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Despite the recent falls in the prices of precious metals, we still expect the gold price to edge higher over the coming year as US real yields drift a little lower . The gold price surged from March to early August owing to the plunge in US real yields, …
23rd September 2020
It’s a bumpy road, but demand is recovering US commercial crude stocks dipped as net imports eased back and production edged lower. Product stocks also fell, in part due to lower refinery activity but also as a result of a tick-up in implied demand . …
The rapid bounce-back in construction and industrial activity in China, reflected in our revamped China Activity Proxy, looks set to continue in the coming months as additional fiscal support is introduced. This underpins our forecast that most industrial …
22nd September 2020
China to continue to prop up global supply Global aluminium output remained strong in August. Production should rise in the coming months as new capacity comes on stream in China, which should act as a lid on prices . According to the International …
21st September 2020
Oil prices surged by around 10% this week on the back of not very much . Admittedly, OPEC declared that it would clamp down on non-compliant members and re-iterated that it would do what it takes to support prices. And US crude stocks fell in the latest …
18th September 2020
Strong demand from China will put a floor under corn and soybean consumption in 2020/21. But with record expected yields in the US, we expect corn and soybean prices to come off the boil . In the September World Agricultural Supply and Demand Estimates …
Persistently weak demand could force an extension of OPEC production cuts OPEC’s oil production rose sharply in August on the back of higher output quotas. However, if concerns persist about global oil demand, which was discussed at length at yesterday’s …
Hurricanes continue to distort the US crude demand picture The restart of refineries following Hurricane Laura explains last week’s fall in crude stocks. With another hurricane on its way, it will be some time before a clear picture emerges of the state …
16th September 2020
The price of US steel has surged recently, and we think that the price will continue to rise in the year ahead as demand picks up at a time of constrained supply . After hovering at around $475 per tonne during April-August, the price of US steel (HRC) …
15th September 2020
Concerns about demand and a move away from ‘risky’ assets, including equities, dragged both energy and industrial metal commodity prices lower this week . In the oil market, we think that any further recovery in oil consumption will be constrained this …
11th September 2020
A combination of strong demand from China and a slow recovery in global production from its virus-related trough means that the price of iron ore is likely to remain elevated for the remainder of this year. However, we expect prices to fall in 2021 as …
Gasoline demand to face downward pressure in the weeks ahead US crude stocks snapped a six-week falling streak to increase last week as refinery activity fell. And as seasonal factors weigh, we expect gasoline demand to make little further headway this …
10th September 2020
Most industrial metals prices are now above their pre-virus levels, after rallying from their March lows. We reckon that the price rebound has further to go, as China’s impressive economic revival continues, and the backdrop for risky assets continues to …
Brent’s recent price drop to a two-month low shows the fragile nature of its price recovery. We think that an uneven recovery in demand, combined with the hangover of vast oil stocks accumulated in the first half of this year, will limit any price gains, …
8th September 2020
China’s commodity import volumes remained high in August, reflecting the broader recovery in economic activity. We expect commodity demand to remain strong in the coming months but import volumes may ease back given the recent rise in prices of many …
7th September 2020
Despite further signs of strength in China’s manufacturing sector, the prices of most industrial commodities – as well as gold and silver – fell this week owing in large part to an appreciation of the US dollar . However, the ongoing fiscal stimulus in …
4th September 2020
Overview – Industrial metals rallied strongly in August on the back of encouraging economic data out of China and some depreciation of the US dollar. By contrast, the price of gold eased back, after hitting an all-time high early in the month. However, …
Overview – Energy prices continued to recover in August, but they are still trailing other commodity asset classes as well as other risky assets, such as US equities. We expect that prices for the most part will hold steady for the rest of this year given …
3rd September 2020
Hurricane disruption to linger and weigh on crude stocks a little next week US crude stocks dropped sharply last week as US production collapsed by over 1m bpd. And though supply is bouncing back, we expect further drawdowns next week as output remains …
2nd September 2020
