Coal became the commodity champion with a 66.1% increase during the first quarter of 2022. Meanwhile, gold became the heaviest with an increase of 5.2% during the first quarter of 2022.
Global commodity prices soared throughout the first quarter of 2022. The geopolitical escalation between Russia and Ukraine became the main theme of the strengthening of the prices of these crops. Even to carve a new price record.
The surge in commodity prices is also beneficial for Indonesia as the world’s main producer of agricultural products. Indonesia can also get coffers from export trade, the majority of which are commodity goods such as coal, palm oil, copper, and others.
The price increase Coal prices were driven by market concerns over Russia’s sanctions by western countries by “ejecting” it from the international financial system. The price of coal had skyrocketed to reach US$ 487.5/ton and became the highest of all time.
The problem is, Russia is the third-largest coal exporter in the world after Indonesia and Australia. In 2019, Russian exports reached 217 million tons.
If supplies from Russia were stopped due to war, the world would lose 17.8% of its supply. Russia is also the country of origin for China’s second-largest import, the main consumer, after Indonesia.
Based on BP Statistical Review 2021 data, Indonesia is the owner of the seventh-largest coal reserves in the world, reaching 34.87 billion tons, the status until the end of 2020.
Based on data from the Geological Agency of the Ministry of Energy and Mineral Resources (ESDM), as of July 2020, Indonesia’s total coal resources reached 148.7 billion tons and reserves were 39.56 billion tons.
The second position is nickel. The raw material for electric vehicle batteries rose 50.4 percent during the first quarter of 2022.
The nickel market on the London Metal Exchange (LME), the world’s benchmark exchange, was shaken and suspended trading. Because the price of nickel is traded at US$ 100,000/ton due to the short-selling action on March 8, 2022.
The volatility of nickel prices is also affected by the conflict between Russia and Ukraine. Russia is one of the largest nickel producers in the world. Russia is the third-largest nickel producer in the world with a projected production of 250,000 tons by 2021, according to US Geological Survey (USGS) data. This amount is equivalent to 9.25% of world production.
Indonesia is said to have nickel metal reserves of 72 million tons of Ni (nickel). This amount represents 52% of the world’s total nickel reserves which reached 139,419,000 tons of Ni.
The data is the result of processed data from the USGS January 2020 and the 2019 Geological Agency.
Meanwhile, for nickel ore, based on data from the Ministry of Energy and Mineral Resources in 2020, the total nickel ore resources reached 8.26 billion tons with a grade of 1%-2.5%, of which the grade was less than 1.7% at 4.33 billion tons, and grade of more than 1.7% amounting to 3.93 billion tons.
Furthermore, political and economic uncertainty makes the luster of precious metals such as gold and silver more “shiny”.
Gold managed to close up 5.2% at the end of the first quarter of 2022. Silver was higher, up 5.9%. World gold prices recorded an all-time high of US$ 2,069.89/troy ounce on March 8, 2022.
The war has sent commodity prices soaring, increasing the risk of escalating inflation.
In the United States, inflation in February reached 7.9% and has the potential to increase further because commodity prices are still at high levels. When inflation is hot, the value of money shrinks. This benefits precious metal assets as hedging assets.
