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Several producers outside China have reduced operations in the past week, most notably in Latin America. But much like policy support, lower supply will do little to boost prices so long as measures to contain the coronavirus keep demand comatose. In any …
25th March 2020
Stockpiling and labour shortages associated with the coronavirus have supported the prices of some agricultural commodities, particularly the grains, in recent weeks. However, once the virus-related containment measures are lifted, we think that their …
Fire sales of gold have seemingly given way to safe-haven buying following yesterday’s unprecedented intervention by the Federal Reserve. Providing the Fed has injected sufficient liquidity to defend against a further collapse in equity prices, we expect …
24th March 2020
While the price of Brent has dropped by nearly 60% since January, agricultural prices have so far held up comparatively well. Although we wouldn’t rule out agricultural prices falling further, the recent divergence in prices reveals that the relationship …
2020 contraction still looks likely Global steel output was reasonably resilient in February. But that follows substantial downward revisions to the January figures. And while policy support – particularly in China – may boost steel production later this …
23rd March 2020
Over the last month, industrial metals prices had been holding up on hopes that China’s economy was edging closer to a post-virus recovery. But that all changed this week. With what were once downside risks now morphing into our central scenario, we have …
20th March 2020
Industrial commodity prices slumped this week amid virus-related economic disruption in the US and Europe and rising concerns about a deeper economic downturn in Asia, particularly China. Meanwhile, governments and central banks have continued to roll out …
Earlier this week, the virus-related economic disruption and the prospect of a surge in OPEC+ supply pushed the Brent-WTI price spread near to zero. Although it has since rebounded, we think the spread will disappear by the end of this year. And by 2021, …
Rising supply to exacerbate stocks glut Despite alarm bells ringing for global aluminium demand, output growth continued to gather pace in February. This will only have added to the piles of unwanted inventory and is another reason to expect that, once …
OPEC+’s decision to abandon output constraint has been a factor behind the ongoing slump in oil prices. In our view, higher OPEC+ supply will weigh heavily on US shale output, prices and the risk premium in the oil price . With the oil market’s attention …
19th March 2020
Crude stocks look set to rise further The latest US stocks data went largely unnoticed today as prices continued to plunge on concerns about the spread of coronavirus. But, for what it is worth, we expect stocks to climb in the coming months owing to a …
18th March 2020
As commodity prices continue to flash red, this Update summarises how we think things will play out from here. In the near term, we suspect that further price falls are in store, regardless of policy support. Instead, it will be signs that the virus is …
Overview – Energy prices have crashed in recent weeks as the coronavirus has disrupted economic activity and reduced demand. Meanwhile, on the supply side, OPEC+ failed to agree to deepen its oil output cuts. We suspect that energy prices could fall …
16th March 2020
Commodity prices tumbled this week, echoing moves in other financial markets . Oil was among the worst performers as Saudi Arabia and Russia announced that they will ramp up output from April, after OPEC+ abandoned its efforts to balance the oil market …
13th March 2020
In the last few weeks, we have revised down our forecast for global economic growth this year owing to the hit to activity from the coronavirus. At the same time, we now expect looser global monetary conditions. As a result, we have revised up our …
Downward revisions to our demand forecasts mean that we now expect all base metal markets to be oversupplied in H1 2020. Lower output should, at best, prevent these surpluses from growing too large. Therefore, inventories built up over the next few months …
OPEC output to increase from April OPEC production slumped in February owing to supply disruption in Libya. However, given that the current output agreement expires in March and with no replacement deal, we expect OPEC+ oil production to rise from April . …
11th March 2020
Oil prices have crashed by about 40% since end-January owing to the coronavirus-related demand shock and the collapse of OPEC+ output restraint. Following previous oil price crashes (2008 and 2015-16), prices rebounded quickly, but we do not think that …
10th March 2020
Even before OPEC+ abruptly abandoned output cuts, oil had fared far worse than most other commodities. Some of this can be explained by oil’s greater use in the forms of economic activity most affected by virus containment measures, such as transport. And …
Against a backdrop of a coronavirus-related slump in demand, Saudi Arabia appears to have abandoned efforts to balance the oil market and is instead aiming to protect market share. Its pledge to significantly raise production from April will result in a …
9th March 2020
China’s commodity exports collapsed in the first two months of 2020. In contrast, commodity imports held up relatively well, but this probably reflects the greater logistical challenge faced by outbound shipments. And with almost all high-frequency …
Oil prices closed below $50 per barrel this week for the first time in two years as Russia refused to rollover or deepen OPEC+ output cuts at the latest meeting with OPEC in Vienna. As a result, we will be revising our supply and price forecasts in a …
6th March 2020
February was another poor month for industrial metals. (See Chart 1.) However, prices fell by less than in January and policy loosening seems to have stabilised prices more recently. That said, the outbreak of COVID-19 is quickly becoming a global issue, …
The prospect of stronger demand stemming from stimulus in China, alongside recent supply disruptions, means that we now expect the deficit in the iron ore market to deepen this year, rather than shrink. As a result, we have revised up our year-end …
4th March 2020
Crude stocks are gradually rising US crude stocks continued to edge higher this week as a rise in domestic crude output and lower refinery activity offset a fall in net imports . Product demand remains healthy for now, but if COVID-19 takes greater hold …
