Over the weekend, Morgan Stanley’s global energy head Martijn Rats shared a comprehensive yet streamlined analysis of what happened in 2021 that has sent many commodity prices, including Europe’s natural gas and electricity prices, surging to never before seen levels. For those who missed it, Rats explained that a common set of factors has tied all these commodity rallies together. As often happens, the story starts in China. The combination of a post-COVID-19 recovery and unusually hot weather has increased consumption of electricity sharply this year . Most of China’s electricity is produced from coal, but domestic coal production is increasingly struggling to keep up – the result of regulatory reforms, under-investment and more stringent HSE inspections. Another important source of electricity generation in China is hydropower, but because of droughts in key parts of the country, hydropower has failed to grow this year too. Over the summer, this […]