than three decades for aluminum and more than one decade for copper.Since then,within five months,one-quarter of the aluminum price gains and almost one-half of the copper price gains has been unwound again as mounting concerns about a global recession put downward pressure on commodity prices mor

152、e broadly.A historical decomposition of price movements into the four shocks identified by the methodology used here suggests that these aluminum and copper price fluctuations were largely the result of economic activity shocks(figure SF.4A,B).Between January and April 2020,economic activity shocks

153、depressed aluminum and copper prices by 27 and 23 percent,respectively;this was only partially offset(9.7 and 4.4 percentage points,respectively)by consumption demand shocks that raised prices.These consumption shocks may reflect above-average economic growth in China during the FIGURE SF.3 Decompos

154、ition of aluminum and copper price volatility Consistent with these impulse responses,longer term fluctuations in aluminum and copper prices were predominantly driven by economic activity shocks whereas inventory demand,consumption demand,and supply shocks mostly caused short-term volatility in pric

155、es.B.Forecast error variance decomposition of copper prices A.Forecast error variance decomposition of aluminum prices Source:World Bank.Note:Forecast error variance decomposition of aluminum(A)and copper(B)prices on impact and at the 12-month horizon,based on a structural vector autoregression as i

156、n Baumeister and Hamilton(2019).SPECIAL FOCUS COMMODITY MARKETS OUTLOOK|OCTOBER 2022 14 copper prices continued through March 2022,when prices soared to near-record(aluminum)and record(copper)highs(figure SF.5A).Since then,however,prices for both commodities have plunged.This has reflected an except

157、ionally steep global growth slowdown as well as the unwinding of supply disruptions.In addition,aluminum smelting,which is extremely energy intensive,has fallen sharply amid soaring energy prices.As a result,negative consumption demand shocks contributed even more to the aluminum price decline than

158、economic activity shocks(figure 5B).Similarly,the real estate sector slowdown in China that began to intensify in April constituted a negative consumption shock for copper prices.In addition,for copper,which is often considered a bellwether for global economic developments,growing concerns about the

159、 possibility of a global recession in 2023an example of an inventory shockhave weighed on prices.Policy implications The results of the analysis conducted in this Special Focus suggest that inventory and con-sumption demand shocks cause considerable volatility in metal prices in the very short term,

160、accounting for about one-third of global metal price volatility on impact.However,these shocks are small,reverse quickly,and have modest price impacts.The estimated impulse responses of aluminum and copper prices to economic activity suggest considerable downside risks to global aluminum and copper

161、prices.There is a material risk of a global recession as a result of highly synchronous policy tightening around the world to rein in record high inflation(Gunette,Kose,and Sugawara 2022).Since industrial production tends to be more volatile than output,this could be accompanied by an even steeper s

162、lowdown in industrial production which would also be reflected in lower aluminum and copper prices.The results point to metal price swings as an important transmission channel for the global business cycle to countries that rely heavily on copper or aluminum sectors for exports,fiscal revenues,and e

163、conomic activity.More swings in aluminum and copper prices can be expected as the energy transition away from fossil fuels towards renewable fuels and battery-powered transport gathers momentum.Renewable electricity generation is considerably more metal intensive than traditional energy generation.S

164、olar or wind-powered electricity generation,for example,uses two to three times the amount of copper per kWh than gas-powered electricity generation;the production of a battery-powered car uses more than three times the amount of copper per car than an internal combustion engine car(IEA 2022).The wa

165、r in Ukraine is likely to accelerate the energy transition as countries seek to reduce reliance on fossil fuels such as oil,coal,and natural gas,where Russia accounts for 11-25 percent of global exports(Gunette,Kenworthy,and Wheeler 2022).For now,metal exporters are on average less commodity reliant

166、 than energy exporters.For example,in the average copper-exporting emerging market and developing economy(EMDE),revenues from resource sectors ac-counted for 10 percent of government revenues in FIGURE SF.4 Drivers of aluminum and copper prices during global recessions Aluminum and copper price fluc

167、tuations during and after the pandemic-induced global recession of 2020 were largely the result of economic activity shocks.Supply disruptions contributed about one-quarter to price rebounds after the pandemic-induced recession,unlike the global financial crisis-induced global recession of 2009 when

168、 supply shocks played a negligible role.B.Contributions to copper price changes A.Contributions to aluminum price changes Source:World Bank.Note:Contributions to cumulative aluminum(A)and copper(B)price changes during the specified period.“During 2009”stands for the period September 2008-March 2009;

169、“After 2009”stands for the period April 2009-April 2010;“During COVID-19”stands for the period January-April 2020;“After COVID-19”stands for the period May 2020-May 2021.SPECIAL FOCUS COMMODITY MARKETS OUTLOOK|OCTOBER 2022 15 Baumeister,C.,G.Verduzco-Bustos,and F.Ohnsorge.Forthcoming.“Drivers of Alu

170、minum and Copper Prices.”Mimeo.Gill,I.S.,I.Izvorski,W.van Eeghen,and D.De Rosa.2014.Diversified Development:Making the Most of Natural Resources in Eurasia.Washington,DC:World Bank.Gunette,J.D.,P.Kenworthy,and C.M.Wheeler.2022.“Implications of the War in Ukraine for the Global Economy.”EFI Policy No

171、te 3,World Bank,Washington,DC.Gunette,J.D.,M.A.Kose,and N.Sugawara.2022.“Is a Global Recession Imminent?”EFI Policy Note 4,World Bank,Washington,DC.IEA(International Energy Agency).2022.The Role of Critical World Energy Outlook Special Report Minerals in Clean Energy Transitions.Vienna:International

172、 Energy Agency.IWCC(International Wrought Copper Council).2022.End-Use Statistics 2022.London:International Wrought Copper Council.2019.This was about one-third of the share of resources sectors in government revenues in the average oil-or gas-exporting EMDE.However,the growing exposure of metal exp

173、orters to volatile global commodity prices points to two policy priorities(Kabundi et al.2022).First,well-designed fiscal and monetary policy frameworks can dampen the economic impact of metal price swings.This includes fiscal rules to save revenue windfalls,sovereign wealth funds,and countercyclica

