2020 Analytics Outlook
This year has been marked by a tug of war between geopolitical tensions and macroeconomic concerns, rangebound commodity prices and – perhaps most importantly – rising consumer awareness of climate change. As we look ahead to 2020, the year will bring some of these themes into even sharper focus.
Energy transition is going to be ever-present, driving discussions and strategic planning in 2020. World leaders in both politics and industry are under mounting pressure from consumers to deliver increased energy produced with dramatically lower emissions and in more sustainable ways.
China’s economic slowdown
Tariffs and trade wars will continue to dictate global pricing and trade flows for multiple commodities in 2020, but the consequences of the ongoing dispute between China and the US, particularly, are now rippling out into the economy, sparking fears of another recession.
The rise of new markets
Investments are under way globally to support significant changes, such as the emergence of electric vehicles and a move from virgin to recycled plastics. But as with all nascent markets, infrastructure that makes these industries truly scalable and markets commoditized will take time to develop.
Weather-driven market events
Weather-related demand swings have always been a feature of commodity markets, particularly natural gas and electricity, but the cycle of significant climate events is increasing. As agriculture and biofuel demand grows, these swings will get larger, as will the demand for heating fuel.
2020 could be the year of the centralized ledger, but potentially without blockchain technology itself. Smart contracts that offer a similar level of security are already a reality, albeit with centralized ledgers. These efforts could reduce costs and lower barriers to entry across commodities markets.
From Martin Fraenkel, President S&P Global Platts