How Will The Turkish Earthquake Affect Commodities?

The recent earthquake will bring uncertainty to Turkey's trade and capital markets. From the perspective of Turkey's trade pattern, exports are mainly automobiles, electric motors, and cotton textiles, while imports are mainly energy from Russia, mechanical and electrical materials from China, chemical raw materials, and precious metals such as gold from Switzerland. Turkey's large trade deficit means that Turkey cannot earn enough foreign exchange through exports to pay for imports, forcing it to increase foreign debt.

Due to the force majeure of the earthquake, the main oil export hub of Ceyhan, Ceyhan, Turkey was out of service, and the transportation of crude oil from Azerbaijan was suspended. The recovery time of the port remains to be seen, which makes the supply of crude oil in this stage shrink due to unexpected events. Several important natural gas pipelines passing through Turkey between Russia and Europe are located near the Black Sea in north-central Turkey, far from the epicenter, and were basically not affected by the earthquake. However, Turkey and Russia announced last year to jointly establish a natural gas hub, and this strong earthquake may affect the implementation process of the natural gas hub plan to a certain extent.

Turkey's non-ferrous metal production capacity and output are generally limited, and the shutdown of production has little impact on the global supply side; it mainly relies on imports, and its consumption is very limited, but it is expected that demand will increase this year due to post-disaster reconstruction. Therefore, the earthquake has little impact on the global supply and demand pattern of nonferrous metals. However, as Turkey is an important link in trade transit, logistics disturbances may have a certain impact on global trade flows.