Commodity Markets Have Stabilised, Returning to Pre-invasion Levels Despite War in Ukraine

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Despite the ongoing conflict between Ukraine and Russia, commodity markets have stabilised and returned to pre-invasion levels. This is a remarkable feat considering the turmoil in the region for exactly a year on February 24. 

The war has impacted commodities prices, with many significant markets seeing their prices fluctuate significantly — crude, oil, liquefied natural gas (LNG), and coal since February of last year when Russian forces invaded Ukrainian territory. 

However, recent market trends suggest that things are beginning to normalise despite continued instability in the region. Prices have either returned to normal or have fallen below the pre-invasion records.

This stabilisation of commodities is primarily attributed to increased global demand for goods such as oil and gas, coupled with new production technologies that have helped reduce costs associated with extraction. 

“All of these commodities saw prices surge after the invasion, with thermal coal and spot LNG hitting record highs as fears of an energy crisis caused by the threatened loss of Russian supplies swept the global markets,” said Reuters.

“But these fears were never fully realised, largely because Russian commodities were re-routed to new buyers and some consuming nations cut consumption of commodities such as natural gas.”

Also, governments worldwide have taken steps toward deregulating specific industries, which has also contributed to these positive developments in commodity markets. 

In addition, spot LNG for delivery to north Asia ended last week at $16 per million British thermal units, down from $24.40 the week before the invasion, which Moscow calls a “special military operation.” Global benchmark Brent futures ended at $80.50 a barrel on Wednesday, below the $96.84 from February 23 last year.

According to commodity price reporting firm Argus, spot iron ore settled at $130.45 a tonne on Wednesday, down from $137.30 on February 23 last year.

Last week, the benchmark price for Australian thermal coal at Newcastle Port dropped to $195.13 per tonne from $249.25 the week before the attack on Ukraine. Even worse, on Wednesday, the daily spot price calculated by globalCoal fell to $169.91 per tonne.

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