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With the notable exception of oil, we are generally negative on the outlook for commodity prices this year. While oil should benefit from a vaccine-related revival in global transport activity, we expect that the prices of industrial metals and …
12th January 2021
We expect the prices of most energy commodities to rise in 2021, as demand revives in line with the global economic recovery. But coal prices are likely to fall back, as demand growth in major consuming regions drops back after the winter weather-related …
11th January 2021
After a strong finish to 2020, most commodity prices built on their gains in the first week of January , as investor sentiment continued to prove supportive and Saudi Arabia announced that it would unilaterally cut oil production in February and March. In …
8th January 2021
Overview – The prices of industrial metals continued to surge in December, capping off a strong 2020. However, we expect that prices will fall this year as growth in China’s demand slows on the back of the gradual withdrawal of fiscal stimulus and tighter …
Overview – Energy commodity prices for the most part ended 2020 on a high, buoyed by strong seasonal demand, an increase in investor risk appetite and a weaker US dollar. And while energy commodities were the underperformer in 2020, they should be the …
7th January 2021
If implemented, Saudi Arabia’s shock pledge to cut oil production by 1m bpd in February and March should offset much of the current lockdown-related weakness in global oil demand. Consequently, the market should remain in a deficit, which is why we have …
Weakness in product demand could last for some weeks yet Crude stocks plummeted at the beginning of 2021, explained by an increase in refinery activity and persistently robust exports. However, rising product stocks point to subdued consumption . The …
6th January 2021
Overview – Commodity prices rose in December in spite of a tightening of COVID-19 restrictions in a number of developed economies, which will weigh on commodities demand at the start of this year. Markets seem to be focusing on a brightening demand …
5th January 2021
China’s December PMI readings suggest that the pace of economic expansion has started to ease, which chimes with our view that the demand for and, prices of, most metals will fall this year . The official manufacturing PMI fell to 51.9 in December, down …
4th January 2021
Implied product demand to remain steady, for now Crude stocks sank a little last week as exports rose. Meanwhile (and more encouragingly), implied gasoline and distillate demand were up in the face of rising COVID-19 restrictions, which suggests that …
23rd December 2020
The price of palm oil has climbed resolutely since May, trading currently at a nine-year high of around MYR 3,800 per tonne. Nonetheless, we think that the price will fall in 2021, as supply constraints ease . The recent rally in the price of palm oil has …
We estimate that the exports of goods and services that are already facing restrictions by China contribute around 1.8% to Australia’s GDP. While we still expect iron ore and liquefied natural gas exports to remain spared, that figure could rise to around …
China steel production to bounce back soon Growth in global steel production fell in November, in part because cold weather in China weighed on construction activity there. Nevertheless, we expect global output to remain high in 2021 as elevated prices …
22nd December 2020
One of the latest casualties of heightened China-Australia geopolitical tensions is Australian coal exports. But we think that this will have limited implications for demand and prices as, for the most part, coal should be re-directed to other countries . …
China production boom will continue Global aluminium production held up well in November and, given the recent surge in prices, will almost certainly increase in the coming months . According to the International Aluminium Institute (IAI), global …
21st December 2020
We think that the price of oil will outperform most other commodity prices next year . A lifting of virus restrictions, as vaccines are rolled out, should allow for a strong bounce-back in oil demand and prices in the second half of next year, whereas we …
18th December 2020
We expect the unusually large discount in natural gas prices in Europe relative to those in Asia to shrink in the year ahead as the recovery in European demand gathers pace . The price of Asia LNG (JKM) recently breached $10 per mBtu; a level not seen …
The price of iron ore has skyrocketed recently, to over $155 per tonne. However, we think that the price will decline in 2021 as demand in China weakens at a time of rising supply . Despite lingering steel production weakness outside China (see Chart 1), …
We think that industrial metals prices will ease back in 2021 primarily because we expect growth in China’s demand to slow. However, we acknowledge that there are some upside risks to our price forecasts, including the possibility that metals demand …
17th December 2020
Stocks dip, but are likely to remain inflated for some time US crude stocks declined in the latest data as net imports plummeted. But refinery activity remains subdued and the latest virus-related restrictions could see lower product demand in the coming …
16th December 2020
After rising steadily in the first half of the year as virus-containment measures curbed metals consumption, exchange stocks have since started to be drawn down. While this tallies with the robust recovery in China’s demand, we think that stocks are not …
15th December 2020
Weaker oil demand forecast could lead to lower OPEC+ supply in Q1 OPEC cut its 2021 oil demand forecast in its latest report, which we suspect could delay further easing of its production cuts early next year. This should help put a floor under prices . …
14th December 2020
Despite the re-introduction of lockdown measures in some US states, industrial commodities prices continued to rise this week on the back of ongoing hopes of a vaccine-induced economic boom next year . Nevertheless, we think that the risks to most of our …
11th December 2020
The substitution of coal for natural gas in European power generation has reversed in recent months, but we doubt that this marks the start of a new trend. Instead, we think that gas-based power in Europe will become increasingly price competitive in the …
