The market's immediate price drop following a U.S.-Iran agreement is premature. The physical recovery of commodities like LNG and aluminum is slow, with infrastructure ramp-ups taking months. This disconnect between sentiment and fundamentals suggests prices could experience a 'whiplash' effect and rebound sharply as supply deficits persist through the year.
European natural gas markets offer near real-time data on storage levels, providing clear visibility for analysts. In stark contrast, Asia, particularly the major market of China, lacks transparency on storage capacity and current inventory levels. This data deficit creates significant uncertainty and forecasting challenges for the global gas balance.
The aluminum market deficit has been filled by drawing down 'invisible' inventories held by merchants and producers. With these stocks now running lean, the market must incentivize exports from China's highly visible onshore inventories. This requires maintaining higher global prices, like on the LME, to make pulling this metal out of China economically viable.