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High prices failing to boost steel supply, at least so far Despite high prices, global steel output contracted in August. And given that the authorities in China are proactively encouraging lower output there, further falls in the coming months appear …
23rd September 2021
Declines in crude stocks seem unlikely to reverse any time soon US crude stocks have continued to fall as refinery activity has so far recovered faster than crude output following Hurricane Ida. And with demand already broadly back to pre-pandemic levels, …
22nd September 2021
Aluminium output still growing despite China fears August’s IAI data suggest that fears that power rationing in Chinese smelting hubs would negatively impact supply, which have boosted aluminium prices to decade highs, are overdone. Instead, we think that …
20th September 2021
Most commodity prices ground higher this week. And, stepping back, we think events this week highlight three key themes to watch in the months ahead . First, natural gas prices show no sign of easing back, and are likely to remain high until early next …
17th September 2021
Hurricane Ida continues to distort the data There were hefty falls in both crude and petroleum product stocks, reflecting closed production capacity due to damage caused by Hurricane Ida. Implied gasoline demand also dropped back but it is impossible to …
15th September 2021
Mounting pressure on OPEC may prompt faster unwinding of output cuts The rise in OPEC’s oil output fell well short of its target in August. And given a higher oil demand forecast for 2022, alongside growing external pressure, we think that the risks are …
13th September 2021
Commodity markets have been relatively quiet over the last few weeks , with many prices trading in a narrow range. There are a few exceptions, most notably the prices of natural gas and coal , which have soared on the back of surging power demand and …
10th September 2021
Coal and natural gas prices have soared around the world on the back of unseasonable weather and disruptions to supply. And even if the weather normalises and supply rebounds soon, we expect prices to remain high at least into the start of 2022 as stocks …
Hurricane Ida to blur the stocks picture for a few weeks yet There was a small draw in crude stocks last week, despite a dramatic drop in refinery utilisation as many refineries closed ahead of the Hurricane Ida. Notwithstanding, US gasoline demand …
9th September 2021
Although world trade volumes are likely to hold up for a while yet, a reversal of some of the shift in spending patterns caused by the pandemic is likely to weigh on commodity demand. This is another reason to expect most commodity prices to end the year …
8th September 2021
China’s imports of key commodities rose almost across the board in August, but we doubt that this is the start of a new upwards trend. Instead, with many of the factors that had boosted demand now fading, we expect China’s commodity imports to resume …
7th September 2021
After climbing to multi-year highs in May , the zinc price has stayed strong, with much less volatility than its counterparts. However, we feel weaker economic growth in China and US tapering of monetary policy will work in tandem with the ongoing …
6th September 2021
Overview – After sharp falls in the middle of the month, most commodity prices ended August broadly flat. However, we doubt it will be long before the downward pressure on prices intensifies again. After all, economic growth in most major economies now …
3rd September 2021
There wasn’t a clear direction in commodity markets this week, with most prices driven by commodity-specific factors . Natural gas and coal prices continued to surge, while the prices of some industrial metals struggled on the back of weaker China PMI …
Fallout from Hurricane Ida to lead to higher crude stocks Last week’s sharp fall in US commercial crude stocks is at odds with many of the underlying indicators. In any case, stocks seem likely to rise in the weeks ahead as reports suggest that refinery …
1st September 2021
Aluminium prices have recently been boosted by a series of supply outages in China. But unlike Chinese steel production, where declines have been driven largely by government policy which looks here to stay, we suspect that the falls in aluminium output …
The China PMI data for August continue to suggest that commodity demand in the world’s largest consumer is coming off the boil. As a result, the wedge between industrial metals prices and the China activity data has continued to grow, which underpins our …
There was a dramatic turnaround in the fortunes of commodities prices this week, with across-the-board gains as risk appetite picked up and the US dollar eased back . Fed Chair, Jerome Powell, was cautious about imminent Fed tapering at the Jackson Hole …
27th August 2021
We think that the adoption rate of renewable electricity will accelerate in the decades ahead, which should contribute to a near-continuous decline in demand for coal. Demand for natural gas should still eke out some growth over the next decade or so …
26th August 2021
US demand is solid, if not exciting Crude oil stocks fell again last week and implied gasoline demand rose, in broadly positive news for oil prices. For now, US consumers appear to be shrugging off the spread of the Delta variant of COVID-19. However, it …
25th August 2021
Global steel output to be weaker in the second half of 2021 A slump in China’s steel production in July led to a dramatic slowdown in growth in global steel output. While China’s production may stabilise or rebound a little in the coming months, it …
24th August 2021
Some of our forecasts for commodity prices this year have been blown off course by extreme weather events. As economists we cannot pretend to have insight into future weather patterns, but we can share some thoughts on what more frequent adverse weather …
23rd August 2021
Commodity prices mostly fell this week on the back of a stronger US dollar as well as mounting concerns over the demand outlook. China’s July activity and spending data, published on Monday, were weaker than consensus forecasts, and the ongoing spread of …
20th August 2021
Concerns over aluminium supply look misplaced Aluminium prices have recently been supported by reports that government-imposed power rationing has weighed on production in China, but there is little evidence of this in the latest data for July. This …
We think that a few countries will join OPEC, which would boost its market power However, we still expect oil prices to fall over the next few decades … … as countries rush to produce as much as possible against the bleak demand backdrop In this Energy …