174、l monetary and macro-prudential policy frameworks(see World Bank 2022 for details).Almost two dozen EMDE commodity exporters have established fiscal rules or sovereign wealth funds,including Chile,the worlds largest copper producer.These tend to be particularly successful at stabilizing business cyc

175、les when they operate in the context of strong institutions and resilient fiscal,monetary,exchange rate,and financial frameworks.Second,in addition to measures to dampen the impact of global metal price swings,proactive efforts at diversification may reduce metal export-ers exposure to global shocks

176、.This could be achieved through export diversification or a more comprehensive“national asset portfolio diversification”approach(Gill et al.2014).The latter would aim to strengthen non-resource sectors through investment in strong institutions and governance,broad access to high-quality infrastructu

177、re,and robust measures to increase human capital.Policies would also need to address broader concerns,such as the environmental pollution that can accompany metals mining.References Baumeister,C.and J.D.Hamilton.2015.“Sign Restrictions,Structural Vector Autoregressions,and Useful Prior Information.”

178、Econometrica 83(5):1963-99.Baumeister,C.,and J.D.Hamilton.2019.“Structural Interpretation of Vector Autoregressions with In-complete Identification:Revisiting the Role of Oil Supply and Demand Shocks.”American Economic Review 109(5):1873-1910.FIGURE SF.5 Drivers of aluminum and copper prices since t

179、heir pandemic trough Following the pandemic trough in April 2020,strong demand pressures and continued supply disruptions pushed up aluminum and copper prices to record highs in March 2022.Since then,an exceptionally steep global growth slowdown and an unwinding of supply disruptions helped to rever

180、se some of the price increases.For aluminum,consumption demand shocks also depressed price,in part because highly energy-intensive aluminum smelters were shut off around the world as energy prices soared.For copper,often considered a bellwether of global economic activity,concerns about an incipient

181、 global recession have depressed prices,as captured by inventory shocks.B.Contributions to price changes,AprilJuly 2022 A.Contributions to price changes,May 2020March 2022 Source:World Bank.Note:Contributions to cumulative aluminum and copper price changes during May 2020-March 2022 when prices reac

182、hed record or near-record highs(A),and during April-July 2022 when prices plunged(B).SPECIAL FOCUS COMMODITY MARKETS OUTLOOK|OCTOBER 2022 16 Kabundi,A.,P.Nagle,F.Ohnsorge,and T.Yamazaki.2022.“Causes and Consequences of Industrial Commodity Price Shockand P.N.”In Commodity Markets:Evolution,Challenge

183、s and Policies,edited by J.Baffes and P.Nagle,219-59.Washington,DC:World Bank.Kabundi,A.,G.Vasishtha,and H.Zahid.2022.“The Nature and Drivers of Commodity Price Cycles.”In Commodity Markets:Evolution,Challen-ges,and Policies,edited by J.Baffes and P.Nagle.Washington,DC:World Bank.Ng,S.2021.“Modeling

184、 Macroeconomic Variations After COVID-19.”NBER Working Paper 29060,National Bureau of Economic Research,Cambridge,MA.Statista Research Department.2022.“Global End Use of Primary Aluminum by Sector,2020.”https:/ GmbH,Hamburg,Germany.Stuermer,M.2018.“150 Years of Boom and Bust:What Drives Mineral Comm

185、odity Prices?”Macro-economic Dynamics 22(3):702-717.World Bank.2018.Commodity Markets Outlook.The Changing of the Guard:Shift in Industrial Commodity Demand.October.Washington,DC:World Bank.World Bank.2022.Global Economic Prospects.January.Washington,DC:World Bank.Commodity Market Developments and O

186、utlook ENERGY COMMODITY MARKETS OUTLOOK|OCTOBER 2022 19 2022 to September 2022,the price of Brent crude oil in U.S.dollars fell nearly 6 percent,but rose by 7 percent,on average,in advanced economies(excluding the United States)and by 3 percent in oil-importing EMDEs in domestic currency terms.Indee

187、d,almost 60 percent of oil-importing EMDEs saw an increase in domestic-currency Brent oil prices during this period.The increases were largest in the South Asia region,with an average increase of 13 percent,and the largest overall increase in Sri Lanka of 67 percent.Global crude oil consumption grow

188、th has slowed over 2022 because of COVID-19 lockdowns in China and weakening demand elsewhere,Energy Energy prices have declined from record highs earlier in 2022 amid slowing global growth and concerns about a possible global recession.Prices have been extremely volatile,with wide divergence betwee

189、n individual energy commodities.Brent crude oil prices decreased from$120/bbl in June to$90/bbl in September.European natural gas prices reached an all-time high in August but have since fallen by about two-thirds,while coal prices reached an all-time high in July and have broadly plateaued.Energy p

190、rices are expected to decline over the next two years but remain well above their recent five-year average.The price of Brent crude oil is forecast to average$92/bbl in 2023,and$80/bbl in 2024.Natural gas and coal prices are expected to ease as consumption softens(natural gas)and production rises(co

191、al).Additional bouts of pronounced energy price volatility are likely.Further supply disruptions are a key risk,particularly for crude oil and natural gas,and global spare production capacity buffers are small.The main downside risk for energy markets is a global recession,which could cause a marked

192、 reduction in energy demand and sharply lower prices.Crude Oil Recent oil market developments Brent crude oil prices fell sharply during 2022Q3,with prices in September 2022 averaging 25 percent below their June highs(figure 2.A).Oil prices have been particularly volatile because of significant unce

193、rtainty about oil market funda-mentals.The fall in prices reflects a confluence of factors:slowing global growth and growing concerns about an impending global recession,continued pandemic restrictions in China,and substantial releases of crude oil from strategic reserves.Oil prices saw a partial re

194、bound to$97/bbl in October as OPEC+members agreed to cut production by 2 million barrels per day (mb/d),but this rebound proved temporary as the actual reduction may be just over half of the headline number.Due to widespread currency depreciation the price of Brent crude oil is higher in local curre

