Last time the Commodities enter super cycle season was in 2008. Both Soft Commodities (e.g. wheat, corn) and Hard Commodities (e.g. coal, oil) were heating up mainly due to increasing demands from the emerging economies (BRIC, etc).

This time around, the super cycle is rather different. The pandemic and the geopolitical situation have all contributed to supply constraints; hence inflating the commodity prices. It could be exacerbated by the recovery in demands post-pandemic later on.

Coal

Despite all the euphoria surrounding renewable energy, coal remains as the primary source of energy for electricity generation.

 

High coal price should incentivize for more investments in renewable energy. Yet, How soon the renewable energy can replace coal power generation is debatable.

 

It seems that high coal price will stay for a while; until more affordable and sustainable alternatives can be sourced.

 

Related stocks: ADRO, ABMM, DOID, ITMG, SRTG

 

Oil & Gas

O&G is industry is a capital-intensive one. Without continuous investment, production capacity will keep on depleting.

 

Since year 2013, the number of oil rigs in operation globally have more than halved from over 3400 rigs to less than 1400 rigs in year 2021.

 

The question is not whether the O&G companies are capable to put more rigs in operation; but whether it is worthy to invest in a rig with long payback period as O&G reserves are getting deeper and harder to pump.  

 

Related stocks: AGII, ENRG, MEDC, SRTG

 

Nickel

Probably the most prized commodity for transport industry, nickel element is crucial to manufacture EV batteries.

 

The high demand (coupled with supply constraint) is pushing some commodity powerhouse to maintain sufficient stocks in their warehouses.

 

Fortunately, the country hosts the most nickel resources compared to other countries.  https://equityindonesia.com/mining-the-future-commodity-nickel/ 

 

Related stocks: ANTM, HRUM, INCO, MDKA, SRTG

 

Fertilizer

Food security could prove challenging for many countries in near future. Climate change and growing population necessitate for land productivity to grow crops.

 

 

This is where Fertilizer (potash, ammonia, nitrogen, urea, etc) plays a key role towards food security.

 

Related stock: ESSA

 

 

Disclaimer: NOT FINANCIAL / INVESTMENT ADVICE. This article is of writer’s personal opinion. Any information contained here is for education and informational purpose only. Readers should seek other sources or professional advice for further clarification where deemed necessary.