Positive environment for global and European transport markets
Strong global demand promotes world trade
The continuing growth in world trade is driving demand for goods transport; Asian markets and the USA in particular showed a high level of momentum in the first few months of 2018. The economic upturn in Germany and Europe has now flattened out. However, economic growth remains at a solid level. US protectionism, uncertainty about the outcome of the Brexit negotiations and rising oil prices pose major risks to the global economy and world trade, leaving the logistics sector particularly exposed. The demand for mobility remains robust with continued employment growth and rising wages. The passenger transport markets are strongly influenced by the respective general legal frameworks. The differences between European countries here are still great despite progressive liberalization.
Dynamic global economic growth continues – Europe’s growth is weaker
In the first half of 2018, the dynamic growth of the global economy largely continued. Drivers include a strong demand for capital goods and strong private consumption. As a result, world trade also recorded significant growth. Risks to growth include significantly higher oil prices and conflicts over trade issues.
European economic growth has already weakened slightly, particularly due to declining exports. Uncertainties have had a negative impact on the investment climate. Inflation has recently increased, driven by higher oil prices, and is reducing disposable household income.
A similar development emerged in Germany. Domestic demand continued to perform well as a result of robust employment growth. Among the industrial sectors, the construction industry in particular grew. Falling order numbers in the industry point to an end to the boom.
The UK economy has grown weaker in the first half of 2018. Consistently high inflation rates have put pressure on the Bank of England to raise interest rates before the end of 2018. Uncertainty surrounding Brexit arrangements is also putting a strain on the business climate.
Political uncertainties have caused nervousness in the energy market
The central hedging policy of DB Group aims to minimize energy price fluctuations. Our activities are therefore not exposed to the full impact of changes in market prices, at least not in the short term.
Overachievement of OPEC austerity measures is causing constriction on the oil market
Brent crude (USD/bbl) | H1 | 2017 | Change | |
absolute | % | |||
Average price | 71.2 | 54.7 | +16.5 | +30.2 |
Highest price | 80.5 | 67.1 | – | – |
Lowest price | 61.8 | 44.4 | – | – |
Year-end price | 78.5 | 66.9 | +11.6 | +17.3 |
Source: Thomson Reuters
- The agreed production cuts (OPEC+) have been significantly exceeded. The main reason for this was unplanned downtime in Venezuela. At the same time, the positive economic development led to robust demand, especially from Asia. The resulting shortage of supply could only be met to a limited extent despite new record levels of oil production in the USA, resulting in a noticeable narrowing of the oil market.
- In May 2018, the price of Brent reached an annual high. By mid-May, speculative investors were also betting on rising prices.
- OPEC+ agreed to plan for the likelihood of a balanced oil market during the second half of the year and decided to ramp up production to the level set in the cut-off decision at the end of 2016.
Electricity prices are developing in parallel with the coal and CO₂ markets
Base load power | H1 | 2017 | Change | |
absolute | % | |||
Base load current | ||||
Average price | 37.7 | 32.4 | +5.3 | +16.4 |
Highest price | 43.9 | 38.4 | – | – |
Lowest price | 32.6 | 28.0 | – | – |
Year-end price | 43.9 | 37.2 | +6.7 | +18.0 |
Emissions certificates (€/TCO₂) | ||||
Average price | 12.2 | 5.8 | +6.4 | +110 |
Highest price | 16.7 | 8.3 | – | – |
Lowest price | 7.6 | 4.3 | – | – |
Year-end price | 15.2 | 8.2 | +7.0 | +85.4 |
Source: Thomson Reuters
- The German electricity spot market is becoming increasingly weather-dependent. The fluctuation in production from renewable energies caused significant price fluctuations due to limited predictability. High primary energy prices acted as price drivers.
- The electricity futures market eased after the climate targets for 2020 were revised during the coalition negotiations.
- The coal market saw a price dip as a result of temporary import restrictions in China. Delivery difficulties and persistently high demand in Asia drove prices up again quickly.
- The entry into force of the market stability reserve from 2019, which will withdraw 24% of the surplus certifi-cates from the market, caused a supply shortage on the CO₂ market. In addition, discussions regarding a minimum price lured additional consumers to the market, doubling the price of emissions allowances since the beginning of the year.