195、ncy terms in many countries(figure 2.B).From February FIGURE 2 Oil market developments Oil prices have generally declined from their peak following the war in Ukraine,albeit with significant volatility.As a result of the sharp appreciation of the dollar,however,oil prices remain higher in many count

196、ries in local currency terms.The economic slowdown has weighed on oil consumption,particularly in China,although it has been somewhat more resilient in other EMDEs.Consumption of jet fuel has increased rapidly,although it remains below its pre-pandemic level.B.Change in oil price in local currency A

197、.Brent prices Sources:Haver Analytics;International Energy Agency;World Bank.Note:EMDEs=emerging market and developing economies;OECD=Organisation for Economic Co-operation and Development.A.Monthly data.Last observation is September 2022.B.Change in price of Brent crude oil from February to Septemb

198、er 2022 in local currencies.C.D.Shaded area indicates IEA forecast.Last observation is 2023Q4.D.Oil products consumption in advanced economies C.Oil consumption ENERGY COMMODITY MARKETS OUTLOOK|OCTOBER 2022 20 FIGURE 3 Oil production OPEC+continues to produce well below its production targets,despit

199、e a smaller-than-expected decrease in Russias production following the war in Ukraine.The U.S.rig count continues to increase but at a slightly slower pace than in previous recessions.Several IEA members have released oil from strategic inventories,with the largest release from the U.S.Strategic Pet

200、roleum Reserve,which fell to its lowest level since 1984.B.Oil production in Russia A.Shortfall in OPEC+production from quota,2022 D.U.S.oil inventories C.U.S.rig count and drilled but uncompleted wells Sources:Baker Hughes,International Energy Agency;U.S.Energy Information Administration;World Bank

201、.Note:IEA=International Energy Agency;OPEC=Organization of the Petroleum Exporting Coun-tries;SPR=Strategic Petroleum Reserve.A.Data based on the IEA Oil Market Report October 2022.B.Oil production forecast for Russia based on IEAs“Oil Market Report October 2022”(dotted line),compared to the April 2

202、022 report(solid line).C.Last observation is the week of October 21,2022 for rig count and September 2022 for DUC.D.Last observation is October 14,2022.The deceleration in oil demand growth has been partially offset by power generators switching from natural gas to oil products(mainly diesel and fue

203、l oil)in response to much higher natural gas prices.The International Energy Agency(IEA)anticipates that the use of oil products in place of natural gas in power generation and other industrial uses will increase to around 0.7 mb/d in 2022Q4,double the level from a year ago(and just under 1 percent

204、of global consumption;IEA 2022a).Almost two-thirds of the switching will occur in Europe.Among oil products more broadly,demand for jet fuel has seen particularly rapid growth as tourism has steadily recovered,with consumption in advanced economies rising 20 percent in 2022Q3(y/y).Jet fuel consumpti

205、on remains around 14 percent below pre-pandemic levels,however(figure 2.D).Gasoline and diesel consumption have fallen slightly.Global oil production rose by 2 percent in 2022Q3(q/q)and has now recovered to its pre-pandemic level.Half of the increase was from OPEC and its partners(OPEC+),where produ

206、ction rose by just over 2 percent or 1.1 mb/d(q/q),as production targets were increased and Libyas output recovered.However,most of the OPEC+countries subject to production quotas failed to meet their targets,and their combined output was around 3.5 mb/d below their September target(figure 3.A).In S

207、eptember,the largest shortfall in production compared to targets was from Russia(-1.3 mb/d),Nigeria(-0.9 mb/d)and Kazakhstan(-0.5 mb/d).The gap between targets and actual output has been widening since the beginning of the year,due to operational issues and capacity constraints.Total oil output in R

208、ussia in 2022Q3 was around 0.3 mb/d below pre-invasion levels.This was a much smaller decline than the 2.5-3.0 mb/d anticipated by the IEA in their March Oil Market Outlook(figure 3.B).Russian production has been supported by rerouting of oil exports from G7 economies to other countries,including Ch

209、ina,India,and Trkiye,while European Union sanctions do not begin until December 2022.At their October meeting,OPEC+agreed to reduce production quotas by 2 mb/d starting in especially in advanced economies(figure 2.C).Growth in oil consumption decelerated to 1 percent(y/y)in 2022Q3,from an average of

210、 3.7 percent in the first half of the year,and is expected to turn negative in 2022Q4.In China mobility restrictions and weaker economic activity have re-duced oil demand by almost 7 percent in 2022Q3(y/y).Oil demand has been more resilient else-where,in part because of government support in the for

211、m of gasoline tax cuts and the use of fuel subsidies,but it has still started to slow,partic-ularly in advanced economies as macroeconomic activity deteriorates.ENERGY COMMODITY MARKETS OUTLOOK|OCTOBER 2022 21 November.In practice,the decrease will be a little more than half of that,as many countrie

212、s are already below their current targets.Among non-OPEC+producers,total oil output increased by 1 mb/d in 2022Q3(q/q),led by the United States,Canada,and Norway.Total oil production in the United States increased by nearly 0.4 m/d in 2022Q3(q/q)and is projected to see a similar increase in 2022Q4.U

213、.S.total oil production has recovered to its pre-pandemic peak,although within that,crude oil production remains about 1 mb/d below peak,offset by higher natural gas liquid production.The oil rig count,a leading indicator of oil production,has been broadly stagnant since mid-June(figure 3.C).Oil pro

214、ducers have focused on returning cash to shareholders amid investor pressure,rather than investing in new production.In addition,the industry is facing higher input costs such as labor and equipment shortages.Oil inventories controlled by industry in advanced economies have seen a steady decline sin

215、ce February and were 5 percent lower in August 2022 compared to the previous year.The decline has occurred despite the release of crude oil and oil products from IEA member countries strategic reserves;these releases have totaled around 180 million barrels(mb)of oil from March through August,a rate

216、of roughly 1 mb/d,or 1 percent of global consumption.The inventory release was intended to stabilize oil supplies amid expected disruptions from the invasion of Ukraine.The United States has released around 134 mb of crude oil from the Strategic Petroleum Reserve,bringing it to its lowest level sinc

