Gasoline: Softer Demand Hurts

In September, U.S. gasoline futures dropped below $2.07 per gallon, marking the lowest level since early January. This decline reflects a combination of weaker demand and oversupply in the market. The downturn is largely attributed to reduced fuel consumption in major markets. In fact, China’s National Bureau of Statistics reported that the country’s factory activity contracted at the steepest rate this year, exacerbating concerns that Beijing’s limited economic stimulus may lead to greater decline in demand for energy intensive industrial products. Despite clear signs of weakening demand, OPEC’s decision to maintain a cautious approach by only gradually reducing output cuts contributed to the continued slide in gasoline prices.

Copper Melts Down

Copper futures fell to $4.1 per pound in early September, pressured by increasing inventories and sluggish demand from China. Spot prices, too, have fallen $8,972 per pound to $9,385 per pound. Official data indicated greater contraction in China’s manufacturing sector in August. However, a private survey suggested a more optimistic view, showing unexpected growth in the sector. Copper, essential in numerous applications such as household appliances, electric vehicles, and renewable energy infrastructure, saw its price decline, which could potentially lead to lower costs for these products. The average automobile, which contains about 65 pounds of copper, and the typical household, with over 400 pounds, could benefit from these lower prices. So, will renewable energy equipment makers.

Lithium’s Weak Charge

Lithium carbonate prices fell to CNY75,000 per tonne, the lowest in over three years, amid concerns of oversupply. The decline comes as lithium miners and producers aggressively expanded capacity, anticipating a nearly 50% increase in global supply this year. The resulting supply surplus has been exacerbated by a slowdown in demand, partly due to a battery glut influenced by government subsidies. Additionally, the European Union’s imposition of a 9% tariff on Tesla electric vehicles (EVs) produced in China, along with increased U.S. tariffs on Chinese EVs, has impacted lithium prices. Given its Indian two-wheeler EV boom, lower lithium prices could prove to be a big growth kicker.