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China will remain a drag on global steel output Global steel production contracted again in y/y terms in October, mainly owing to lower Chinese production. China’s output may rebound a little in the coming months as power rationing has come to an end, but …
23rd November 2021
European natural gas prices were in the news again last week, soaring by 18%. Given stocks are still low and there are few signs of extra flows from Russia, we think that prices will remain high in the near term . The European natural gas market has …
Aluminium output boosted as power rationing in China eases October’s IAI data suggest the easing of power restrictions in China has enabled greater utilisation rates at smelters, driving the global increase in output this month. We think that aluminium …
22nd November 2021
This week showed that the energy crisis is not in the rear-view mirror just yet . Germany’s energy regulator suspended its certification process of the Nord Stream 2 pipeline on Tuesday, owing to issues regarding the organisational structure of the …
19th November 2021
After soaring towards the tail end of 2020, steel prices in Europe have eased back in recent months. And we think that prices will fall much further over the next couple of years, as a combination of healthy profit margins and low inventories continue to …
18th November 2021
The big picture is still one of healthy US demand The latest weekly data show falling crude and petroleum product inventories and a jump in implied demand. The strength in demand is somewhat surprising given the rise in gasoline prices, but we suspect …
17th November 2021
Gold is an effective hedge against inflation in the long term But less reliable in the short term We think modest rises in US real yields will be enough to drag on the gold price In this Metals Watch , we revisit the theoretical relationship between the …
Policy changes to boost Chinese coal production and curb demand growth in 2022 Economic growth and self-sufficiency to take priority over environmental sustainability But long-term outlook appears more consistent with environmental goals In this Energy …
16th November 2021
Although the climate deal struck at COP26 appears to have fallen short on many counts, it does at least reaffirm our view that demand for traditional energy commodities will struggle in the long run . Following two weeks of negotiations, the ‘Glasgow …
Copper prices have soared since mid-2020 as demand raced ahead of supply. However, a strong supply response is now underway which, in tandem with cooling copper demand, will weigh on prices into 2022. The cash price of LME copper surged close to $11,300 …
15th November 2021
Despite falling short of its targeted increase in output once again in October, we think OPEC+ will continue to snub calls to raise output more rapidly . The week began with comments from the Biden Administration that OPEC+ was imperilling the global …
12th November 2021
Increases in OPEC production to continue to fall short Although OPEC oil production increased in October, it remained significantly below the group’s target. And with little prospect of a meaningful increase in non-OPEC output in the near term, we …
11th November 2021
Crude stocks rise for a second week but will remain low for a while Crude oil in commercial storage rose last week for the second week on the trot, helped by a planned release of strategic reserves. But the big picture is that stocks remain low by past …
10th November 2021
This year, the EU announced reforms to its Emissions Trading Scheme (ETS) which, if introduced, would boost the price of each carbon permit and ultimately help the bloc to rapidly reduce its greenhouse gas emissions. In the first of a two-part Focus …
China’s imports of iron ore and copper rose in October compared to a month prior (in seasonally adjusted terms). But we doubt this is the start of a renewed upswing, not least as indicators of demand have deteriorated and volumes were still down sharply …
8th November 2021
Most commodity prices fell this week, adding to the sense that the recent rally is close to a peak (if it hasn’t peaked already) . Either way, we think energy prices will be falling next year on weaker demand growth and greater supply, contributing to …
5th November 2021
Overview – Industrial metals prices have risen recently on the back of supply concerns related to higher energy costs and power rationing in China. Both factors will continue to support prices in the near term. However, we expect these supply issues to be …
3rd November 2021
Overview – Following sizzling rallies in the prices of energy commodities in 2021, we expect prices to ease back in 2022 on the back of lower growth in demand and improved supply. Current high prices will incentivise producers to raise output and will …
1st November 2021
Despite their recent positive correlation, we think that oil and the dollar will go in opposite directions before long: we continue to think that oil prices will fall back as the supply situation improves, while we expect the greenback to stay strong …
Although the China PMI data were a mixed bag in October, the big picture is that they remain at odds with sky-high industrial metals prices. This adds to our view that prices have quite a long way to fall over the next year or so as constraints on supply …
It is perhaps too soon to call the end of the energy price rally, but the prices of European natural gas and Chinese coal took a tumble this week as supply fears were, at least partially, allayed. What’s more, the recent surge in oil prices stalled. …
29th October 2021
Download the PDF for the Full Report Overview – Low stocks ahead of winter in the Northern Hemisphere have sent energy prices soaring. In turn, higher energy costs have also constrained the production of other commodities, most notably industrial metals. …
28th October 2021
US commercial stocks rise, but will remain low for a while US commercial stocks rose last week on a release of strategic reserves and a jump in net imports. Exports could fall further in the coming weeks given the need to rebuild stocks at the WTI Cushing …
27th October 2021
The recent highs in the zinc price have been driven by fears around supply as sky-rocketing energy prices have undermined smelter profitability. We expect power prices to remain high in the coming months which should constrain zinc supply and boost …
26th October 2021
We expect US crude oil production to rise by the end of next year, but remain well below levels in early 2020. What’s more, with non-US oil production set to grow at a faster pace than US oil production, the Brent-WTI price premium is likely to remain …
