Josh Crumb: Global Commodity Outlook & Building ABAXX

Episode Summary

Executive Summary: Josh Crumb explains why he founded Abex: to build a full-stack, physically deliverable commodity exchange and clearinghouse that better matches real supply chains, especially in LNG, metals, and carbon. He argues commodity markets are increasingly distorted by cash-settled benchmarks, weaker bank balance sheets, and momentum-driven trading, while long-term demand from Asia, energy transition, and supply-chain bifurcation supports a constructive commodity outlook.

Main Topics: Josh Crumb’s background and path to Abex (Priority: 5/5): Crumb traces his journey from mining engineering at Colorado School of Mines to mining M&A, Goldman Sachs metal strategy in London, and ultimately founding Abex to modernize commodity market infrastructure. Why commodity exchanges matter in physical supply chains (Priority: 5/5): He argues exchanges are not just financial venues but critical parts of supply chains when markets are stressed, especially for physical commodities that must be produced, transported, stored, and delivered. Limits of existing benchmark structures (Priority: 5/5): Crumb critiques dominant exchange groups for moving away from physical markets and relying too much on survey-based or cash-settled contracts, which can fail as hedges when volatility spikes. Abex’s business model and launch strategy (Priority: 5/5): Abex is building a full-stack exchange with its own clearinghouse and technology, starting with physically deliverable LNG contracts and carbon products, then expanding into battery metals and gold. Macro commodity outlook: China, Asia, and cyclical discipline (Priority: 4/5): He remains constructive on commodities due to long-run Asian demand, energy growth, and infrastructure buildout, while warning that investors must still respect cyclicality and financing windows. Gold, silver, and market structure shifts eastward (Priority: 4/5): Crumb sees physical gold flows shifting from the West to Asia and notes silver needs investment demand to clear its supply regime. He expects gold infrastructure to increasingly center on Singapore and kilo-bar trading. Contrarian view: supply-chain balkanization and green premiums (Priority: 4/5): His most contrarian idea is that commodity prices will increasingly diverge by origin due to geopolitical fragmentation, carbon policy, and different environmental costs, especially in metals like nickel.

Key Arguments: Commodity exchanges become indispensable when supply is disrupted; they act as risk-management tools and part of the physical supply chain, not just price-discovery venues. Cash-settled or survey-based benchmarks can fail badly when physical markets move sharply; physically deliverable contracts are more reliable hedges for real-world participants. Abex is designed to serve the underlying physical market first, then bootstrap liquidity through OTC block trades and broker relationships, rather than trying to force paper liquidity from day one. The biggest incumbents in commodity exchanges have become disconnected from the physical market and increasingly dominated by banks, PRAs, and momentum trading. Long-term commodity demand remains supported by demographics, urbanization, electrification, and energy infrastructure buildout in Asia. Market structure in commodities has changed: banks and large macro funds now warehouse far less risk than they did a decade ago, reducing informed price discovery. Natural gas is not just a price trade but a structural enabler of coal-to-gas switching, LNG expansion, and a more resilient global energy system. Gold is increasingly an Asia-centered physical market, with Singapore, Dubai, and other eastern hubs gaining relevance over LBMA-centric Western flows. Silver likely needs renewed investment demand to move decisively higher because its supply/demand structure can be met by byproduct supply until prices rise enough to incentivize primary supply. Future commodity benchmarks may extend beyond traditional raw materials to compute, electricity, renewables-linked products, and other digitally verifiable physical assets.

Data Points: Abex build time: 5.5 years - Crumb says it took about five and a half years to build and launch the exchange. Abex initial contracts: 5 contracts - At launch, Abex listed three LNG contracts and two carbon contracts. LNG contracts at launch: 3 contracts - Gulf of Mexico FOB, Northwest Europe demand, and Northeast Asia demand contracts. Carbon contracts at launch: 2 contracts - Abex launched with two carbon contracts alongside LNG. LNG price differential during Europe spike: about $8/MMBtu - He cites the 2022 Europe gas spike, when LNG hedged with TTF created a large mismatch between regas and pipeline gas prices. U.S. LNG liquefaction growth since pre-COVID: about 60% to 70% - He says U.S. liquefaction capacity has expanded significantly since before COVID. North America LNG growth horizon: set to double again by 2028-2029 - Crumb says North American LNG capacity is expected to expand further in the next several years. Goldman's commodity/fixed income risk metric: sub $20 million - He references Goldman’s very low balance-sheet risk in its recent quarter as evidence of reduced commodity warehousing. Historical mining graduation class size: about 20 people - He recalls graduating from a top U.S. mining school with a very small class during a weak industry period. Commodity futures market growth: around 15% CAGR for decades - Crumb says futures markets have grown at roughly this pace and expects that trend to continue. Oil downside scenario: $45-$50/bbl - He identifies this as an extreme downside in a severe price-war scenario. Current oil reference: less than $70/bbl WTI - The host notes WTI closed below $70, underscoring bearish sentiment despite supportive fundamentals. Silver market regime: 2nd or 3rd straight year of deficits - The host cites ongoing silver deficits while Crumb discusses why price response may still lag.

Pivotal Quotes: "there's really no such thing as a greenfield exchange" — Josh Crumb: He explains how hard it is to build a commodity exchange and why Abex had to create an entire full-stack infrastructure from scratch. "the market needs these products" — Josh Crumb: He justifies Abex’s launch strategy by emphasizing that physical participants already need better hedging tools and benchmarks. "I think the balkanization of supply chains" — Josh Crumb: He identifies supply-chain fragmentation and origin-based price differentials as the most important underpriced commodity theme.

Implications: Commodity markets are moving toward physically anchored, region-specific benchmarks with more digital infrastructure. Exchanges that serve real hedging needs, especially in LNG, metals, and gold, may gain share as globalization fragments and Asia-centered demand deepens.