The global bulk commodity market has once again experienced severe volatility. Except for the crude oil industry chain, other commodities are falling.

The uncontrollable risks of geopolitical conflicts in the Middle East are escalating. As more energy facilities become targets of attacks by both sides, the global energy supply pattern is facing severe challenges, prompting the market to significantly adjust its previous baseline forecast that the conflict would last 4-5 weeks. All three near-month contracts of crude oil futures have risen sharply.

The prolonged Middle East conflict has triggered market concerns about a significant inflationary economic situation. Precious metals such as gold and silver, along with non-ferrous metals like copper and aluminum, have all seen substantial adjustments, with silver once dropping more than 13% intraday. The sharp volatility in the commodity market has brought out the "crisis alpha" attribute of CTA products, presenting them with another opportunity to rise prominently.

A large amount of capital has poured into the petrochemical sector

In the night session on March 19, the energy and chemical sector in China's futures market performed brilliantly. The main contracts of chemical products such as LPG and propylene led the gains, with the main contract of liquefied gas once rising by more than 7%. Combined with the current chaos in the Middle East, the volatility of the energy market is further increasing. Brent crude oil once surged by more than 8% in overnight trading. Currently, the May contract has stood above the $110 per barrel mark, and the June contract has reached $106 per barrel.

As of the close of trading on the afternoon of March 19, the main contract of LPG futures hit the daily limit. The main contract of low-sulfur fuel oil futures rose by more than 10%, the main contracts of methanol and crude oil futures rose by more than 8%, the main contracts of ethylene glycol, fuel oil and propylene futures rose by more than 6%, and the main contracts of polypropylene, asphalt and polyethylene futures rose by more than 4%.

It is worth noting that the crude oil market is changing its previous baseline scenario for oil price forecasts. According to the price forecast baseline scenario by ICIS, a commodity market information service provider, it is assumed that the conflict in the Middle East will last for 4 to 5 weeks, and it will take at least one to two months for logistics to recover after the war. The prices of crude oil and downstream petrochemical products are expected to return to reasonable levels for the remaining part of the year, which means that the possibility of severe inflation or economic recession significantly weakening end demand is low.

However, as the military strikes between the two sides further escalate, the projected duration of the conflict in the Middle East is bound to exceed the market's baseline forecasts. Since the outbreak of the U.S.-Iran conflict three weeks ago, tanker transit activities in the Strait of Hormuz have nearly come to a halt. Data shows that the current average daily oil transit volume is only about 400,000 barrels, a plunge of more than 97% compared to the average daily level of approximately 14 million barrels before the blockade. According to ICIS statistics, the tight supply situation in the propylene market in Northeast Asia is unlikely to change at least in the next two months, and all market participants will make more adjustments based on changes in supply.

The prolonged duration of the Middle East conflict has triggered market concerns about persistently out - of - control inflation. According to CME FedWatch, the market has gradually priced in that the Federal Reserve will only cut interest rates by 25 basis points at the December 2026 monetary policy meeting, and market worries about future economic stagflation have significantly intensified. Due to the narrowing room for interest rate cuts, the financial attributes of the overall commodity market, except for the crude oil industry chain, have been suppressed. In particular, the precious metals and non - ferrous metals sectors, which saw significant gains in the early stage, have experienced sharp adjustments.

Gold and silver plummeted sharply

In the night session on March 19, non-ferrous metals and precious metals continued to adjust sharply. Among them, the intraday drop of silver once exceeded 13%, that of gold once exceeded 7%, and that of Shanghai aluminum once approached 6%. Meanwhile, the international aluminum price fell by more than 8% on the LME market, marking the largest drop since 2018. LME copper fell by more than 5%.

This is also evident in the flow of funds. According to data from Wenhua Finance, nearly 8 billion yuan poured into the petroleum sector on March 19, with over 5 billion yuan flowing into crude oil, ranking first among commodities. However, the precious metals and non-ferrous metals sectors saw a total outflow of more than 20 billion yuan, with the capital outflows from Shanghai gold and Shanghai silver far exceeding those of other varieties.

Yu Jiayi, an analyst at Orient Securities, believes that the Middle East conflict is still expanding, and the uncontrollable risk of further escalation remains significant. Market concerns about rising inflation leading to a shift in the Federal Reserve's monetary policy are growing, and the short-term financial attributes still exert certain pressure on gold prices.

Yu Jiayi stated that if the conflict persists for a longer period, under the stagflation combination, even if short-term interest rate cut expectations are suppressed, leading to fluctuations in gold prices, a longer-term perspective will open up room for gold prices to rise. In the medium to long term, the debt risk of the U.S. federal government remains, the status of the U.S. dollar is facing challenges, and under the restructuring of the global monetary system, gold still has opportunities for sustained performance.

"The recent pressure on precious metal prices is mainly constrained by investors' concerns about the risk of negative feedback in risky asset prices triggered by high oil prices," said Zhang Hang, an analyst at Guosheng Securities. He believes that these concerns only affect the short - term price fluctuations of precious metals and do not affect the medium - term bullish logic. The lower - than - expected non - farm payroll data last week indicated the risk of stagflation, and he continues to be optimistic about the opportunities for low - level layout in the precious metal sector.

The sharp fluctuations in the commodity market have also brought unexpected opportunities for CTA products that made early arrangements. According to the research report by Snowball Private Equity, recent inflation concerns have led to a weakening of the negative correlation effect between stocks and bonds, while the hedging effects between stocks and commodities, and between bonds and commodities have strengthened, with the overall correlation remaining within a reasonable range.

The crisis alpha capability of the current commodity market has emerged, and against the backdrop of market volatility, the advantage of multi-income strategies in capturing opportunities has become more prominent." Regarding CTA and CTA+ strategies, Jiang Yuting, head of the Financial Products and Research Department at Snowball, pointed out that commodity-based strategies are also in a state of differentiation. Strategies with a medium-to-long-term cycle have generally achieved better profitability, while short-term strategies are more divided.

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