Cyclope 2020: the Covid has amplified the energy counter-shock

Audio 01:51

By: Claire Fages Follow

Covid-19 epidemic requires, the annual Cyclops report on the commodities markets is published a month late. This period has been used to devote an entire chapter to the historical consequences of the health crisis.

Publicity

Curious coincidence, the cover illustration of Cyclops, chosen before the pandemic, is "the Allegory of bad government", a fresco by the Sienese painter Ambrogio Lorenzetti, died of the black plague in 1348. Once is not custom, The 34th Cyclops report does not look only at the year before, namely 2019. An additional chapter describes the upheaval experienced by the raw materials markets since January, with the emergence of the coronavirus.

The end of the " Glorious Thirty Years of Globalization " ?

A health crisis which served as a spark for an economic crisis which could have "  an impact as strong as the two great crises of 1929 and the 70s  ", estimates Philippe Chalmin, co-director of the publication: the end of "  news Thirty Glorious Years of Globalization, which had started in the 90s  ”.

This time, it is not an oil shock, but an "oil and gas counter-shock" that we are witnessing. An energy counter-shock which is due to the big brake on demand caused by the Covid-19. But which has roots prior to the health crisis. The price war between Saudi Arabia and Russia had started before the pandemic.

Surplus crisis and price war, from oil to aluminum

Every 20 or 30 years, recalls Philippe Chalmin, there is a deep crisis with a shock of rising prices which pushes to invest and when these investments materialize, surpluses are formed, which has been observed since 2014, including included in some agricultural markets. The crisis has amplified the movement. And "  it highlighted the weaknesses of some  ", such as the cotton value chain, which collapsed, the meat and fruit and vegetable sectors, which lacked manpower, and "  the difficulties of others even in the world of international trading  ”.

Winning metals linked to new mobility, as in 2019

Similarly, the Covid-19 crisis revealed the structural strengths and weaknesses of certain ores and metals. "  The winners of 2020, palladium, iron, gold, silver and nickel, are the same as in 2019,  " said Yves Jégourel, co-director of Cyclope. Copper has already erased part of the losses recorded since January. These are minerals and metals with a limited supply, or which have good prospects in new forms of mobility.

Conversely, aluminum, which has lost the least since January, is recovering more slowly, due to considerable stocks. With Gulf suppliers such as Bahrain, which has doubled its exports, we are even on the way to a price war comparable to that waged by oil producers.

Newsletter Receive all international news directly in your mailbox

Follow all international news by downloading the RFI application

• Raw materials
• Energies
• Oil
• Economic crisis

On the same subject

Chronicle of raw materials

Energy: an unprecedented drop in investment in 2020 according to the IEA

Chronicle of raw materials

Covid-19 disrupts grain trade

Chronicle of raw materials

The coronavirus, signal of a sustainable decline in fossil fuels?