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Ukraine’s grain exports will fall sharply in the 2022/23 season Grain prices should fall back to pre-war levels, although these are still historically high But in an extreme scenario, prices would stay much higher for longer Grains prices have skyrocketed …
31st March 2022
Commodity prices are as volatile as they’ve ever been. We don’t think volatility will ease until the war in Ukraine ends, because only then will we know the true extent of the Russia-related supply shock . Commodity prices are naturally volatile for many …
High prices hitting demand; don’t rule out shale sector just yet Crude stocks fell again last week, as healthy profit margins appear to be driving an upturn in refinery activity. That said, high product prices are also taking their toll on consumer …
30th March 2022
The industrial sector would bear the brunt of any power rationing imposed as a result of Europe’s shift away from Russian energy, but the direct economic impact of this would be smaller than one might expect. However, the knock-on impact from higher …
The experience of the 1970s suggests that the ongoing war in Ukraine and its effects on commodity prices will reshape commodity markets for years to come. Most immediately, elevated prices are likely to lead to some degree of demand destruction. And …
29th March 2022
We expect European steel prices to remain elevated this year given sharply higher production costs and disruption caused by lower imports from Russia and Ukraine. That said, prices should ease back from current highs on the back of subdued demand and some …
28th March 2022
Taking the lead from energy, most commodity prices rose this week as hopes of an imminent ceasefire in Ukraine faded and Western leaders met to consider further sanctions on Russia . Meanwhile, Putin’s announcement that natural gas purchases could only be …
25th March 2022
Record high fuel prices to constrain US oil demand US commercial crude oil stocks fell last week, driven by a decrease in net imports and greater refinery inputs. Demand also inched higher, but we suspect high prices will limit further gains . In its …
23rd March 2022
We expect Russia’s coal and gas exports to fall this year, keeping prices high But Russia’s energy exports could fall by much more under a Western embargo In this extreme scenario, there would be limited supply elsewhere to compensate In this Energy Watch …
Weaker China demand and high energy costs to drag on steel output Global steel production fell in y/y terms in February, driven by a double-digit contraction in China. Our expectation is that high energy costs and softer construction-led demand growth in …
22nd March 2022
Soaring energy costs to weigh on supply for some time High power prices in Europe continued to cause production curtailment in February but there were signs of a rebound in China’s production. Looking ahead, we expect supply to remain constrained for now …
21st March 2022
Commodity prices remained extremely volatile this week . After all the supply fears associated with the war on Ukraine, a rising number of COVID-19 cases in China raised concern about both demand and supply given widespread lockdowns in key industrial …
18th March 2022
High prices likely to put a floor under crude stocks US commercial crude stocks rose last week but remained historically low for the time of the year. Demand took a tumble and will probably struggle to rise much further with gasoline prices so high. In …
16th March 2022
OPEC oil production still falling short Although OPEC oil production rose in February, it remained well below target. And while OPEC left its 2022 oil demand and supply forecasts unchanged, it hinted at revisions due to “geopolitical turmoil”. The OPEC …
15th March 2022
The seemingly unstoppable rise in commodity prices gave way to sharp corrections this week, though the big picture is that prices remain extremely elevated . We suspect commodity prices will continue to whipsaw around in the weeks ahead, as markets move …
11th March 2022
Saudi Arabia has so far resisted pressure from the US to raise oil production in order to dampen prices but, with Russian oil production and exports set to be disrupted, we think that a move in this direction is now more likely than not. While the Kingdom …
Even if the West bans crude imports from Russia entirely, the Iranian experience suggests that there will still be ways for Russia to get its oil onto global markets. But any workarounds would take time to translate into a pick-up in exports, and at best …
The high cost of energy will continue to support metals prices due to the energy-intensive nature of metal refining. If energy prices continue to climb and power rationing is introduced, we expect metal refiners to be forced to cut production, choking …
Russia’s oil production is set to decline over the course of this year under the weight of Western sanctions, but the scale of the decline will depend on the extent of the sanctions. In this Update , we weigh up how a complete Western ban on imports of …
10th March 2022
Panic buying and flatlining production to send stocks even lower Crude stocks in the US continued to fall last week and are now at a multi-year low for this time of year. The sharp drop in product stocks points to panic buying by consumers, while domestic …
9th March 2022
While the plan to reduce Europe’s reliance on Russian gas this year seems achievable, it will only lock in higher-for-longer gas prices and prolong the squeeze on household incomes. The centrepiece of the European Commission’s “REPowerEU” package, …
We think that a complete ban on Russian energy imports would cause the prices of Brent crude oil and European natural gas to surge to $160pb and €300/MWh in the near term and settle at still very high levels into next year. The Russian economy would …
7th March 2022
The latest trade data show that China’s energy imports contracted in the first two months of the year in y/y terms. And even if the West were to cut off Russian energy imports altogether, we doubt that China would ramp up its imports of energy from Russia …
Although many commodity prices are already back to levels last seen in 2008, there is still scope for prices to rise further if Western sanctions are extended to cover energy commodities . (At the end of this Weekly Wrap , we publish forecasts in a …
4th March 2022
The constraints on Russian supply will work in tandem with an improving demand-side picture from auto production to keep palladium prices elevated. As a result, we have revised up our price forecasts . Palladium prices have rocketed by almost 51% since …
