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Upbeat manufacturing data from the US and China bolstered risk appetite this week, helping the prices of industrial commodities record another strong week . However, precious metals prices also did well, as further declines in real interest rates in the …
7th August 2020
Earlier this week, the gold price broke through the previous record set back in 2011 to reach an all-time high. Given that we now expect real yields to continue to grind lower, we have revised upwards our gold price forecast to $2,100 per ounce by …
China’s industrial import volumes rose in July, which is consistent with the recovery in economic activity and opportunistic stockpiling at low prices. While final commodity demand will remain strong for the remainder of this year, China’s import volumes …
Weekly data for June and July point to a slight recovery in US crude oil production from May’s depressed level of 10m bpd. We expect output to remain subdued for the rest of 2020 . US crude oil production fell to 10m bpd in May, from 12m bpd in April, …
6th August 2020
Last week saw the zinc price return to its pre-pandemic level, making it the second in the S&P GSCI of Industrial Metals to do so after copper. But unlike copper, we expect the zinc market to remain oversupplied for the foreseeable future. Accordingly, we …
Crude stocks to drop in the coming weeks US commercial crude stocks fell steeply again last week, in part because refinery activity is continuing to revive. We think that stocks will decline further in the coming weeks as product demand bounces back in …
5th August 2020
The coronavirus has changed how people live their lives and spend their money. The consumption of almost all agricultural commodities has fallen so far this year and we expect that it will take until 2022 for demand to return to pre-virus levels. As a …
The latest China import data tally with our view that constrained supply will help to push the prices of most base metals higher. Conversely, the surge in iron ore shipments is consistent with our forecast that a rise in supply will send the price of iron …
3rd August 2020
July’s encouraging batch of PMIs for China suggest that the robust economic rebound continued into the start of Q3. And with policy support set to be stepped up, strong Chinese activity will continue to be a fillip for commodities demand in the months …
Overview – Despite base metals prices already nearing pre-virus levels, we think that the rally has further to run. The key factor underpinning our positive outlook is the planned policy stimulus in China, much of which will take the form of …
31st July 2020
Mounting signs of a rapid rebound in the Chinese manufacturing and construction sectors, as well as a further depreciation in the US dollar, offered some support to industrial commodity prices this week . However, concerns about rising virus infection …
Product demand on the road to recovery A drop in net imports, combined with rising refinery throughput led to a huge fall in crude stocks last week. Although unlikely to be of the same magnitude, we suspect that stocks will continue to decline in the …
29th July 2020
Overview – The partial easing of coronavirus containment measures has allowed energy demand and prices to pick up from the lows recorded earlier this year. That said, we anticipate that the recovery in energy demand will be only gradual over the next …
The ongoing recovery in economic activity – from lows earlier this year – will support the prices of most commodities in the second half of 2020 and into 2021. We are particularly positive on the outlook for industrial metals given that much of China’s …
Despite some jitters in equity markets, commodity prices generally ended the week higher . In what is becoming a well-worn pattern, optimism about a robust economic recovery continued to build – this time in response to the final agreement of a EU …
24th July 2020
Prolonged weakness in demand and high production will keep the cotton market in a surplus in 2020/21. As a result, we forecast that cotton prices will remain low over the next 18 months . Since the beginning of this year, the price of cotton (ICE Cotton …
In recent months, cargoes of US LNG have been cancelled in record numbers as countries around the world struggle with the virus-related economic slump. After exports surged by nearly 60% y/y in the first half of 2020, we expect their subsequent collapse …
China’s bounce-back won’t be replicated elsewhere The contraction in global steel production eased for the second month in a row in June, offering further evidence that the worst of the downturn is now behind us. But global steel production will take much …
23rd July 2020
US production unlikely to rise much further An increase in crude oil production and a reduction in refinery throughput led to an increase in crude stocks last week. However, we think that stocks will fall back in the coming weeks as product demand picks …
22nd July 2020
We have raised our forecast for the gold price, as we expect real yields to drift a little lower and remain low for some time. We now think that the price of gold will finish the year at $1,900 per ounce ($1,600 previously) and will remain elevated over …
21st July 2020
Downside risks to output growing, but market to remain oversupplied Global aluminium output growth slowed slightly in June. However, given the colossal hit to demand seen in the first half of the year, we still expect the market to be hugely oversupplied …
20th July 2020
At face value, the rally in the copper price to above its pre-virus level suggests that the coronavirus pandemic has led to an overall improvement in the metal’s fundamental outlook. While a little counter-intuitive, we think this idea is less far-fetched …
17th July 2020
A raft of positive Chinese economic data this week offered some support to commodity prices, but concerns about the rise in coronavirus infections in the US and in Latin America prevented any significant gains . Oil prices dipped on news that OPEC will …
New data released by the London Metal Exchange (LME) confirm our view that there has been an increase in off-exchange stocks this year, particularly for aluminium. Admittedly, there are limitations to the data, but they still underpin our forecast that …
16th July 2020
Unseasonably hot weather in Siberia in recent months has weighed on wheat production and damaged industrial infrastructure. Scientists think that future heatwaves in the region will become more common in the coming decades due to climate change. This …