217、e 1984(figure 3.D).The SPR is also now smaller than the quantity of commercial inventories.The remainder of the inventory releases came from Europe and Asia in the form of crude oil and oil products.Price forecasts and risks Outlook.Brent crude oil prices are forecast to average$92/bbl in 2023(close

218、 to their current level),before declining to$80/bbl in 2024;this forecast is unchanged from the April projections(figure 4.A).Despite the expected easing,prices will remain well above their recent five-year average of$60/bbl.The forecast assumes a deterioration in the macroeconomic outlook that is o

219、ffset by increased switching from natural gas to oil consumption and lower production among OPEC+(including Russia).The outlook is highly uncertain(as discussed below),and a continuation of elevated price volatility with further spikes in the short-term is likely due to low levels of spare capacity

220、and inventories,the upcoming European Union(EU)import ban and a potential price cap,and ongoing geopolitical developments.After rebounding to its pre-pandemic level by the end of 2022,oil consumption is expected to rise by 1.7 percent in 2023 to a new all-time high,according to the IEAs October asse

221、ssment(figure 4.B;IEA 2022b).Oil consumption growth in 2023 is expected to be supported by a recovery in demand in China,as the country gradually reduces pandemic restrictions,and by increased switching from natural gas to oil.The IEA estimates that switching could result in 0.7mb/d of additional oi

222、l demand during winter.Outside of Asia,however,oil demand growth is expected to be negligible or slightly negative in 2023.Oil production is expected to see an increase of less than 1 percent in 2023.Only a small number of countries are expected to see a rise in production,chiefly the United States(

223、figure 4.C).In contrast,crude oil production among OPEC+is expected to decrease,led by Russia.While OPEC+announced a headline reduction in production targets of 2 mb/d,numerous countries are already well below target.As such,the actual reduction may be just over half of the headline number,and sever

224、al countries may not see a reduction in production in 2023.Production in Russia is set to fall sharply as the EU embargoes Russian crude oil(from December 5,2022)and oil products(from February 5,2023)and restricts access to insurance and shipping services.The IEA anticipates that Russian production

225、could be 2 mb/d lower in 2023 as a result of sanctions.In addition,releases of oil reserves from strategic inventories are expected to stop by the end of 2022.Since March,these have been contributing about 1 mb/d of ENERGY COMMODITY MARKETS OUTLOOK|OCTOBER 2022 22 transition,including measures to bo

226、ost the adoption of electric vehicles and boost fuel efficiency.These could lower oil consumption(and carbon emissions)in the medium term.Risks There are several upside and downside risks to the price outlook.The downside risks primarily arise from threats to global consumption stemming from a globa

227、l recession and more prolonged COVID-19 restrictions in China.The upside risks are dominated by supply issues,including the extent to which Russias exports are impacted by new trade measures,OPEC+supply decisions,possible disappointments in production from the United States,and lower levels of strat

228、egic oil reserves.The prospect of a global recession could lead to much weaker oil consumption.Global growth has decelerated and is expected to slow further in 2023,due to synchronous policy tightening,worsening financial conditions,and declining confidence.Additional negative shocks,such as higher

229、inflation or financial stress,could push the global economy into a recession(Guenette,Kose,and Sugawara 2022).Historically,global re-cessions have been associated with large declines in oil consumption,although the severity of these has varied(figure 4.D).The largest decline in oil consumption occur

230、red in the 1980s,with consumption falling for four consecutive years.While the 1980s episode bears some similarities with the macroeconomic outlook todayhigh inflation,monetary tightening,and high oil pricesthere are three key differences(World Bank 2022).First,part of the decline in oil demand in t

231、he 1980s reflected substitution to alternative fuels for electricity generation,notably coal and nuclear power(Baffes and Nagle 2022).However,very little oil is used in electricity generation today,and as oil is currently one of the cheapest sources of energy,its use has actually risen due to switch

232、ing from natural gas.Second,governments have lowered taxes and introduced subsidies on oil,especially gasoline,which will mute the impact of higher prices on consumption.Third,the share of oil in GDP is much lower additional supply to the market,and in their absence the oil market would have been ti

233、ghter.The long-term oil market outlook may also be affected by the consequences of the war in Ukraine.Russian production of crude oil could be permanently lowered because of the exit of foreign companies and reduced access to capital,foreign technology,and machinery.Patterns of trade in crude oil an

234、d oil products are also likely to be altered,potentially raising transport costs.At the same time,recently announced government policy initiatives,including in the European Union and the United States,will likely accelerate the energy FIGURE 4 Oil market outlook Oil prices are expected to ease in 20

235、23-24,with modest increases in both demand and supply,albeit weaker than previously expected.Production growth is primarily accounted for by the United States,with modest increases in a couple of other countries.A key downside risk is the possibility of a global recession,which could materially redu

236、ce oil demand growth.B.Oil demand and supply forecasts A.Oil price forecasts D.Changes in oil demand around recessions C.Contributions to oil production growth Sources:BP Statistical Review of World Energy;International Energy Agency;World Bank.Note:IEA=International Energy Agency;OPEC=Organization

237、of the Petroleum Exporting Countries.A.Consensus forecasts taken from the October 2022 survey.Futures prices average of October 3 to October 21,2022.B.Shaded area indicates IEA forecasts.C.Figure shows IEA estimates for oil production growth from its“Oil Market Report,October 2022.”D.Figure shows ep

238、isodes of oil demand contractions around recessions.Year t is the peak in oil demand prior to contractions.Dashed line shows IEA forecast for 2022 and 2023 from its“Oil Market Report,October 2022.”ENERGY COMMODITY MARKETS OUTLOOK|OCTOBER 2022 23 today,especially in advanced economies,so consumers ma

239、y be less responsive to higher prices than in the past.Global oil supply will depend on the extent of disruptions to Russias exports,OPEC+production decisions,and the investment response by U.S.oil companies.At present,the IEA expects Russias exports to decline by about 1.5 mb/d because of additiona

240、l sanctions,but there is considerable uncertainty around these estimates.The proposed G7 oil price cap could help maintain the flow of oil from Russia,but it is untested and would need the participation of large EMDEs to achieve its objectives.Russia has also said it will not trade with countries pa

