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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 …
Gasoline demand in the US is recovering from the coronavirus-related slump. However, we think that it will take some time before consumption fully returns to its pre-virus level . By way of background, implied US gasoline demand was around 9m bpd in 2019. …
22nd June 2020
Past the worst, but output still likely to contract this year In a pattern that has become all too familiar, steel output grew in May in China but fell sharply elsewhere. We expect steel output both in and outside China to pick up in the months ahead, but …
Stronger than expected Chinese recovery to keep market well-supplied Global aluminium output growth picked up a little pace in May. With demand in China now increasing quicker than we had previously expected, it is likely that Chinese aluminium output …
Industrial commodity prices continued to claw back their virus-induced losses this week . These gains helped to extend the general rise in the prices of industrial commodities since late March, notwithstanding some hiccups along the way. The latest …
19th June 2020
We have turned more positive on the outlook for the price of tin. China’s demand is coming back strongly after a virus-related slump and, in the more medium-term, tin will benefit from its heavy use in new technologies. At the same time, supply is …
Our new coal switching price indicator (CSPI) shows that, in the UK and the Netherlands, power generation using natural gas is much more cost-effective than coal. While this has been true for a while, it has been entrenched by the recent virus-related …
18th June 2020
We think that the recovery in equity prices has further to run, and now expect an even swifter economic rebound in China. Accordingly, we have raised our base metal price forecasts, which now show a return to their pre-virus levels as early as next year …
Relatively high rates of compliance unlikely to last May saw the latest OPEC production cuts come into force, with compliance among members fairly good. That said, a gradual pick-up in oil prices and demand, together with the prospect of some Libyan …
Nearing the peak in US commercial crude stocks Despite a hefty fall in US crude oil production, commercial crude stocks rose to another record high last week. Nevertheless, we expect crude stocks to start to fall over the coming weeks as refinery …
17th June 2020
The virus-related economic disruption has already dealt a huge blow to fossil fuel usage in European power generation. What’s more, we suspect that the transition towards renewables may be accelerated by post-virus policy support, which would have …
16th June 2020
The recent rally in most commodity prices stalled this week at least in part due to concerns about the scale of virus infections, particularly in the US . A stronger US dollar, falls in US equity prices and some profit-taking added to the downward …
12th June 2020
Soaring Chinese imports of platinum group metals (PGM) could be taken as a sign that end-use is racing back towards its pre-virus level. However, we think that higher imports merely reflect opportunistic buying. Accordingly, we continue to expect only a …
11th June 2020
US gasoline demand a relative bright spot in otherwise bleak market A jump in crude oil imports was the primary driver behind the rise in crude US stocks last week. And despite the continued revival in gasoline demand, product stocks crept higher. …
10th June 2020
This year’s rally in the gold price has come on the back of a coronavirus-led surge in safe-haven buying and a plunge in interest rate expectations. More recently, however, we suspect that the uptick in the gold price has come from investors positioning …
Palm oil consumption will be hit hard by weak biofuel demand in 2020. However, we think that consumption will rebound strongly next season as higher biodiesel mandates incentivise more biofuel production. As a result, we expect palm oil prices to rise …
As expected, OPEC+ extended its 9.7m bpd production cut for another month (until end-July) . Given that prices have rallied strongly in recent weeks, the group’s caution reflects the still-high level of uncertainty surrounding prospects for oil demand. …
8th June 2020
Although China’s commodity imports volumes dropped in May, we expect the recent infrastructure-related fiscal support measures to lift domestic demand and commodity imports in the coming months . China’s exports fell by 3.3% y/y in May in US dollar terms, …
Overview – The gradual easing of coronavirus-related lockdown restrictions around the world, along with falling global production, has supported the price of oil recently. By contrast, persistent oversupply and lacklustre demand continue to weigh on coal …
5th June 2020
The prices of most commodities rose this week, as signs emerged that developed economies may be past the worst of the initial economic hit from the coronavirus. Stronger-than-expected US employment data and Chinese PMIs and additional monetary easing by …
