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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 …
The surge in the price of cocoa this week has come as a number of large risks hang over the supply outlook. But if these risks fail to materialise, we expect prices to fall back over the coming months . The price of cocoa soared by close to 25% this week …
The recovery in oil demand across Emerging Asia has been highly uneven. Oil consumption in China is already back to pre-virus levels, and we think it will rise further in the year ahead. But consumption elsewhere is unlikely to return to pre-virus levels …
19th November 2020
Risks to demand skewed to downside in the weeks ahead Crude stocks rose last week as rebounding output offset increased refinery activity. Meanwhile, with new US virus cases continuing to rise, we suspect that the risks to demand are now firmly to the …
18th November 2020
Ongoing policy stimulus in China should continue to boost investment and industrial output in the coming months. However, we expect economic activity to gradually slow by end-2021 which is why we think that prices will start to ease back next year . …
The partial recovery in oil prices points to a rise in the number of rigs drilling for oil However, the relationship between rigs and oil production is less clear cut In addition, changes in rigs take longer to translate into changes in output in the US …
17th November 2020
Commodity prices benefitted from news of a potential vaccine for COVID-19 this week . The resulting boost to risk appetite pushed equities and most commodity prices higher, with the exception of precious metals. That said, while a vaccine points to …
13th November 2020
Chunky rise in stocks highlights the headwinds still facing prices The rise in US commercial crude stocks last week is a stark reminder that, despite the recent optimism surrounding a potential COVID-19 vaccine, the recovery in oil prices still has a long …
12th November 2020
Strong demand from China together with constrained production should support the price of natural rubber through the first half of next year. That said, we think that prices will start to fall back by end-21 . After dropping in the first half of the year …
Progress on a vaccine could lead OPEC to push up its 2021 demand forecasts OPEC’s oil production jumped in October as Libyan output surged. But we expect that OPEC and its allies will extend their current level of supply cuts into early 2021, which will …
11th November 2020
While the positive developments in finding an effective vaccine against COVID-19 have boosted investor risk appetite, we still think that gold prices will remain high in the year ahead . The price of gold surged between March and August in large part due …
Reports of an imminent, and highly effective, vaccine against COVID-19 point to generally stronger commodities demand. Once there is more certainty on the vaccine, we will review our price forecasts . Risk appetite returned with a bang on Monday as news …
News of a vaccine sent oil prices surging on Monday on the back of expectations that this will enable demand to recover more quickly than previously thought. But higher prices also increase the chances of a faster return of supply, particularly from …
China’s commodity import volumes remained high in October, although they eased back from September levels. We expect import volumes to remain solid in the coming months given the strength in economic activity, but higher prices should prevent a repeat of …
9th November 2020
New national lockdowns in Europe have led us to revise down our oil demand forecasts for Q4. But the decline is likely to be much smaller than in Q2, not least because the economic hit will be less severe . European oil demand slumped in early 2020, as …
6th November 2020
Commodity markets shrugged off the uncertainty surrounding the US election and took direction from equity markets and the US dollar this week . Most commodity prices rose as equities jumped and the dollar weakened. However, the likelihood of a President …
The apparent failure of the Democratic Party to win a ‘clean sweep’ in this week’s US election means that many of the policy initiatives and spending proposals made by presidential hopeful, Joe Biden, during his campaign are likely to be – at best – …
Despite a small revival in thermal coal prices ahead of winter in the Northern Hemisphere, we doubt it will be long before they start to test historic lows again. And if, as we expect, the COVID-19 pandemic serves to accelerate the push towards …
5th November 2020
Large fall in stocks unlikely to be repeated in coming weeks The plunge in US commercial stocks largely reflects a hurricane-related drop in output, rather than strong demand. And with virus cases rising, demand should remain subdued in the coming weeks . …
4th November 2020
The recent strength in Asian exports reflects sustained growth in global electronics demand, which has been a factor underpinning the recent rally in industrial metals prices. We expect electronics exports to hold up well in the months ahead, which should …
We think that energy commodities will claw back a bit of the ground that they have lost relative to industrial metals over the next two years or so, as some cyclical factors linked to COVID-19 which have weighed more heavily on the former unwind. However, …
3rd November 2020
We suspect that the rapid recovery in Asia LNG prices will run out of road in the coming months, as supply returns and LNG cargoes are potentially diverted away from Europe . Asia LNG prices plummeted earlier this year as the plunge in economic activity …
In the past, La Niña weather conditions in the Pacific Ocean have had a significant impact on agricultural crops and prices. In this Update we consider the risks that the development of La Niña over the coming months pose to our current agricultural price …
China’s October PMI data add weight to our view that Chinese economic growth will continue to accelerate, even though we estimate that the economy is already back to its pre-virus trend. This will support the prices of commodities in the months ahead, in …
2nd November 2020
A lack of any detail in China’s Five-Year Plan and concerns about virus lockdown measures weighed on the prices of industrial metals this week . It now looks as though we will have to wait until Match for more information on the five-year plan. Next week, …
30th October 2020
Commodity prices have largely shrugged off the conclusion of China’s Fifth Plenum and discussion of the 14 th Five-Year Plan (FYP). This is not so surprising as the main takeaway from the event is that we will have to wait until March for any detail. But …
A victory for the Democratic party in November’s presidential election has several potential implications for commodity markets . Very broadly, Joe Biden’s pledge to actively promote decarbonisation of the economy should accelerate the move away from …
Overview – Energy demand and prices have continued to recover from their virus-induced lows, but they remain depressed. However, we expect the revival in energy demand to pick up pace in 2021 as developed economies phase out virus-containment measures and …
28th October 2020
Product demand likely to remain subdued The weekly surge in US commercial stocks largely reflects a return to more normal levels of crude production, after Hurricane Delta forced rigs to close. However, the product data point to stagnating demand amid the …
Overview – Industrial metals prices have been among the biggest beneficiaries of the stimulus-fuelled recovery in China’s economy. But given how far prices have risen already, and that we think demand outside of China will remain lacklustre, an …
26th October 2020
Data showing that the Chinese economy continued to rebound last quarter and that growth was accelerating heading into Q4 gave a lift to most industrial metals prices this week . Given China’s share of global metals consumption is far greater than its …
23rd October 2020
China to remain the only bright spot for some time Growth in global steel production accelerated in September. However, all the growth was in China’s output. It looks increasingly likely that a revival in production elsewhere will have to wait until 2021 …
Overview – Commodity prices will continue to benefit from the stimulus-fuelled recovery in China’s economy over the next year. At the same time, a gradual revival in growth in advanced economies should give a lift to the price of oil, which has …
22nd October 2020
