Research

Commodity: Starting 2024 With Another War

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Algo Research Team

Industry | Jan 15, 2024 | Views: 341

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Key Summary:

  • Geopolitical risk represents tactical trade
  • High commodity and inflation narrative too soon
  • Selective flows in some names, 2024 earnings estimates mixed

Another year, another geopolitical war where 2024 saw the start of the year kick-off with US-UK coalition attacking Houthis (Iran-backed) bases in Yemen as a result of recent threats and attacks on cargo vessels in the Red Sea, which has disrupted and delayed (re-routing to Cape of Good Hope) goods flowing from Asia to the West. Some experts suggest that this is an escalation (and provocation) to trigger a wider conflict in the Middle-East (by dragging Iran) following the war between Israel and Palestine.



The conflict has pushed shipping rates much higher this month with >150% increase for the rate from Asia to Europe and >40% from Asia to North America. Consequently, many have called for a restart in inflation and commodity prices, but we think this is not yet the case.

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