Overview – Ongoing fiscal stimulus in China, coupled with the recent depreciation of the US dollar, is boosting commodity prices. China’s commodity imports are also growing strongly, but we suspect that the pace of purchases may slow soon as higher prices …
China’s August PMI readings support our view that the economy will return to its pre-virus trend by the end of this year, which is positive for almost all commodities prices, but especially industrial metals . That said, metals prices have already had a …
1st September 2020
The Fed’s move to a “flexible form of average inflation targeting” announced at this week’s Jackson Hole is broadly positive for commodities prices. It points to ultra-loose US monetary policy for longer, which is likely to act as a drag on the value of …
28th August 2020
Global oil supply fell to a multi-year low in the second quarter, and recent data point to output having fallen further in the third quarter. With demand reviving, we think the oil market is now in a deficit, which – assuming there is no ‘second wave’ of …
Hurricane Laura to weigh heavily on crude stocks next week US crude stocks dropped again last week owing primarily to a collapse in net imports. Stocks should decline next week too since Hurricane Laura has forced most production in the Gulf of Mexico …
26th August 2020
A recovery in demand at a time of constrained supply will put downward pressure on US natural gas stocks and provide a small lift to prices in 2021 . The price of US natural gas (Henry Hub) touched a multi-decade low of $1.48 per mBtu in June owing …
25th August 2020
Imports to remain weak for some time yet Despite a bounce-back in India’s imports of gold last month, China’s imports remained in the doldrums. Gold imports by both countries should rise in the months ahead, but a full recovery still appears to be a long …
Boom in Chinese production to continue The contraction in global steel production continued to ease in July. This improvement remains led by a surge in Chinese production resulting from a state-sponsored rise in infrastructure spending, which is set to be …
24th August 2020
Industrial metals prices pushed higher this week, while the prices of oil and gold were broadly flat . For now, the robust recovery in Chinese demand for metal still seems to be enough to offset weaker demand elsewhere. That said, the latest PMI data …
21st August 2020
In our view, the scale of energy demand destruction caused by the coronavirus pandemic has made the liberalisation of the global LNG market start to look inevitable . While pressure has been mounting on suppliers to offer more flexibility for some time, …
Robust supply to continue to weigh on the aluminium price The continued increase in production in July helps to explain why the price of aluminium has been a relative underperformer so far this year. And with yet more additions to China’s smelting …
20th August 2020
A combination of stronger demand and higher oil prices will support the spot price of Asian LNG over the next year and a half . At the start of the year, the LNG market was already showing signs of oversupply and the virus-related hit to demand made …
Moderating product demand unlikely to derail future stock drawdowns US crude stocks declined for the fourth week in a row, although by less than the market expected. We expect that total crude stocks will continue to head towards their five-year average …
19th August 2020
The nine-week, gold-led rally in the precious metals faltered this week. We had warned that gold was looking a bit expensive, and that prices were vulnerable to a slight correction. While real bond yields edged up in recent days, we still think that they …
14th August 2020
We expect the price of nickel to make further gains between now and the end of 2021. The ongoing rise in the production of stainless steel in China will be the main factor supporting demand, while the ban on Indonesian ore exports should keep supply …
We had previously expected the global platinum market to flip into a surplus this year as the measures taken to contain the coronavirus weighed on most types of demand for the metal. However, in light of our recently revised real yields forecast, we now …
The recovery in China’s hog herd will support demand for corn and soybeans in 2020/21. However, our demand forecasts are not as rosy as the USDA’s and, in any case, a strong rebound in supply will limit any price gains . In the August World Agricultural …
13th August 2020
Lower US output to add further downward pressure to crude stocks US crude stocks declined for their third straight week, although by less than in previous weeks. As demand continues to revive and US production treads water, we expect stocks to fall in the …
12th August 2020
Rising OPEC production to limit price gains OPEC production rose in July and the recent introduction of higher quotas means that output will almost certainly continue to increase in the coming months . The OPEC Monthly Oil Market Report (MOMR), released …
We think that it will take over a year for oil product consumption to recover to pre-virus levels. This in turn will limit crude oil demand for the next 18 months or so and any near-term price gains . Earlier this year, we thought that global crude oil …
11th August 2020
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 …