241、rticipating in the price cap.While significant disruption to Russias exports may occur in the short term as trade routes are disrupted,market participants may find ways to circumvent the sanctions,as has often occurred with other sanction episodes.For OPEC+more broadly,the group has shown a willingn

242、ess to alter production targets to support prices.While the current agreement is due to last through the end of 2023,it is possible the group could cut production further in the event of weaker-than-expected demand.Several countries are already producing below their new target,and there are broader

243、concerns about low levels of spare capacity.Spare capacity among OPEC+remains low at about 3.5 percent of global consumption and is concentrated in Saudi Arabia(2 mb/d),UAE(0.7 mb/d),and Iraq(0.3 mb/d).The production outlook assumes large increases in the United States.However,production could be we

244、aker than expected if companies continue to prioritize profitability over new production.In addition,higher interest rates,higher production costs,and shortages of key inputs,will make new projects more expensive.The stock of drilled but uncompleted(DUC)wells has fallen to its lowest level on record

245、 and is down 50 percent relative to its peak in June 2020,as companies have chosen to develop these wells rather than drill new ones.Going forward,this reduces the potential for companies to increase production from this channel.Further releases of strategic oil reserves would risk reducing supply b

246、uffers.Additional price spikes may lead to further inventory releases,but this would risk leaving strategic global inventories at very low levels.The U.S.Strategic Petroleum Reserve is currently close to 400 million barrels,down from a peak of 727 million in 2010.In addition,inventories will likely

247、need to be refilled in the future,representing an additional source of demand.While the exact timeline is unknown,the United States has indicated it will refill the SPR at a price of between$67/bbl and$72/bbl,thereby potentially setting a temporary floor for prices.Upside and downside risks may offs

248、et one another.Weaker-than-expected demand could be offset by lower OPEC+production and refilling of strategic inventories,potentially limiting the extent to which prices could fall.In contrast,if demand was higher than expected as a result of stronger global growth,or supply from Russia or the U.S.

249、was lower than expected,the gap could be met with additional releases from strategic inventories or from OPEC+spare capacity.However,these would use up buffers and raise the risk of additional price spikes in the future.Coal and Natural Gas Recent developments Natural gas market developments.Natural

250、 gas prices have been exceptionally volatile,with some benchmarks reaching all-time highs in 2022Q3 before sharply declining(figure 5.A).While the natural gas market has become increasingly global,stark price differentials remain due to differing supply dynamics.European natural gas reached an all-t

251、ime high of$70/mmbtu in August 2022 due to aggressive actions by several European countries to import liquefied natural gas(LNG)to rebuild their inventories and to compensate for reduced flows of gas from Russia.(Russia cut pipeline flows to most European countries during 2022Q3.)Prices subsequently

252、 dropped to$45/mmbtu in the first half of October as inventories filled ahead of schedule,and consumers reduced their consump-tion in response to higher prices and warmer-than-ENERGY COMMODITY MARKETS OUTLOOK|OCTOBER 2022 24 Inventories had been well below their typical levels earlier in the year,bu

253、t reached 90 percent capacity by October,above their average(figure 5.B).LNG imports were also needed to compensate for lower electricity production from hydroelectricity due to drought(Portugal and Spain),and nuclear power due to maintenance and water discharge issues due to heatwaves(France).The r

254、ecord high price of LNG in Europe in August resulting from high demand led to LNG cargoes destined for other countries being rerouted to the more profitable European market.This led to widespread power cuts in some countries,such as Bangladesh and Pakistan,which were unable to compete with Europe to

255、 purchase LNG cargoes on the spot market.Increased use of substitutes such as oil failed to meet power needs.Other large LNG importers,including Japan and the Republic of Korea,purchase more of their LNG via long-term contracts and were less affected by the surge in spot prices.Both countries,howeve

256、r,sought to diversify away from natural gas,including by bringing forward planned nuclear energy restarts.Natural gas consumption has broadly declined in 2022Q3.In Europe,demand has fallen by about 10 percent(figure 5.C).The decline is due to demand destructiona reduction in demand due to persistent

257、ly high pricesin energy-intensive industries,such as fertilizer plants,which curtailed output;the widespread switching to other fuels in power generation;and reductions in use by households in response to higher prices.Mild weather also helped reduce demand in October.The fall in demand has been hel

258、ped by government policies to reduce energy consumption,particularly natural gas.Consumption has also been influenced by the weather.In Brazil,a major recovery in hydroelectricity generation from droughts in 2021 caused consumption of natural gas to fall sharply.In the United States,natural gas dema

259、nd has been robust in 2022,but there has been less substitution to coal given the smaller price differential between the two fuels.Natural gas production has sharply declined in Russiadown 17 percent in August 2022(y/y)as the country has few options to redirect its exports given the reliance on pipe

260、lines to Europe.usual weather.Japan contract prices rose to a record high in September,albeit well below European prices.Natural gas prices in the United States rose to$8.8/mmbtu in August,their highest level since 2008,amid strong domestic demand and record exports of LNG,but subsequently declined

261、in September and October.Natural gas markets have been driven,to a large extent,by developments in Europe,and these have led to major shifts in patterns of trade.Exports of natural gas by pipeline from Russia to Europe have fallen sharply,causing Europe to turn to the LNG market as its main alternat

262、ive (as well as some incremental pipeline flows from the North Sea and North Africa).LNG imports rose sharply to help refill inventories ahead of winter.FIGURE 5 Natural gas market developments Natural gas prices have fallen from their record highs observed during 2022Q3.The fall in prices has been

263、partly due to the rapid increase in European natural gas inventories which are now above recent average levels.The buildup in inventories has been assisted by reduced natural gas consumption in Europe as industry and households have reduced consumption and switched to alternative fuels.Natural gas p

264、roduction in Russia has fallen sharply due to the reduction in exports to Europe.B.European natural gas inventories A.Natural gas prices D.Natural gas production in Russia C.European natural gas consumption Sources:Bloomberg;Eurostat;Gas Infrastructure Europe(AGSI+);JODI(database);World Bank.A.Month

