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Resilinc has announced the top five moving factors that shaped the markets in 2022 for the commodities tracked by Resilinc’s CommodityWatchAI. Launched in 2020, CommodityWatchAI uses real-time news and event monitoring and predictive analytics to forecast supply, demand, and pricing trends out to three months for commodities including but not limited: gold, silver, aluminum, copper, caustic soda, cobalt, helium, paper, and tin.
Resilinc’s customers use the service to plan purchasing strategies, identify cost arbitrage opportunities, leverage pricing negotiations, and gain competitive advantages. In this blog, we’ll look at how the CommodityWatchAI top five ranking shifted from 2021 to 2022, uncover how these factors impacted commodities in 2022, and see what these shifts mean for commodities in the future.
#1 Manufacturing Disruptions
The biggest news in CommodityWatchAI’s 2022 data is that Higher Consumption played a much smaller role in 2022 than it did in 2021. In 2021, consumer demand skyrocketed in patterns that defied historical demand forecasting models. This unpredictable demand spike led to shortages of commodities ranging from aluminum to paper, making Higher Consumption by far the top moving factor in 2021.
In 2022, with inflation cutting into demand globally for a wide range of products, Higher Consumption ranked a distant eighth while Manufacturing Disruption became the most influential moving factor. This shift reflected the continuing disruptions in commodities value chains in China associated with the government’s strict Covid policies, which eased at the end of the year. Additionally, protests and labor actions by workers and consumers in Latin America and Asia disrupted manufacturing and logistics for many commodities.
#2 Geopolitical Unrest
With a European war underway, Geopolitical Unrest was the second most influential moving factor in commodities supply, demand, and pricing in 2022. Russia’s invasion of Ukraine reduced or stopped production of neon, aluminum, steel, and other commodities, while the EU has banned exports to and imports from Russia for a range of chemical products.
#3 Laws & Regulations
Alongside Geopolitical Unrest, Laws & Regulations became the third most significant moving factor that impacted commodities in 2022. These include export restrictions both symbolic and substantial, with China’s ban on sand exports to Taiwan in the first category and Indonesia’s announcement of a 2023 ban on exports of bauxite—the main raw material for aluminum—expected to have a substantial impact on aluminum supplies.
#4 Higher Operational Costs and #5 Market Uncertainty/Fear
Higher Operational Costs and Market Uncertainty/Fear rounded out the top 5 most influential moving factors for the year. Higher Operational Costs were the result of rising prices for energy and other key inputs.
After ranking fourth in CommodityWatchAI’s moving factors in 2021, Market Uncertainty/Fear ranked fifth in 2022. While all of the above moving factors contributed to the uncertainty and anxiety, an additional factor emerged during the year, according to professional traders and procurement professionals: the decline in stocks and bond markets has driven more retail investors to take refuge in gold, silver, copper, and other commodities. And this trend introduces yet more volatility as inexperienced investors are poised to suffer large losses or “disrupt the complex and volatile markets,” noted FT in a January 2, 2023 article.
What factors will impact commodities in 2023?
Resilinc’s CommodityWatchAI can’t insulate customers from turmoil and volatility that will surely persist through 2023 for commodities. But the AI-powered tool empowers supply chain and sourcing teams to monitor and forecast supply and pricing trends and use that intelligence for strategic advantages. Learn how CommodityWatchAI can help your team stay on top of commodity trends for 2023.
