Tonga volcano or re-eruption, no summer year to reappear? These commodities are affected

Recently, the submarine volcano of Aha Apai Island in Tongahong erupted twice in a row, which immediately triggered a tsunami and flooded many piers, affecting the whole world.

For global commodities, "volcanic eruptions in the waters of Tonga have affected or are most affected by agricultural products, including energy, mines, transportation and other aspects." Zhang Xinyuan, a researcher at Huatai Securities Research Institute, analyzed.

Zhang Xinyuan analyzed that the eruption of the Tonga volcano is likely to exacerbate the pressure of agricultural production reduction caused by the La Niña phenomenon in the northern hemisphere this year; if the eruption continues, accelerating global climate change, it may increase the pressure on new energy supply; if the volcanic ash spreads in a large area, or further affects the global aviation industry, reducing transportation efficiency and dragging down the global supply chain.

It is also worth mentioning that this eruption of volcanoes in Tonga's waters may only be "warm-up". Shane Cronin, a volcanologist at the University of Auckland, points out that more volcanic activity is likely to occur in the future, and we may experience major volcanic upheavals for weeks or even years.

Agricultural products bear the brunt

Global cooling and ash corrosion caused by volcanic eruptions may lead to a reduction in regional crop yields.

Geographically, the volcanic eruption in the Tonga sea from Japan to California in the United States, Pacific Rim countries and regions have issued tsunami warnings and launched emergency plans.

Zhang Xinyuan analyzed that most of the areas that currently maintain tsunami warnings are mainly agriculture, fisheries, tourism and mining. Among them, Australia, New Zealand and other countries play an important role in the global supply chain of dairy products, fresh vegetables and fruits, and are vulnerable to the secondary impacts of volcanic eruptions.

Wu Xiaojie, an analyst at Zhongzhou Futures, pointed out that for the soybean industry, it is currently in a critical period of crop growth in South America. The la Niña climate has caused a double whammy of dry and high temperatures in southwestern South America, including southern Brazil, Argentina and Paraguay, which adversely affects crop growth;

However, the eruption is continuing, and only early judgment can be made at present. 200 years ago, a volcanic eruption in Indonesia had a major impact on global temperatures and crops.

Mount Tambora erupted in 1815, with an eruption index of 7. The subsequent lack of harvest of crops caused many people to die of famine, and the volcanic particles even formed huge clouds to spread around the world, resulting in frequent abnormally low temperature weather, known as the "year without summer".

At present, the eruption index of Tonga's volcano is about 5 levels, and industry expert Puban believes that if there is no larger-scale eruption in the follow-up, it will not affect global temperature for the time being.

Wei Ke, deputy director of the Monsoon System Research Center of the Institute of Atmospheric Physics of the Chinese Academy of Sciences, said that whether volcanoes can affect the global climate is not directly related to the duration of volcanic eruptions, economic and human losses, and the size of the sound, mainly related to the amount of sulfates that the volcanic eruptions enter the stratosphere. About 400,000 tons of sulfur dioxide entered the stratosphere from the Tonga eruption, a value that is still far from having an impact on the global climate.

The analysis report of the New Lake Futures Research Institute pointed out that the impact of the Tonga volcanic eruption on agricultural products is mainly concentrated on the weather, and it may be a long-term process, which may not be obvious in the short term. From a shipping point of view, because China's bulk agricultural products import routes do not pass through those small islands in eastern Australia, the tonga volcanic eruption has no impact on China's agricultural product imports, especially in the northern hemisphere, which is unlikely to have a "summerless year".

Mineral supply concerns

In addition to climate and crops, tsunamis in the southern hemisphere caused by volcanic eruptions could affect mineral supplies in some countries. For example, iron ore and aluminum ore in Australia, nickel ore in Indonesia and so on.

Zhu Shaonan, an analyst at Soochow Futures, believes that the continued high temperatures brought by volcanic eruptions may lead to fires in some areas, which will affect transportation.

New Lake Futures assessed that the event will have an impact on iron ore production, Australia is the world's largest iron ore resource resources and the largest exporter of iron ore, the tsunami caused by the Tonga volcano has not yet seen an impact on the production and transportation of western and southwestern Australia; and grange Resources, the main iron ore producer in Tasmania, which issued the tsunami warning. Iron ore shipments in 2021 were 2.774 million tonnes, accounting for 0.3% of Australia's annual shipments in 2021 and 0.24% of mainland iron ore imports in 2021, with little impact on global and continental iron ore supply.

Since late November 2021, iron ore prices have bottomed out.

Zhu Shaonan analyzed that in the first quarter, due to factors such as high temperature, rainfall and port maintenance, it was in the off-season of iron ore shipments, so it is expected that Australian iron ore shipments will be at a low level, but the year-on-year change is not much.

In terms of the impact of the non-ferrous plate, it will also be hindered by transportation.

Chile and Peru are the world's largest copper producers, but there are also zinc mines, and during the eruption of the Tonga volcano, Chile, Peru, New Caledonia and other Pacific coastal countries appeared in huge waves, and ship shipments were blocked. As one of the major nickel suppliers in the world, New Caledonia will also affect the shipment of some metal nickel.

In the long run, the impact on the supply side is limited, Xinhu Futures analysis, refineries generally have a certain amount of copper inventory, short-term shipment blockage has less impact on the global copper supply; the supply of new nickel accounts for only 8%, and the short-term transportation obstruction also has little impact on the global nickel supply.