265、ly data,last observation is September 2022.B.Sample includes 20 EU Countries and the United Kingdom.Last observation is October 5,2022.C.Year-on-year change of observed inland consumption.Last observation is July 2022.D.Monthly data.Last observation is August 2022.ENERGY COMMODITY MARKETS OUTLOOK|OC

266、TOBER 2022 25 This shortfall has been partly offset by increased supplies from other countries.Production in the United States was 10 percent higher in 2022Q3(y/y).The natural gas rig count has been increasing,and there has also been increased production associated with crude oil production.Exports

267、of LNG from the United States reached a record high in May,with a large increase in exports to Europe,although they fell in June following an explosion at the Freeport LNG terminal.This facility accounts for about 17 percent of U.S.LNG export capacity.Production has risen slightly in other countries

268、 amid higher prices,including in Australia,Egypt,and Qatar.Coal market developments.Coal prices continued to increase in 2022Q3,reaching an all-time high of$330/mt in July and broadly plateauing thereafter(figure 6.A).Developments in coal markets have been heavily influenced by high natural gas pric

269、es,which encouraged many countries to switch from natural gas to coal in power generation.This is a marked reversal of a broader trend to retire coal plants(figure 6.B).In addition,prices for thermal coal(mainly used in power generation)have risen well above the price of metallurgical coal(used for

270、steel making),which has caused some lower-grade metallurgical coal to be blended in power plants.Global consumption of coal has increased.In Europe,several countries reopened coal power plants or increased their utilization.Consumption in China also rose in 2022Q3 as increased coal generation was ne

271、eded to offset very low hydroelectricity output(caused by severe droughts).In the United States,in contrast,consumption of coal declined 12 percent in 2022 Q3.This is partly due to ongoing retirements of coal plants,but also because the price differential between coal and natural gas is much smaller

272、 in the U.S.than in other countries,due to the abundance of natural gas production.Production of coal has risen in several countries.In China,coal production was 11 percent higher in the first eight months of 2022 compared to the previous year(National Bureau of Statistics of China 2022).In India,pr

273、oduction was 21 percent higher in the first nine months of 2022 compared to 2021(figure 6.C;Ministry of Coal of India).As both China and India are coal importers,increased domestic production reduces their imports from other countries.Exports from Indonesiathe worlds largest coal exporterincreased a

274、fter the countrys temporary export ban in January ended,although a new partial ban was announced in August.Australias exports,in contrast,have fallen this year due to severe weather(Reserve Bank of Australia 2022).South African production has been hampered by rail capacity constraints and weather,al

275、though exports to Europe have surged.The European Union ban on Russian coal imports in August altered trade flows,with Europe importing more coal from Colombia,South Africa,the United States,and even Australia(figure 6.C).Meanwhile,Russia has rerouted cargoes that would typically have gone to the Eu

276、ropean Union to other countries,including India and Trkiye.These diversions have resulted in a significant increase in transport distances and therefore higher transport costs,since coal is bulky and expensive to transport.Outlook and risks Natural gas and coal prices are expected to ease in 2023 an

277、d 2024 but remain at much higher levels than their average over 2017-21.By 2024,Australian coal and U.S.natural gas prices are still expected to be double their average over the past five years,while European natural gas prices could be four times higher.The expected easing of prices next year is du

278、e to weaker demand for natural gas as households and industries curtail their consumption and switch to substitutes,while coal production is expected to increase significantly as China,India,and major coal exporters boost output.The switching away from natural gas could put climate change objectives

279、 at risk,given alternative fossil fuels have higher carbon dioxide emissions(figure 6.D).The outlook for natural gas will depend on the severity of the winter in Europe and the ability of consumers to reduce their demand.While current expectations are for a mild winter,a worse-than-expected outcome

280、could still result in very low ENERGY COMMODITY MARKETS OUTLOOK|OCTOBER 2022 26 LNG imports will increase by 60 bcm in 2023,helped by new import terminals,including floating terminals(International Energy Agency 2022c).However,that increase is more than double the expected increase in global LNG exp

281、ort capacity,which will keep upward pressure on prices as Europe competes with other markets,and the disruptions seen this year for some LNG importers could persist through 2023.One additional risk to natural gas is the potential for damage to critical infrastructure,as observed with the explosions

282、that occurred on the Nordstream 1 and 2 pipelines in September.Pipelines are,by their nature,very long and therefore difficult to protect,while LNG terminals are highly concentrated.As with crude oil,slower global growth is a key downside risk to the outlook for both natural gas and coal next year.I

283、n addition,recent government policy announcements,including in the European Union and the United States,to sharply increase renewable energy capacity and reduce overall energy consumption could further reduce natural gas and coal consumption,in both the short-and medium-term.Future growth in natural

284、 gas consumption may also be weaker than expected as the sharp volatility in prices and lack of access to LNG may prompt some countries to reevaluate its role as a reliable fuel.In part reflecting this,the IEA has reduced its forecast for natural gas consumption growth over the next five years by on

285、e-half(International Energy Agency 2022d).The impact of this change on carbon emissions will depend on the extent to which countries favor renewables or coal in place of natural gas.In addition,countries may prioritize longer-term contracts with fixed prices over purchases on the spot market.In the

286、longer term,the prospect of persistently high energy prices may require a shift in industrial strategies in some European countries that have historically relied on natural gas imports via pipeline from Russia.Indeed,high energy prices have already led to the closure of capacity in some energy-inten

287、sive industries,including fertilizer,chemical,and metal processing plants,and shifts in manufacturing operations among others.inventory levels by the end of the winter.Policy coordination among key importers will be vital to ensure an equitable burden of high energy prices or energy disruption.The E

288、uropean Union has announced several policies to try and address these challenges,including jointly purchasing gas,and focusing on reducing demand.A price cap on natural gas has also been discussed,however,this would need to be balanced against procuring sufficient supply.Europe will face further cha

289、llenges in replenishing inventories next summer amid the loss of Russian gas imports.The IEA forecasts that European FIGURE 6 Coal market developments Coal prices soared through 2022Q3 and remain elevated as countries turn to coal as a substitute for natural gas,a marked reversal of a broader trend