Localised lockdowns will keep a lid on gasoline demand in coming weeks Crude stocks in commercial storage fell last week, though this was primarily a result of the collapse in net imports. Gasoline demand actually slipped back as some states moved to …
15th July 2020
OPEC to increase production quotas as it forecasts faster demand growth OPEC production continued to decline in June, largely due to a contraction in Saudi output. However, with OPEC becoming more optimistic on demand, we think that (new) higher quotas …
14th July 2020
China’s commodity import volumes surged in June, while exports remained in the doldrums. We expect this trend to partially reverse in the coming months as higher commodity prices will curb bargain-hunting purchases and a further pick-up in economic …
The recent launch of the European Commission’s hydrogen strategy marks a step forward in the region’s decarbonisation push in which it hopes to use ‘green’ hydrogen in place of fossil fuels. We answer five key questions about hydrogen technology and …
10th July 2020
The prices of most commodities rose this week, with the exception of energy . In particular, industrial metal prices rose alongside Chinese equities. Elsewhere, the European economic recovery is starting to look remarkably V-shaped, despite localised …
Now that quarantine restrictions are being lifted, mine supply should recover But still-high rates of infection in Latin America may act as a constraint The risks look largest for copper, but iron ore supply could also take a hit In this Metals Watch , we …
As the US economy continues to recover from virus-related disruption, we expect the housing and retail sectors to rebound. This, along with a stronger Canadian dollar and restricted supply (owing to social distancing measures), means that we expect the …
9th July 2020
We recently raised our price forecasts for base metals, including lead, as we now forecast a quicker economic rebound in China. And though we expect lead’s near-term price recovery to be driven by reviving car sales, a faster shift towards EVs will weigh …
8th July 2020
High import volumes unlikely to be sustained An unexpected surge in net imports pushed up US commercial crude stocks this week. But we think imports will fall back soon given the sharp drop in oil production outside the US in recent months . The EIA’s …
Overview – Energy prices continued to recover in June, but they remain significantly lower than at the start of the year. What’s more, we do not expect them to recover to pre-virus levels until 2022 at the earliest. Supply will comfortably meet any rise …
7th July 2020
Overview – June was another good month for industrial metals. The prices of base metals made further gains, although those used in steel alloys (e.g. zinc and nickel) performed less well as wet weather in Southern China disrupted construction projects, …
3rd July 2020
This week was fairly quiet for commodities, with most prices rising slightly . In particular, energy prices in the US and Europe were boosted by the partial (albeit uneven) paring back of virus-containment measures. Meanwhile, the latest batch of PMIs …
The end of the port blockade in Libya should mean that the country’s oil production is restored, but we think that supply will be slow to return not least because of damage to facilities and weak global demand. By way of background, the dramatic loss of …
Overview – The more industrial commodities performed particularly strongly in June on the back of the ongoing revival in global economic activity. We have become more positive on the outlook for industrial metals prices this year given higher …
2nd July 2020
US commercial crude stocks likely to fall further A fall in imports and another increase in refinery throughput meant that US commercial crude stocks plunged last week. We expect crude stocks to drop over the coming months as imports decline . The EIA’s …
1st July 2020
China’s June PMIs indicated a continued improvement in domestic industrial activity, which should be positive for commodities. However, fading external demand may prove to be a headwind for exports . The Caixin manufacturing PMI rose to 51.2 in June, from …
China’s import data are another sign that demand is bouncing back in the world’s largest metal consumer. However, in some cases, a lack of supply is restricting shipments. This is likely to become more of an issue in the months ahead and is another reason …
30th June 2020
Weak demand and a recovery in supply should push the sugar market into a surplus in 2020/21. As a result, we forecast that sugar prices will remain low over the coming year . Despite droughts in major producers, including India and Thailand, the price of …
29th June 2020
It is by no means inevitable that the coronavirus crisis puts a big permanent hole in the supply capacity of economies (i.e. their ability to produce goods and services). With the right government policies, many economies should be able more or less to …
The prices of most industrial commodities fell this week owing primarily to concerns about the spread of the coronavirus, particularly in the south of the US . Falls in equity markets also weighed on prices, at least at the beginning of the week. …
26th June 2020
Recovery in physical gold demand to take some time Imports of gold into China and India in May were little changed from the previous month and continue to paint a grim picture for physical demand in the world’s top gold importing nations . We expect …
25th June 2020
In light of the recent revision to our China economic growth forecast and our expectation that the rebound in equities has further to run, we have revisited our oil price forecasts for the year ahead. We expect that constrained OPEC+ supply will not be …
Recent revisions to our macroeconomic and markets forecasts are more positive for industrial metals than oil, and they support our slightly bearish outlook for the price of gold . The starting point for our commodity price analysis is our view on the …
US commercial crude stocks will soon fall US commercial crude stocks rose again last week as some production came back online after being hit by Tropical Storm Cristobal. Nevertheless, we expect that stocks are nearing their peak as refinery activity …
24th June 2020
Reports that the US is considering rescinding Canada’s exemption to its 10% tariff on aluminium this week are unlikely to have much of an impact on the metal’s price . But such moves have the potential to worsen the oversupply in the global market, acting …
