1、nA year when underi nvestment bi tes.Just as commodi ty markets have beendomi nated by the dollar i n 2022,we expect them to be shaped byunderi nvestment i n 2023.From a fundamental perspecti ve,the setup for mostcommodi ti es next year i s more bulli sh than i t has been at any poi nt si nce wefirs

2、t hi ghli ghted the supercycle i n October 2020.Despi te broadly depletedworki ng i nventori es(oi ls bui ld was mostly at sea)and spare capaci ty nearlyexhausted across most markets,capi tal i n 2022 proved to be unresponsi ve tonear record pri ces as market posi ti oni ng remai ned skewed for a re

3、cessi on.Spotpri ces retraced nearly to 2021 levels as financi al deleveragi ng and physi caldestocki ng both forms of short run underi nvestment combi ned wi th adi sorderly Chi nese reopeni ng to pressure energy pri ces si nce October.Acrosscommodi ty markets,the rapi d ri se i n the cost of capi

4、tal lowers the i ncenti ve tohold ei ther physi cal i nventori es or paper ri sk,di storti ng pri ce di scovery asfinanci al markets react faster than the real economy,creati ng markets that aresi mply unprepared for sequenti al growth i n 2023.nNo supply response i n si ght.Whi le markets are di ve

5、sti ng today,whats morestartli ng i s the lack of i nvestment i n commodi ti es for tomorrow.I mportantly,themaj ori ty of the commodi ty deflati on came from central bankers rai si ng the costof capi tal and drai ni ng market li qui di ty,both physi cally and financi ally,whi ch i snot a long-term

6、fundamental soluti on.Wi thout suffici ent capex to create sparesupply capaci ty,commodi ti es wi ll remai n stuck i n a state of long run shortages,wi th hi gher and more volati le pri ces.Whi le i nvestors remai n concerned wi th the2023 growth outlook a large dri ver of the latest sell off the gl