290、toward retiring coal plants.The EU has turned to alternative suppliers of coal to reduced imports from Russia.The switch toward other fuels from natural gas could put climate objectives at risk,given greater carbon dioxide emissions from coal and fuel oil.B.Net new coal plant additions A.Coal prices

291、 D.CO2 emissions,by type of fuel C.EU coal import growth,select countries Sources:BP Statistical Review;Eurostat;Energy Information Administration;Global Energy Monitor;World Bank.A.Monthly data.Last observation is September 2022.B.Last observation is 2021.C.Figure shows the year-on-year change in c

292、oal imports in million tons from select countries.D.Fuel oil is an average of distillate fuel oil and residual fuel.Figure for natural gas does not include greenhouse gas emissions arising from leaks.Mmbtu=millions of British thermal units and is a measure of energy content.AGRICULTURE AND FERTILIZE

293、RS COMMODITY MARKETS OUTLOOK|OCTOBER 2022 27 decline marginally relative to projected demand,during the 2022-23 season,with the stocks-to-use ratio falling to 0.27 from a high 0.31 in 2017.For the three main grainswheat,maize,and ricethe U.S.Department of Agriculture is estimating that global produc

294、tion will decline by 2.3 percent this season,or 57 million metric tons(mmt).By comparison,grain supplies have grown by an average of 35 mmt per year during the past three decades.Wheat prices dropped nearly 20 percent in 2022Q3(q/q),but they are still one-quarter higher than a year ago.Prices surged

295、 in 2022Q2,reaching$522/mt in May,following the halting of Ukrainian exports through the Black Sea.A UN-brokered deal between Ukraine and Russia,orchestrated by Trkiye,facilitated the resump-tion of grain exports on July 22nd.Since then,half of Ukraines wheat inventories are thought to have found th

296、eir way to global markets.Negotiations are underway to extend the deal which expires in November.On the supply side,global production of wheat during the current season(which began in August)is expected to increase marginally from last season as declines in Argentina and Ukraine(both due to lower pl

297、anting area)will be offset by higher-than-expected yields in key exporters,including Australia,Canada,and the Russian Federation.Global consumption of wheat is expected to decline by 0.5 percent due to weaker-than-expected demand for animal feed.As a result,the stocks-to-use ratio will remain at 0.3

298、4,roughly unchanged from last season.Maize prices dropped 10 percent in 2022Q3(q/q),but are still 20 percent higher than a year ago.The resumption of grain exports through the Black Sea,along with weaker-than-expected animal feed demand in the European Union and the United States(down 8 and 4 percen

299、t,respectively)contributed to the weakness.At a global level,maize production is expected to decline by 4 percent this season,in response to weather-related lower yields in the United States and the European Union,which account for 32 and 7 percent,respectively,of global maize supplies.Given expecte

300、d reductions in both production and consumption,the stocks-to-use Agriculture The agricultural price index declined 11 percent in 2022Q3(q/q),after reaching an all-time high in April,in nominal terms.The weakness reflected larger-than-expected edible and oilseed global supplies,a UN-brokered agreeme

301、nt that allowed Ukrainian grains to reach global markets,and deteriorating global growth prospects.Among key grains,wheat prices fell nearly 20 percent over the previous quarter(but remain 24 percent higher than a year ago),followed by maize prices(10 percent lower,q/q);rice prices have remained bro

302、adly stable.The edible oils and meals price index declined 18 percent in 2022Q3(q/q).Beverage prices remained fairly stable during the past three quarters as a group,with a modest increase in tea and coffee prices offset by a drop in cocoa prices.Raw material prices declined nearly 11 percent in the

303、 quarter following robust supplies of cotton and natural rubber amid deteriorating global growth prospects.Following a projected increase of more than 13 percent in 2022,agricultural prices are expected to fall by nearly 5 percent in 2023,before stabilizing in 2024 as supplies of most food commoditi

304、es increase due to improved yields and the ongoing Ukraines return to the global markets.Despite the expected declines,most prices will remain high by historical norms.There are numerous risks to the price outlook.They include the likelihood of higher-than-expected input prices or energy supply disr

305、uptions;further deterioration of the global outlook(including acceleration of monetary tightening and further appreciation of the U.S.dollar);adverse weather patterns(including an emerging La Nia for a third year in a row);and restrictive trade policies.Grains,oils,and meals Recent developments and

306、outlook The grain price index declined by 12 percent in 2202Q3(q/q)but remains almost 20 percent higher than a year ago.The broader food price index declined at a similar pace(figure 7).A favorable global wheat crop and a UN-brokered deal that facilitated grain exports from Ukraine have been key con

307、tributors to the easing of grain prices.Global food inventories are expected to AGRICULTURE AND FERTILIZERS COMMODITY MARKETS OUTLOOK|OCTOBER 2022 28 ratio is projected to remain unchanged at 0.26,below its record 0.33 in 2016 but well above a low of 0.13 during the price spike of 2010.Rice prices d

308、eclined 4 percent in 2022Q3(q/q),but remained 6 percent higher than a year ago.Rice prices have been broadly stable during the past five quarters since retreating from a seven-year high in 2021Q1 amid heightened pandemic-related concerns about global supplies and discussion of export restrictions,mo

309、st of which did not materialize.This is in contrast to the sharper and more sustained price spike of 2010-11,which resulted from trade restrictions by key exporters(notably India and Thailand)and aggressive buying by major importers(Indonesia and the Philippines).The USDA expects global rice product

310、ion to decline 2 percent in 2022-23,reflecting lower crops in China(down 1.3 FIGURE 7 Agricultural price developments Following record highs earlier in the year,prices of oils&meals and grains retreated in 2022Q3,in response to better-than-expected oilseed crop yields and the UN-brokered deal that a

311、llowed Ukrainian grain supplies to reach global markets.However,food prices in most domestic currencies are still high due to U.S.dollar appreciation.B.Wheat price in domestic currencies A.Agriculture price indexes D.Soybean and rice prices C.Wheat and maize prices Sources:Bloomberg;Haver Analytics;