We forecast that a substantial pick-up in oil demand in the second half of next year amidst a backdrop of constrained supply will push Brent oil prices to around $60 per barrel by end-2021. That said, there are clear downside risks, the most notable being …
10th December 2020
We expect that the price of gold will trade at around $1,900 per ounce through 2021 as US real yields remain low. That said, we recognise that there are some key downside risks to our forecast. US nominal yields could surge and investors could intensify …
US crude stocks to remain elevated for a little while yet The huge counter-seasonal build in US commercial crude stocks last week was driven by a surge in net imports. We expect that it will take some time before stocks fall back to more “normal” levels . …
9th December 2020
We have now factored the rollout of an effective COVID-19 vaccine into our forecasts and, as a result, we are slightly more positive on the demand outlook for some agricultural commodities. That said, we still expect most agricultural prices to fall over …
8th December 2020
We think that OPEC+ production will rise by less than the new agreement allows. Some countries will make compensatory cuts, while weak Q1 demand could prevent monthly rises in February and March . Last Friday, OPEC+ announced that would increase output by …
7th December 2020
China’s commodity import volumes should hold up well in the coming months in part because ongoing fiscal support should continue to boost domestic demand . China’s exports surged by 21.1% y/y in US dollar terms to a record high last month, but imports …
After much wrangling, this week OPEC+ agreed to a partial roll over of its current collective output cut into next year. But the obvious divisions between members of the group mean the question marks over the future direction of oil supply are as large as …
4th December 2020
Industrial metals prices have surged in recent weeks owing in large part to strong economic activity in China. And while prices should hold up during the first quarter next year, we think that they will ease back by end-2021 as demand growth in China …
Overview – Industrial metals prices rallied in November. While we expect demand growth to stay strong in the months ahead, on the back of robust economic activity in China, we think that it will slow in 2021 as the Chinese government gradually withdraws …
Overview – The prospect of effective COVID-19 vaccines gave a lift to most energy commodities in November as they have raised the prospect of higher demand in 2021. We anticipate a particularly strong rebound in oil consumption next year and have raised …
Implied product demand unlikely to make significant turnaround until March Crude stocks dipped last week as net imports sank. Meanwhile, with COVID-19-related restrictions now present in a number of large states, we suspect that demand will remain low for …
2nd December 2020
Overview – A flurry of positive news surrounding effective COVID-19 vaccines gave a lift to most commodity prices in November, as a faster easing of virus containment measures next year should provide a lift to demand. While we think that oil prices will …
1st December 2020
China’s November PMI readings surprised on the upside but were consistent with the rally in industrial metals prices last month. Given that fiscal stimulus is ongoing and export growth remains robust, metals demand and prices should remain supported in …
The prospect of effective COVID-19 vaccines has prompted us to raise our forecast of global economic activity in 2021, which has positive implications for commodity demand. We think oil demand and prices, in particular, will rise sharply next year. But …
30th November 2020
We expect OPEC+ to extend its current 7.7m bpd supply cuts for at least another three months at its next meeting. Although prices have rallied in recent weeks on hopes of a faster recovery in demand, output restraint will still be needed to avoid …
27th November 2020
All eyes in the oil market will be on the OPEC and OPEC+ meetings on Monday and Tuesday next week . Given the renewed imposition of virus-related restrictions in Western economies, the near-term prospects for oil demand have deteriorated. Accordingly, we …
We think that the withdrawal of fiscal stimulus in China will offset any vaccine-induced boost to metals demand in 2021. And with supply bouncing back, we expect the prices of industrial metals to dip next year. By contrast, we expect that the price of …
With widespread vaccination against COVID-19 now increasingly likely, we are revising up our oil demand forecasts for next year. And while OPEC+ will probably raise output a little faster in response, we still think that the oil market will remain in a …
Demand to remain subdued … for now US commercial crude stocks fell slightly last week, while implied product demand also ticked down. And, with new US virus cases still at very high levels, we think that it probably won’t be until next year – once …
25th November 2020
The launch of a new copper futures contract in China should help shift pricing power in metals markets towards Asia, but the contract will not immediately become a new global benchmark . Last week, the Shanghai International Energy Exchange (INE) launched …
Vaccine rollout will boost global production Despite the slight fall in China, global steel production continued to rise in October and will probably increase further in the year ahead providing that the rollout of COVID-19 vaccines is successful . …
24th November 2020
Most commodity prices rose this week, buoyed by news of further progress on COVID-19 vaccines. A rapid roll out of an effective vaccine suggests that economic activity, particularly in the US and EU, would be stronger than otherwise, which is positive …
20th November 2020
The platinum market should move into a small surplus in 2021 as demand falls and production in South Africa rebounds strongly in the wake of lighter virus-related restrictions . In its latest quarterly report, the World Platinum Investment Council (WPIC) …
China aluminium production to hold up, despite winter curbs Ongoing strength in China’s aluminium production meant that global aluminium output continued to grow in October. And despite the winter environmental restrictions in China, supply there is set …
