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Quarterly Bulletin Q4 2023

GenPro Quarterly Bulletin

October – December 2023

Commercial Updates

The Commercial team closely monitors the market, in order to provide accurate updates and an overview of the expected price development of the most important commodities.

The latest conflict in the Middle East has brought significant uncertainty into commodity markets that have already been coping with the effects of the Russian invasion in Ukraine and before that, Covid.

So far, the impact on prices has been small.  However, if the conflict escalates and turns into a wider regional conflict, the impact on commodity markets could be significant. Historical precedent indicates that, depending on the duration and scale of such an escalation, substantial supply disruptions and rising prices are possible.

Other geopolitical risks, trade restrictions and continuation of production cuts by OPEC+ (the Organisation of the Petroleum Exporting Countries and its allies) into 2024 may also affect the market condition.

Severe weather conditions driven by climate change over the next six months could impact both agriculture and metal mining production, which could also result in rising prices.

In Q3, before the latest conflict, the World Bank commodity price index rose 5% over the previous quarter, driven mainly by an 11% surge in oil prices. Non-energy prices fell by 2% due to sufficient supplies of grains and base metals.

Since the beginning of the conflict, energy prices have increased by 9% and brent crude oil by 6%.

Coal prices continued to decline on improved supply and greater substitution to cleaner fuels in power generation.

Metal prices fell 2% in Q3 and prior the conflict due to weak demand in China’s heavy industry sector and housing construction have fallen by 1% since the onset of the conflict.

Energy prices, after dropping by 29% in 2023, are expected to fall by 5% in 2024 as subdued global growth reduces demand pressure.

Agricultural prices are forecast to fall by 7% in 2023 and a further by 2% in 2024 due to sufficient supplies. Food and beverage prices will decline slightly more, while agricultural raw materials will rise by over 1%.

Base metal prices are projected to fall by 5% in 2024 due to slowing demand.

Lube Oil Desk

For our Q4 overview, we are focusing on current market activity and what may be expected ahead.

Prices increased in October, as expected.  The market is presently dominated by escalating tensions in the Middle East and prices remain under pressure as the prospect of the conflict spreading has further increased.

The conflict in Israel is a further key issue which could cause volatility in addition to the Russian-Ukraine war. Macroeconomic fears affecting demand fundamentals are now coming to the fore, overshadowing the previously announced supply cuts in the market.

Saudi Arabia and Russia indicated that additional output cuts may be reduced or extended depending on oil price dynamics.

Looking forward, base oils prices are more likely to follow crude price movement but some scheduled plants turnarounds may put pressure on prices, albeit limited.

Meanwhile, the price gap between Asian and European Group I products remains wide. Market expects the gap to slowly converge to a more normal range, although mainly by European price reductions rather than Asian price increases.

Compliance & Sustainability Updates

In Q4 2023, GenPro maintained its steadfast commitment to sustainability and compliance, achieving significant milestones across various domains. Conducting a total of 56 audits, with 35 physical and 21 virtual audits, our Compliance and Sustainability Team ensured robust oversight of our suppliers, fostering collaboration and driving improvements throughout the supply chain. A pivotal achievement was the mapping of 13 Minimum Contractual Requirements (MCRs), addressing GenPro’s requirements applicable to our Suppliers Pool. This strategic move enhances our capacity to enforce and uphold compliance standards across our network. We progressed to the second stage of the Single Use Plastics (SUPs) phase-out project to the request of one of our Members.

Offering additional measures, we have generally assisted our Members in procuring 154 technical stores free of SUP packaging, aligning with our goal to establish a more sustainable marine ecosystem. Two Notices to our Suppliers were introduced, communicating the MCRs and the guidelines for eliminating SUP packaging from identified technical stores.

 

GENPRO CONTRACTED SUPPLIERS
The Terms & Conditions of each agreement are communicated to the participating member upon contract conclusion via email.  The member is thereafter responsible to upload the necessary information on their selected e-procurement system

Explore GenPro’s Directory of Suppliers here!

NEW TEAM MEMBER

New colleague Sofia Taliotis
Sofia Taliotis
Commercial Data Analyst

Sofia recently joined GenPro in December 2023. She holds a BSc in Mathematics and Statistics from the University of Surrey in the United Kingdom and has been working as an analyst for more than five years in the financial sector. She has joined the team as a Commercial Data Analyst.

GENPRO MOMENTS!

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