312、World Bank.A.C.Monthly data.Last observation is September 2022.B.Percent change from February to September 2022.C.Wheat refers to the U.S.HRW benchmark.D.Rice refers to Thai 5%benchmark.percent)due to dry conditions and to lower planted area in India(down 5 percent).These shortfalls will be partly c

313、ompensated by Thailand and Vietnam which are expected to raise production by 1.2 percent each;India,Thailand,and Vietnam are the worlds three dominant rice exporters.As global rice consumption is expected to remain broadly unchanged,the supply shortfall will reduce the stocks-to-use ratio for rice t

314、o 0.34,marginally lower than the past two seasons but considerably higher than the low of 0.18 in 2006.The oils and meal price index declined more than 18 percent in 2022Q3(q/q),the largest drop among key food price indexes.However,the index,which reached an all-time high in March 2022,remains 5 per

315、cent higher than a year ago.The lower prices reflect better crop prospects across most edible oils and oilseeds,Indonesias removal of its export ban on palm oil,and weakening global demand due to consumer affordability issues and faltering growth prospects.The resumption of exports from Black Sea po

316、rts also contributed to improved supply sentiment(Ukraine accounts for 30 percent of global sunflower production).This seasons global production of the eight most important edible oilsincluding soybean and palm oil,which together account for nearly two-thirds of global edible oil suppliesis expected

317、 to grow more than 4 percent or 9.6 mmt,much higher than long-term average growth of 5.5 mmt(figure 8).While supplies of all eight edible oils are expected to increase,most gains will come from palm,rapeseed,and soybean oils(up 4.2,4.3,and 8.2 percent,respectively)in response to favorable growing co

318、nditions in South America(soybean oil)and East Asia(palm oil).Production of the seven major oilseeds is expected to grow even more strongly than edible oils at 4.5 percent,led by soybean and rapeseed.The supply outlook of oils and meals for 2022-23 shows improvement from last season when production

319、of both groups grew far less than their long-term average.Price forecasts and risks Following a more than 20 percent increase in 2022,the grain price index is expected to drop 6 percent in 2023 and remain broadly flat in 2024.AGRICULTURE AND FERTILIZERS COMMODITY MARKETS OUTLOOK|OCTOBER 2022 29 The

320、outlook reflects expectations of improved yields,continuation of Ukraines return to the global markets,and weakening demand in response to the slowdown in the global economy.Maize prices are expected to decline 8 percent next year,following a projected increase of more than 20 percent in 2022 due to

321、 the effects of the Ukraine war and weather-related production shortfalls.Wheat prices,which are projected to increase 36 percent in 2022,are expected to decline modestly next year.Rice prices are projected to average 5 percent lower in 2022 and remain unchanged in 2023.The 2023 forecasts for all th

322、ree grains represent small upward revisions since April.The price outlook is subject to multiple upside and downside risks in a highly uncertain environment(figure 9).They include worsening global growth prospects,including the pace of recovery in China;macroeconomic uncertainties;a prolonged and de

323、eper conflict in Ukraine;higher input costs(especially energy and fertilizers);the ongoing La Nia weather pattern;and,in the longer term,trade and biofuels policies.Global growth prospects.The global growth slowdown and the possibility of recession in several economies raises concerns about sharply

324、lower household incomes.In addition,an appreciation of the U.S.dollar against most currencies has made food commodities in emerging market and developing economies more expensive,further eroding the purchasing power of households in low-income countries.Along with inflationary pressures,these would

325、reduce affordability of,and access to,food.Low-income countries are especially vulnerable as consumers spend a large portion of their disposal income on foodin some countries exceeding 50 percent.Many of these countries have limited fiscal space to support vulnerable households after having spent co

326、nsiderable resources during the pandemic.Macroeconomic uncertainties.Elevated inflation and interest rate hikes also pose risks to commodity prices.Persistently high inflation could exert further upward pressure on the cost of labor as well as on the intermediate materials used FIGURE 8 Global suppl

327、y conditions for grains and edible oils Global grain supplies are heading for a shortfall of nearly 50 mt in the current season that started in August,amid deteriorating prospects for the U.S.maize crop.Edible oil supplies,however,are expected to increase well above historical average growth due to

328、a robust soybean crop from South America.Although aggregate food stocks-to-use ratio(a rough measure of supply relative to projected demand)has dropped markedly over the past four seasons(down to 27 percent from its high of 31 percent in 2017),it is still adequate by historical standards.B.Edible oi

329、l supply growth A.Grain supply growth D.Soybean and rice supplies C.Wheat and maize supplies Sources:U.S.Department of Agriculture(psdonline database,October 12,2022 update);World Bank.Note:mmt=million metric tons.A.B.E.F.Years represent crop season(for example,2021 refers to 2021-22.Last observatio

330、n is 2022.Supply is the sum of beginning stocks and production.C.D.Blue bars denote revisions to the 2021-22 supply assessment(based on monthly USDA updates);orange lines denote the latest(October 12,2022)estimate for the 2022-23 season.E.F.Stocks-to-use ratio is the ratio of ending stocks to domest

331、ic consumption.0369720092000221990-2021 averagemmt,annual change0015201,0001,0201,0401,0601,080May-22Jun-22Jul-22Aug-22Sep-22Oct-22May-22Jun-22Jul-22Aug-22Sep-22Oct-22WheatMaize(RHS)2022-23 forecast2021-22 estimatemmtmmt67068069070074

332、70480490May-22Jun-22Jul-22Aug-22Sep-22Oct-22May-22Jun-22Jul-22Aug-22Sep-22Oct-22SoybeansRice(RHS)2022-23 forecast2021-22 estimatemmtmmt005200720092001720192021MaizeRiceWheatRatio52005200720092001720192021Ratio-020025020052007200920

333、00221990-2021 averagemmt,annual changeF.Stocks-to-use ratio for food,aggregate E.Stocks-to-use ratio for grains,individual to produce,store,and transport commodities.Interest rate hikes by major central banks to combat high inflation are expected to continue in 2023 and will increase the global cost of AGRICULTURE AND FERTILIZERS COMMODITY MARKETS OUTLOOK|OCTOBER 2022 30 FIGURE 9 Risks