Slump in output points to high prices for longer Global steel output plunged in September primarily owing to a dramatic decline in China’s production. We suspect that China’s output will remain low for some months yet, which will act as a floor under …
The well-documented shortages of semiconductors have slammed the brakes on global vehicle production. As a result, the near-term prospects for platinum group metals (PGMs) demand in autocatalysts have been dented. It is only once a meaningful recovery in …
25th October 2021
The meteoric rise in energy commodity prices over the last few months lost momentum this week . Natural gas and coal prices were down particularly sharply in Europe after President Putin reiterated comments that there is scope for a rise in supply from …
22nd October 2021
Stocks fall and are likely to remain low in the short term Strong exports contributed to the first drawdown in stocks in four weeks last week, supporting already-high crude prices. What’s more, stocks at the hub of Cushing, Oklahoma, also fell and they …
20th October 2021
High power costs likely to deter production Slower growth in aluminium output in September was probably linked to surging power prices. The combination of constrained output and soaring production costs will support aluminium prices in the near term and …
Coal prices are likely to remain high over the next six months as high demand weighs on already-low stocks. Prices should drop back next year, though, as demand growth moderates and supply improves . The price of coal has roughly tripled since the start …
19th October 2021
Power rationing in China has raised concerns about metal supply. But perhaps less obvious is that power rationing will also negatively affect demand if manufacturing activity is curtailed. On balance, we think that the supply impact will dominate and …
Most commodity prices increased this week . Optimism over electrification, which was a hot topic during LME Week, seemed to feed through into higher industrial metals prices. But the prices of energy commodities were the pick of the bunch . Brent crude …
15th October 2021
Stocks rise again, but will remain depressed for months to come A large fall in the refinery utilisation rate drove another increase in stocks last week, although utilisation rates are normal for the time of the year. And with output set to remain …
14th October 2021
Even if OPEC raises quotas, there remain doubts about higher supply OPEC moved closer to its collective target output last month. However, it is now clear that if the group were to answer calls to raise output, it would involve abandoning the current …
13th October 2021
China’s imports of key commodities slumped almost across the board in September. The main exception was imports of coal, which soared in response to recent power shortages. We expect coal imports to remain strong over the next few months, but they too …
As energy prices hit multi-year highs, we look into the link between energy and non-energy commodity prices. It is clear that industrial metal prices track energy prices the most closely over time, which is mainly because the drivers of demand are …
11th October 2021
Commodity prices generally rose this week, helped by the US senate approving a deal to increase the federal debt ceiling . After a rollercoaster of a week, European natural gas prices ended the week lower following comments from President Putin that …
8th October 2021
We think that weaker physical demand, higher real US Treasury yields and a stronger dollar will mean that the recent poor performance of the silver price is set to continue over the next couple of years . After a brief spell of volatility in the price of …
7th October 2021
The price of European natural gas (TTF) surged by around 35% this morning, before crashing back down on Putin’s reassuring comments about Russian supply. The latest price moves appear speculative, and we retain our view that it is just a matter of time …
6th October 2021
Overview – Natural gas and coal prices soared in September. In turn, this has raised the output costs of industrial metals, most notably those which are especially energy intensive such as aluminium and steel. At the same time, reports suggest that some …
5th October 2021
We expect a gradual normalisation in demand growth and a rebound in supply will start to weigh on oil prices from the fourth quarter. So far this year, growth in demand has outpaced supply, helping prices to hit multi-year highs, but we expect this …
4th October 2021
Commodity prices generally rose this week , but especially energy prices, which continued to surge on constrained supply, unseasonably high demand and low stocks. That said, we think the supply shortfalls will prove temporary and expect energy prices to …
1st October 2021
Natural gas prices have soared and are likely to remain historically high for some time But there has not been an underlying structural shift up in demand And high prices will incentivise supply At the time of writing, global natural gas prices are …
China’s manufacturing PMIs for September diverged, but both still point to subdued commodities demand. What’s more, the surveys were conducted before power shortages started to constrain activity. Weaker industrial activity should put downward pressure on …
30th September 2021
Crude stocks set to remain depressed, despite surprise increase A jump in crude oil production led to the first stock build in eight weeks. However, with output still constrained and demand set to remain strong, stocks are likely to remain low for some …
29th September 2021
We believe that current high nickel prices will prove short lived, and expect weaker economic growth in China and the tapering of US monetary policy support to depress demand for nickel and pull down its price by the end of the year . The price of LME …
28th September 2021
Commodity prices held up well this week , despite the hawkish tone of the Federal Reserve and continued worries over a messy default by Evergrande, the Chinese property developer. Notably, European natural gas and Asian LNG prices continued to climb , …
24th September 2021
A mild winter in the Northern Hemisphere, a substitution of gas for other fuels in electricity generation, and/or a rise in supply via Nord Stream 2 could all send European gas prices lower in the months ahead. But even if prices start to fall back soon, …
Although a messy collapse of Evergrande is a downside risk to our near-term price forecasts, it adds weight to our view that China’s construction sector is in structural decline. In turn, this underpins our view that industrial metals prices will be on …
23rd September 2021