Overview – Commodity prices continued to fall in February as the coronavirus, which started in China, spread to most other regions of the world and sparked fears of a slowdown in global economic activity. We have revised down our forecasts of commodities …
We expect OPEC+ to agree to an emergency output cut of an additional 1m bpd for at least three months at its meeting later this week. This should, at a minimum, put a temporary floor under prices . OPEC and its allies, including Russia, are set to meet in …
The structural economic slowdown which we expect in China over the coming decade will weigh heavily on consumption of industrial commodities and their prices. Steel will be by far the most affected commodity, but copper and aluminium will also suffer. In …
3rd March 2020
In light of the accelerating spread of the coronavirus – and the economic disruption that is likely to follow – we are pulling down our GDP growth forecasts for Q1 and Q2 of this year. Growth is likely to rebound over the second half of the year, but most …
2nd March 2020
China’s PMIs slumped in February, and a particularly worrying drop in the employment component suggests that a swift recovery is not on the cards. The data do, however, bolster our case that economic stimulus will be forthcoming, giving a boost to …
The prices of almost all commodities plunged this week amid fears that the coronavirus is morphing into a pandemic , with negative implications for global economic activity and commodities demand. Prior to the virus outbreak, we had expected a gradual …
28th February 2020
We think that, at least initially, the energy proposals of a Democratic President would support oil prices by curbing supply more than demand . All the major Democratic candidates disagree with the pro-fossil fuel agenda of President Trump, and they all …
We had previously assumed that any coronavirus-related hit to metals demand in Q1 would be made up in subsequent quarters. But that now seems unlikely. As a result, we are lowering our year-end price forecasts for most base metals. However, and perhaps …
27th February 2020
Coronavirus to weigh on US crude exports US crude stocks rose last week. That said, exports could drop soon if coronavirus-related port disruption spreads across Asia, which would put upward pressure on stocks . The EIA’s weekly US Petroleum Report, …
26th February 2020
China production strength is old news China continued to prop up global steel production growth in January, though output growth in the US and Japan also improved. However, January’s data fail to fully reflect the impact of measures to contain the …
25th February 2020
Industrial commodity prices trod water this week as investors struggled to assess the extent of the economic fallout from COVID-19. That said, the lingering sense of uncertainty put wind in the sails of precious metals prices . It will be difficult to …
21st February 2020
While the price of US natural gas (Henry Hub) has slumped on the back of coronavirus-related concerns, it has fared better than natural gas prices elsewhere. And given the low exposure of US LNG exporters to areas affected by the virus, we expect Henry …
Some signs of improvement in gasoline demand US crude stocks rose a touch last week despite a slump in net imports. Looking ahead, we expect strong growth in US exports together with a recovery in economic activity to push down crude stocks this year . …
20th February 2020
The price of platinum has risen by nearly 5% since the start of February, buoyed by heightened uncertainty prompted by the outbreak of COVID-19. Later this year, and assuming the virus is successfully contained, we anticipate that a gradual turnaround in …
A better start to the year, all things considered After falling for the first time in a decade in 2019, global aluminium production started 2020 on a better footing. In contrast to other metals, we don’t think coronavirus containment measures will hamper …
Heightened global uncertainty related to the outbreak of the coronavirus will support gold and silver’s investment appeal in the near term. Later this year, however, and assuming the disease is brought under control, we anticipate that a gradual pick-up …
19th February 2020
Our forecast for the US dollar to remain strong in 2020 suggests downward pressure on commodities prices. However, we would argue that there are instances when commodity prices can still rise - despite an appreciating US dollar - if the global …
18th February 2020
There is potential for cobalt’s end-use in electric vehicle batteries to grow rapidly. However, concerns over the concentration of cobalt supply in the DRC have held back demand so far. Several auto manufacturers are already switching to less …
Disruption to China’s commodity imports, owing to the outbreak of coronavirus, has sent the Baltic Dry Index into freefall. While freight rates should recover as and when China’s industrial activity picks up, our forecast of lacklustre demand for iron ore …
17th February 2020
The prices of most industrial commodity prices rose this week on hopes that the coronavirus is near to its peak and that economic activity in Asia will start to pick up soon. The announcement of output cuts by several metal producers in China has also put …
14th February 2020
LNG prices should recover from their current coronavirus-related lows by end-year. But given the significant oversupply in the market, prices are likely to remain historically weak . We had always expected average LNG prices to fall this year owing to …
13th February 2020
Measures to contain the spread of coronavirus in China have already dealt a heavy blow to metals demand. But the longer China’s economy remains part-suspended, the greater the chance that supply is also curtailed substantially. The scale of any supply …
Bearish report dampens optimism slightly US crude stocks increased again last week owing almost entirely to a surge in net imports. However, despite this bearish report, oil prices are still up 3% today in part on the back of optimism that the coronavirus …
12th February 2020
Deeper cuts not a done deal OPEC production fell sharply in January, but this was mainly the result of supply disruptions in Libya and Iraq. Otherwise, there was little indication in the latest OPEC monthly report that the group will rush to deepen output …
Chinese imports of gold surged in December, while India’s foreign purchases remained in the doldrums. Looking ahead, we expect high local-currency prices in India coupled with a slowdown in Chinese economic growth to curb physical demand for gold in 2020. …
11th February 2020