US strategic oil reserves to fall further due to IEA-coordinated release US commercial oil stocks fell last week on the back of higher exports, lower imports and greater refinery use of crude oil. Strategic reserves also fell to their lowest since August …
2nd March 2022
As fears over Russian oil supply mount, negotiations between Iran and world powers on reviving the Iran nuclear deal have been advancing in Vienna. If the nuclear deal is revived, we think there will be an immediate increase in Iranian supply, but fears …
We expect that the rise in the gold price so far this year will continue in the near term as safe-haven demand builds. That said, we expect that the price will fall when/if tensions cool. But the extent to which the Central Bank of Russia (CBR) might …
1st March 2022
China’s PMIs ticked up a little in February, but the big picture is that economic growth remains lacklustre in part owing to measures to contain COVID-19. The subdued demand picture confirms that the ongoing strength in commodity prices is all about …
In this Update , we answer the key questions about what the exclusion of Russian banks for SWIFT means for Russia and the rest of the world. What is SWIFT? SWIFT (“The Society for Worldwide Interbank Financial Telecommunication”) provides payments …
28th February 2022
Restrictions on Russian trade will probably lead to lower nickel supply and keep prices elevated. As a result, we have raised our nickel price forecast, despite a relatively subdued outlook for demand . The price of nickel has rallied by 30% since …
We have raised most of our commodity price forecasts this week to account for Russia’s invasion of Ukraine and the heightened risk of disruption to commodity supply . Given that Russia is a leading exporter of many commodities, prices will stay high so …
25th February 2022
Our estimates suggest that risk premiums are currently adding around 40% to commodity prices. This suggests that commodity prices could fall a long way whenever concerns over the Russia-Ukraine conflict begin to ease, though clearly this is unlikely to …
Rising US crude stocks won’t halt rise in oil prices US crude stocks rose by more than the consensus expected last week, but this was never going to halt the ongoing surge in oil prices. With all eyes now on the potential fallout from a Russian invasion …
24th February 2022
The latest twist in the Russia-Ukraine crisis is likely to keep commodity prices elevated over the coming weeks and months. And if the situation spirals into a more serious and wide-ranging conflict between Russia and the West, commodity prices could rise …
It is not in the economic interests of either Russia or the West to use trade in energy as a weapon against each other, but that is not to say it won’t happen. If energy flows were disrupted, we think oil prices could settle at around $120-140 per barrel, …
22nd February 2022
Steel output starts the year on a weaker footing Global steel production fell in y/y terms in January, driven by a double-digit contraction in China. It appears that subdued demand in China is acting as a constraint on output. Our expectation of softer …
Oil production in Venezuela has been showing signs of life, and there is probably scope for further gains in the near term. But it would require a lifting of sanctions and significant investment over many years to bring production back to levels seen a …
21st February 2022
Global aluminium output off to a slow start Global aluminium output fell by 4.5% y/y in the first month of 2022. A combination of high power prices in Europe and the New Year festival in China dragged down refined aluminium production. Looking ahead, we …
It was a rollercoaster week for many commodities as tensions between Russia and the West over Ukraine ebbed and flowed and the West held talks with Iran over a new nuclear deal. In the end, it was signs of progress in the Iran talks that pushed oil prices …
18th February 2022
After it was slashed in the wake of the pandemic, capital expenditure by US oil producers is now rising. Given oil prices will probably remain high for a while, we suspect the recovery has longer to run. This could give a lift to US oil production this …
Stocks in Cushing likely to build in the coming weeks Commercial stocks in the US rose last week as refinery inputs fell and net imports increased. However, stocks in the WTI storage hub of Cushing, Oklahoma, dwindled further, causing WTI prices to rise. …
16th February 2022
In this Update , we discuss the possible ramifications for the global oil and natural gas markets of a Russian invasion of Ukraine. Much would depend on whether Western sanctions are placed on Russian energy companies and/or Russia decides to withhold …
The recent agreement between the US and Japan will allow the majority of Japan’s steel exports to enter the US without levies. We expect this increased supply will combine with slower growth in demand to lead to further falls in US steel prices through …
15th February 2022
Growth in China’s economy has slowed sharply and US interest rate expectations have jumped but commodity prices continue to hold up well . In some cases, constrained supply explains the resilience in prices and, in others, there are fears of supply …
11th February 2022
Growth in LNG exports, particularly from the US, will put downward pressure on natural gas prices in Asia and Europe. However, it will not be enough to return prices to pre-pandemic levels as stocks are low and demand growth is likely to remain strong, …
Our forecasts for commodity prices this year are subject to greater uncertainty than usual. While we expect growth in energy demand to slow, it may still be the case that supply remains constrained. As a result, energy prices may stay high for longer, …
OPEC oil production rises in January, but end-2022 targets look ambitious OPEC raised oil output in January, but the shortfall relative to target grew even larger. We never expected OPEC to manage to completely unwind its production cuts this year, but …
10th February 2022
US demand growth to falter later in the year Crude oil and product stocks fell last week, reflecting robust US demand. However, we think growth in product demand will slow over the course of this year in tandem with slower growth in the US economy . The …
9th February 2022
China’s refined metals output mostly rose in 2021, despite power rationing in Q4. We expect output growth to continue in 2022, which is a factor underpinning our view that metals prices will fall . Aluminium output in China grew by over 4% in 2021, as new …
