Filtered by Subscriptions: Commodities Use setting Commodities
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 …
The fiscal stimulus announced today at the National People’s Congress in China failed to make much of a splash in metals markets. Nevertheless, we think it will underpin stronger iron ore demand this year . Although infrastructure spending will be a key …
Profitability and production at US shale firms has slumped owing to low oil prices We expect US oil output to remain low throughout the rest of 2020 … … but it could start to bounce back in 2021 Since the outbreak of the coronavirus, oil demand has …
21st May 2020
Stocks fall, but outlook remains bleak Last week, US commercial crude stocks fell for the second week running. Digging deeper, though, reveals that the rebound in gasoline demand – which has so far underpinned much of the growing market optimism – …
20th May 2020
Significant output cuts still look unlikely Global aluminium output growth slowed further in April. However, with demand in China now picking up as its economy emerges from lockdown, the possibility of substantial output declines there appears slim. …
The silver price has historically been influenced by industrial metals and gold prices As a safe haven, silver has disappointed relative to gold Going forward, we expect the silver price to underperform gold through to end-2020 Silver is often described …
18th May 2020
In recent weeks, all three major natural gas benchmarks have traded at more-or-less the same price. Rather than a structural shift in the market, we think this probably reflects regional prices simply collapsing in unison amid the virus-related collapse …
This week has provided further tentative signs of a revival in commodities demand . China’s industrial production bounced back in April and weekly data in the US suggest that the pick-up in gasoline demand is gathering pace (although it remains very low …
15th May 2020
More promising signs for the US oil market US commercial crude stocks unexpectedly fell last week, adding to growing evidence that the US oil market has passed the worst. That said, a sustained recovery is not on the cards for some time yet. Indeed, the …
13th May 2020
While we generally agree with the USDA’s latest projections for 2019/20, we suspect that they are being too optimistic on agricultural supply in 2020/21. Nevertheless, we expect a pick-up in corn output will shift the market into a surplus, which will …
A last hurrah for OPEC output OPEC production jumped up in April, but this will prove a one-off given the agreed output cuts from May onwards. We expect OPEC compliance with the cuts to be fairly good in the coming months as prevailing low prices and …
Low oil prices, OPEC+ production cuts and delays to investment should reduce global oil supply by over 6% this year. This is one reason why we expect prices to end the year higher . By way of background, global oil production rose to 100.5m bpd in 2019 …
11th May 2020
Industrial commodities prices posted strong gains this week on the back of signs of a relaxation of quarantine measures in Europe and the US, which fuelled hopes that demand would recover soon. However, we maintain that most markets are still …
7th May 2020
China’s commodity imports have held up well so far this year, but weak external orders and subdued domestic demand point to lower volumes in the months to come . China’s exports rebounded strongly in April, rising by 3.5% y/y in US dollar terms (see our …
Slight reprieve for stricken US oil market Although US crude stocks climbed again last week, there are promising signs that the stress in the US oil market is beginning to ease. That said, a material turnaround in conditions remains some way off . The …
6th May 2020
The virus-led increase in exchange stocks is reminiscent of the GFC But changes in warehouse economics will keep a lid on stocks Nonetheless, we expect stocks to rise and remain high for some time In this Metals Watch , we take a closer look at whether …
Overview – The prices of most commodities struggled in April against a backdrop of moribund global demand. That said, the performance of energy commodities was mixed: while Brent crude and Henry Hub gas rose in price, the other energy commodities fell. We …
5th May 2020
Despite a raft of terrible economic data, industrial commodity prices ended the week broadly flat, except for oil prices which rose sharply. Attention is turning to the potential relaxation of containment measures, as several countries “pass the peak” of …
1st May 2020
The partial recovery in the S&P 500 suggests a return of investor risk appetite. But commodity indices have plumbed new lows. We think a couple of points are worth making about this apparent inconsistency, the most important of which is that it is largely …
Investment demand likely to dwindle While a surge in ETF inflows offset weak physical demand in Q1, we don’t expect this to be repeated over the coming quarters. After all, many of the factors that have boosted the investment appeal of gold are likely to …
30th April 2020
Next week, the Texas Railroad Commission could mandate measures to curb oil production in Texas for the first time since the 1970s. However, even if they do decide to curtail output, we think that the impact on oil prices will be minimal, in part because …
China’s official and unofficial PMIs dipped in April, almost entirely owing to weak export orders. A strong performance by the construction sector provides some relief for industrial metals prices, but there was little in the data to give much of a boost …