19th August 2021
The government in China has stepped up measures to tackle pollution and excess capacity in the domestic steel sector over the past few months. This adds weight to our view that steel production, and consequently the price of iron ore, will fall back over …
US gasoline demand looks to have peaked While crude stocks fell again last week, gasoline inventories rose a little and there was a further pullback in implied gasoline demand . Given the ongoing rise in virus infections and some re-imposition of …
18th August 2021
China’s latest activity data are further evidence of a slowdown in its economy. This aligns with our view that industrial metals demand will soften in the year ahead, putting downward pressure on prices . China’s July industrial data were generally much …
The UN’s latest Intergovernmental Panel on Climate Change (IPCC) report warned that ever-increasing greenhouse gas emissions are a ‘code red for humanity’, which could give further momentum to the green energy transition . This transition primarily …
13th August 2021
OPEC may need to reconsider supply plans OPEC’s oil production soared in July as Saudi Arabia unwound the bulk of its voluntary output cut . Although OPEC left its demand forecast unchanged, we think that the near-term demand outlook has deteriorated, …
12th August 2021
Recovery in US oil demand topping out Last week’s fall in crude oil and gasoline stocks suggests that growth in demand in the US is continuing to outpace growth in supply. However, following a strong recovery from its pandemic-induced lows, we suspect …
11th August 2021
While we expect both drilling activity and oil production in the US to pick up slightly over the next year or so, we doubt it will return to pre-pandemic levels anytime soon. This should keep the Brent-WTI spread narrow but is unlikely to prevent oil …
The latest trade data out of China adds to the evidence that demand growth in the world’s key commodity consumer is slowing. This supports our view that the broad-based rally in commodity prices from their pandemic-induced lows has run its course, and …
9th August 2021
Concerns surrounding the spread of the Delta variant of COVID-19 were the main driver of prices this week, but the impact on prices was far from uniform. Not surprisingly, oil prices slumped as many countries in Asia, including China, tightened travel …
6th August 2021
A decision by the Biden administration to increase US biofuel mandates in 2021 and 2022 has the potential to be a gamechanger for corn demand. However, we think that this is unlikely, which is one reason why we think that corn prices will fall over the …
5th August 2021
Overview – Although the prices of industrial metals have picked up again recently, we still expect them to be falling over the next year or so. Underpinning this view are our forecasts for economic growth to slow in China, a continued rebound in supply …
4th August 2021
Gasoline demand to rise a bit further in the coming weeks US commercial crude stocks unexpectedly increased last week as net imports rose, but we suspect that inventories will fall back soon as demand for oil products, such as gasoline, continues to rise …
Overview – After a blistering rally for much of 2021, we expect the prices of energy commodities to be easing back as we move into 2022. Oil supply, particularly from OPEC+, is set to rebound strongly over the next year, which will be a factor weighing on …
3rd August 2021
China’s July survey data suggest that manufacturing and construction activity have continued to cool, which supports our view that a slowdown in China will weigh heavily on industrial metals prices . The Caixin and official manufacturing PMIs both …
2nd August 2021
The recent bounce in commodity prices continued this week, helped by the ongoing depreciation in the US dollar and a series of risks on the supply side which are rearing their head . Most notably, a spell of cold weather in Brazil has dampened the supply …
30th July 2021
Download the PDF for the Full Report Overview – We think that the widespread rallies in commodity prices from their pandemic-induced lows are now close to, or in some cases already past, their peak. Most notably, we anticipate that Q3 will be as good as …
29th July 2021
Build in crude stocks looks to have been a blip US commercial crude stocks resumed their downward trend last week. With domestic output still well below pre-virus levels and product demand likely to rise, we think crude stocks will fall further from here …
28th July 2021
Oil prices have been on something of a round trip this week – falling at the start of the week as OPEC+ finally agreed to a new output agreement and the ongoing spread of the Delta variant fuelled concerns over the global economic outlook, and then …
23rd July 2021
Further evidence of a slowdown in China’s steel production Growth in global steel production remained in double digits in June, but this largely reflects the low base for comparison from last year. Meanwhile, government-imposed environmental controls in …
Crude stocks build won’t last for long US commercial crude stocks unexpectedly rose this week as net imports surged. Nevertheless, providing that the Delta virus variant doesn’t lead to the re-imposition of virus-related restrictions, we expect that …
21st July 2021
We think a reversal of the factors that have fuelled the recent surge in European natural gas prices, namely high LNG prices, constrained supply and depleted stocks, will bring prices back down to earth by early 2022. However, a strong economic rebound …
20th July 2021
Production growth to accelerate as curbs on power in China are eased Global aluminium output growth softened in June, largely due to power cuts in China’s key aluminium-producing province of Yunnan. But these curbs have started to be relaxed in recent …
The OPEC+ agreement, signed yesterday, should help to stabilise oil prices and we expect Brent crude to trade in a narrow band of between $70 and 75 per barrel over next six months. But we expect Brent to fall into the $60-70 range in 2022 as more global …
19th July 2021
Reports that the UAE and Saudi Arabia have reached a compromise deal over oil production quotas support our forecast that oil prices will end the year lower . Admittedly, the deal is yet to be agreed by OPEC+. But even if the group fails to reach a formal …
16th July 2021
After reaching an all-time high in May, the price of copper has since come off the boil. And we think it will fall further over the next eighteen months or so, as a combination of weaker economic growth in China and a greater availability of both ore and …
