Lex writers, like pigeons, solely have 340-degree imaginative and prescient. We’ve small blind spots on something approaching from behind. Early this 12 months, Lex selected to disregard the chance that Russia would launch a full-scale invasion of Ukraine. Its instant aftermath led to additional surges in all power costs. However economically delicate industrial metals akin to aluminium ultimately fell sharply.
On the time of writing in February, Lex may need seemed again to notice that the rustproof steel worth had greater than doubled to almost £3,200 per tonne since Might 2020. If any contrarian twitches took maintain, they weren’t registered in that column. We concluded that readers ought to “Count on it to stay effectively bid in months to come back”. As an alternative, London Steel Alternate aluminium costs stuttered after the invasion after which fell by a 3rd.
Additionally questionable was the recommendation to stay with wind turbine makers. In January, we even made fun of hedge funds shorting teams akin to Vestas, assuming incorrectly that the worst had handed. As an alternative, provide chain disturbances introduced added prices. Earnings per share for 2022 flipped from revenue to loss within the house of a number of months. By October, its share worth had fallen by a fifth, though it has rallied since.
Whereas hovering power costs post-invasion set the bear among the many pigeons for some commodities, not many believed oil costs might fall. Lex did. However frankly having questioned the bull market in crude a lot of final 12 months, our credibility was low.
Nonetheless, we hammered on and on. From late February, Lex pointed out the risk of hovering petrol costs hitting customers’ wallets all over the place, however particularly within the US. It’s the largest shopper of oil, in any case. Oil merchants grappled with low crude shares and the approaching slowdown of petrol consumption, the most important single part of demand. Finally, oil did peak in early June, earlier than dropping by almost a 3rd.
Lex will not be afraid to defend its positions. However we do admit it once we get it mistaken. This 12 months, commodities have given us loads of alternative for that.
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