Consumption of natural rubber (NR) will be hit by sharply lower vehicle production this year. That said, we think that a revival in both demand and oil prices later in the year should give a lift to NR prices . Like most commodities, the price of natural …
OPEC+ is expected to meet in the next few days. Despite reports of rifts amongst its members, we think that it will agree to extend its current 9.7m bpd production cut for at least another month . At the latest meeting in April, OPEC and its allies …
We expect the palladium market to remain in a deficit this year as both demand and supply plummet. Palladium supply should bounce back reasonably quickly, but the medium-term outlook for palladium demand from the auto sector is much harder to call. On …
4th June 2020
SPR buying only a temporary solution to oversupply US commercial crude stocks fell last week entirely because strategic crude stocks rose strongly. Nevertheless, falling imports and the ongoing rise in refinery activity suggest that the oversupply in the …
3rd June 2020
Overview – May was a good month for metals prices. (See Chart 1). The ongoing revival in economic activity in China helped to lift the prices of most industrial metals, while investment demand for precious metals remained strong. We think that industrial …
Exchange stocks are best used to judge the breadth of the downturn in metal demand, rather than the depth. With that in mind, we think that exchange stocks will help to tell us when demand for metal has started to recover, though they will probably …
Coal prices should receive their usual seasonal uplift later this year. Nevertheless, we think that the average price of Newcastle coal will fall in 2020 and 2021 owing to weak demand and strong supply . The price of Newcastle (Pacific) coal has plummeted …
Overview – The prices of most commodities rose in May on the back of the ongoing recovery in China’s economic activity and a gradual easing of lockdown conditions in the US and Europe. We think that most prices will make further gains from here, but they …
2nd June 2020
China’s latest raft of PMIs showed a continued improvement in industrial activity in May, which is positive news for commodities demand. However, the pace of recovery remains slow . The Caixin manufacturing PMI picked up to 50.7 in May, from 49.4 in …
1st June 2020
The close of China’s National People’s Congress (NPC) yesterday brought with it little in the way of additional news, leaving the huge fiscal stimulus announced last Friday – which was unambiguously positive for commodities demand – eclipsed by the …
29th May 2020
Stimulus announced at China’s NPC is positive for commodities demand and prices But credit growth will be much lower than it was post-GFC Accordingly, the stimulus is unlikely to send prices soaring like in 2009 China’s stimulus spending in 2009 in the …
So far, there is only limited evidence that a lack of raw material is constraining output at Chinese smelters. But we think that will change in the months ahead. In our view, output is still most likely to be curbed at copper and nickel smelters, which is …
A hefty crude build, but gasoline demand picked up We think that the market is right to dismiss the latest chunky build in US crude stocks as it was largely driven by a rise in imports, which is likely to prove a one-off. Instead, a further fall in US …
28th May 2020
Quarantine measures associated with COVID-19 have seen geopolitical disputes, such as US-Iran tensions, seemingly fall under the radar of energy traders. That said, the national security law imposed on Hong Kong by China could re-escalate US-China trade …
Our forecast that the Brazilian real will recoup some lost ground by end-2020 should put upward pressure on the prices of its commodity exports. However, other factors, such as the health of the Chinese economy, are likely to be more important drivers of …
27th May 2020
Imports likely to have troughed in April, but any improvement to be gradual The latest data couldn’t be clearer: gold demand in the top two importing nations all but vanished in April. Imports should rise in the months ahead but will remain low by past …
26th May 2020
Most commodities prices rode the wave of a general uplift in investor sentiment this week . That said, prices have eased back slightly today despite encouraging signs from the National People’s Congress (NPC) in China. Although the stimulus package …
22nd May 2020
China’s dominance over global steel supply to grow The latest data add to the evidence of a growing divergence in the trend in steel output between China and the rest of the world. And as infrastructure spending in China is stepped up over the coming …
At the time of writing, we still lack the detail on China’s policy plans. That said, the headline expansion in the budget deficit and plans to boost credit growth are unequivocally positive for commodities demand – particularly industrial metals, but …