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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 …
11th November 2020
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
Production should bounce back US commercial crude stocks declined as Hurricane Delta dealt a further blow to output. And though production should revive to pre-hurricane levels, gains will probably be smaller in the months thereafter . The EIA’s weekly US …
21st October 2020
China’s aluminium output set to climb even higher Growth in global aluminium production accelerated in September, led by robust output gains in China and Canada. Capacity additions in China should mean that global output continues to rise in the fourth …
20th October 2020
After a rollercoaster few weeks, it was a more muted affair for commodity markets this week . Indeed, there was little in the way of big price moves, which we think reflects a couple of factors. First, in many cases, it remains difficult to identify a …
16th October 2020
Hurricane-induced slump in production to prove short lived The suspension of production in the Gulf of Mexico ahead of Hurricane Delta largely explains the decline in US crude stocks last week. But most of this production has already been restarted and …
15th October 2020
OPEC production to remain low, even as Libya comes back on stream OPEC’s oil production fell in September and, except for Libya, we expect output by individual member states to either stabilise or decline a touch in the coming months as prices remain weak …
13th October 2020
The ongoing fiscal-led boost to domestic demand and a stronger renminbi propelled China’s commodity imports higher last month. This tallies with our long-held view that a rapid rebound in the Chinese economy will support generally higher industrial metals …
The prices of most commodities rose this week, supported by a pick-up in risk appetite towards risky assets, such as US equities . Oil prices were the top performer, increasing by around 10% in part due to supply concerns. Nevertheless, we expect oil …
9th October 2020
In this Focus , we argue that the medium-term impact of the COVID-19 pandemic on both global economic growth and consumer behaviour has brought forward “peak oil demand” to around 2030 . As a result, we expect that real oil prices will be falling for much …
8th October 2020
Hurricane Delta to weigh on stocks next week US commercial crude stocks rose a little as net imports jumped in combination with a revival in domestic production. But with another hurricane on the way, we expect output to dip back next week . The EIA’s …
7th October 2020
Overview – Some energy commodities such as natural gas and coal benefitted from a seasonal uplift in demand in September, but oil prices fell. We think that oil and natural gas prices will make a little more ground this year, provided that demand …
6th October 2020
Overview – Industrial metals prices fell in September on the back of the appreciation in the US dollar and fears that the re-tightening of virus containment measures in Europe and elsewhere will dampen demand growth. However, we think that …
5th October 2020
The prices of most major industrial commodities, including oil, fell this week seemingly owing to lingering fears about commodity demand . Concerns are growing about the financial health of some major property developers in China and COVID-19 related …
2nd October 2020
Overview – An uptick in COVID-19 cases in India and in developed economies knocked back many commodity prices in September, with few left in positive territory for the month. And although September’s price action reminds us that downside risks to …
1st October 2020
Recovery in refinery throughput to weigh on stocks in the coming months US commercial crude stocks fell a touch as exports rose. And despite implied product demand dropping back, a revival in refinery activity is likely to act as a drag on crude stocks in …
30th September 2020
We expect the aluminium market in the decade ahead to be characterised by stubbornly low prices, as economic growth in top consumer China eventually slows and begins to drag on demand. But as consumption in other emerging markets increases and the …
China’s September PMI readings suggest that the economy is now entering a period of above-trend growth, which is indisputably good news for the prices of commodities, particularly industrial metals . The official manufacturing PMI jumped to 51.5 – a …
A higher gold price, along with the ongoing recovery in industrial demand, particularly from China, means that the price of silver is likely to rise in the year ahead . The silver price has fallen sharply in recent weeks, from a peak of around $29 per …
Although WTI crude oil prices have partially rebounded from their second-quarter nadir, oil production in the US has yet to recover. We suspect that low prices and producers struggling to source financing will mean that US oil output won’t recover to …
29th September 2020
China is ramping up its purchases of US energy and agricultural products as promised in the Phase One trade deal. But instead of reflecting a desire to meet its obligations to the US, we think China’s buying mostly reflects opportunistic purchases at low …
28th September 2020
It was another wobbly week in commodity markets as prices generally fell, largely on the back of a deterioration in investor risk appetite . Most equity markets sold off and the US dollar strengthened as a tightening in virus containment measures in …
25th September 2020
Although a vaccine against COVID-19 may not dramatically alter the near-term economic outlook, we expect it would structurally improve the demand prospects for many commodities and therefore boost prices, particularly for crude oil . As a ‘second wave’ of …
24th September 2020
Headwinds rising for global steel production Global steel production continued to recover in August. However, new regulatory measures affecting the property market in China – along with the re-introduction of virus-related restrictions elsewhere – could …
