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We forecast that the prices of base metals will fare better than precious metals in 2020. This view hinges on a modest recovery in the global economy, which should give a lift to metals demand at a time of already strained supply. That said, we think that …
7th January 2020
We are cautiously optimistic about the outlook for commodities prices this year. While global economic growth will remain subdued, we think it will start to revive over the course of 2020. Therefore, there is now scope for price gains, particularly as the …
Overview – The prospect of a ‘Phase One’ trade deal between the US and China buoyed commodity prices in December. Although we expect trade tensions to remain elevated, we think that most commodity prices will rise in the year ahead as fears of a global …
6th January 2020
Surging exports to continue to weigh on US stocks US commercial crude stocks fell sharply last week as exports soared and there was a step-up in refinery activity. We expect exports to remain high given constrained OPEC+ output. In contrast, product …
3rd January 2020
Oil prices received a shot in the arm following Friday’s assassination of Qassem Soleimani , a top ranking Iranian general. Regardless of geopolitical events, we expect constrained supply growth and a modest pick-up in demand to push oil prices higher in …
We forecast that the price of aluminium will rise this year even if, as we expect, the market flips from a deficit to a surplus. This is due to our expectation that investors will focus on a more positive backdrop for aluminium demand, amid low inventory …
The oil price has jumped today on the back of the US assassination of a powerful Iranian military leader. Given the backdrop of improved investor sentiment in the oil market, prices could remain elevated. That said, regardless of geopolitical events, we …
China’s official and unofficial manufacturing PMIs remained strong at the end of 2019, which is positive news for commodities demand. However, we think that the ongoing slowdown in construction activity will constrain economic growth, and will weigh on …
2nd January 2020
Most commodity prices rose this week, in part owing to the release of strong Chinese activity data. Lingering optimism following the announcement of a US-China “Phase One” trade deal at the end of last week also supported prices . We expect investor …
20th December 2019
US commercial crude stocks remained high in 2019 owing principally to strong domestic production and increased Strategic Petroleum Reserve (SPR) releases. Looking ahead, we think that a further rise in export growth and higher domestic demand will reduce …
Weaker demand and output cuts to further weigh on production Global steel output dropped in m/m terms in November, led by China. We think that global production will remain weak in the coming months due to softer demand growth and pre-announced output …
Global output to bounce back in 2020 Global aluminium production continued to falter in November, largely due to another sharp fall in Chinese output. But additions to China’s capacity coupled with a resumption of shuttered smelters should lay the …
ESG rules won’t significantly deter investment in International Oil Companies (IOCs) or reduce fossil fuels production. Instead, output is likely to be guided by underlying oil prices, which we expect to fall over the medium-term. We suspect that price …
19th December 2019
If enacted, we estimate that the Trump Administration’s reported proposals for altering fuel efficiency standards in automobiles will mean that US gasoline consumption will be around 0.3m bpd higher than would otherwise be the case by 2026. This would be …
18th December 2019
The muted market reaction to news of a provisional trade deal between the US and China lends weight to our view that the trade war’s grip on metals markets will ease over the coming year. While we are bearish on the outlook for iron ore and Chinese steel, …
17th December 2019
We don’t think that China will import the $40bn of agricultural goods that it has reportedly pledged to buy from the US. As such, the impact on prices should be fairly minimal . Last Friday, the US and China reached a ‘Phase One’ trade deal. (See our …
16th December 2019
Most industrial commodity prices rose this week, as the US and China announced that they had reached a phase-one trade deal . The agreement cancels the tariffs scheduled to come into effect this Sunday (which had the potential to be particularly damaging …
13th December 2019
Our new oil demand proxy provides a timely indication of the health of global oil demand, and lends insight into whether it is demand, or other factors, that is driving prices at any given time. We find that expectations for future oil demand and supply …
After scaling a multi-year high in 2019, we forecast that iron ore prices will fall back over the coming years. This is premised on the continued return of supply from Brazil and Australia following major disruptions earlier this year, as well as a marked …
Regardless of the outcome of US-China trade talks, we think lower Chinese consumption will weigh on the price of soybeans next year . China typically consumes just under one-third of the global soybean crop and accounts for about two-thirds of the trade …
11th December 2019
Gasoline and distillate demand to diverge US commercial crude stocks rose last week, while gasoline inventories surged on the back of a drop in demand. We expect inventories to rise further in the first quarter, as economic growth remains muted . The …
OPEC likely to tip oil market into deficit early next year OPEC kept output slightly below its quota in November. We expect that OPEC will produce within its new quota until it expires in March 2020, but that Saudi Arabia will do most of the heavy lifting …
Overview – Warmer-than-expected weather, amid subdued global economic growth, put downward pressure on the prices of coal and LNG since the start of November. In contrast, the price of oil rose on the back of the agreement that OPEC+ will cut output …
9th December 2019
In our view, the outlook for copper prices over the next twelve months is positive. Supply is unlikely to recover nearly as quickly as many assume following major disruptions this year, and demand should at least stabilise. In addition, exchange stocks of …
China’s commodity imports were relatively strong in November, perhaps reflecting some front-loading of regional spending on infrastructure. But our view that growth in China’s property sector is set to slow suggests the strength in commodity imports will …
The announcement that OPEC+ will deepen output cuts by 0.5m bpd in the first quarter of 2020 boosted oil prices this week . While the decision means that the market will be a bit tighter next year than we had anticipated, we think the drop in supply won’t …
6th December 2019
Today, OPEC+ announced that it will deepen its oil output cut by 0.5m bpd to 1.7m. More surprising, is that it looks as though Saudi Arabia will cut supply by a further 167,000, despite the fact that it is already producing well below quota . This could …
Despite somewhat more encouraging economic data releases, industrial metals prices struggled to find direction in November mainly owing to the ongoing uncertainty surrounding US-China trade negotiations. We think most base metal prices will rise next year …
5th December 2019
There has been mounting speculation that OPEC+ is set to agree deeper cuts at its upcoming meeting. However, we still think Saudi Arabia’s concerns about its loss of market share, and little appetite for increased cuts in Russia, will win the day. …
4th December 2019
Surprise drawdown a false dawn US crude stocks fell last week on the back of increased refinery throughput. However, with stocks well above their historical average, and with the US economy set to slow, this latest report doesn’t alter our view that US …
President Trump’s decision to impose tariffs on imports of steel and aluminium from Brazil and Argentina is likely to have little impact on prices. And while this could be interpreted as a sign that tariffs on the remaining “List 4” imports from China …
Overview – Commodity prices struggled to find direction in November despite the release of somewhat stronger economic data. Meanwhile, developments on the US-China trade front remained a key driver of sentiment. While a “phase one” trade deal seems likely …
3rd December 2019
China’s official and unofficial PMIs rose in November, suggesting that the weakness in the manufacturing sector has eased. While this could provide some support to industrial commodity prices in the near term, we are sceptical that it will mark the …
2nd December 2019
Commodities prices were little changed this week . Prices were initially boosted by President Trump’s comments that the US and China were in the “final throes” of a trade deal. But they pared their gains as fears emerged that the signing into law of the …
29th November 2019
Following the recent correction in the nickel price, we now think there is room for it to rise next year. We expect a large loss of supply and a recovery in demand to yield a deeper market deficit, forcing drawdowns in both reported and unreported …
28th November 2019
Crude stocks will continue to climb US commercial crude stocks rose last week, largely on the back of an outflow from the government’s strategic reserve. Over the coming months, we expect slowing economic growth and faltering crude demand to lead to …
27th November 2019
Since the imposition of US sanctions in May 2018, Iranian oil production has fallen by nearly 45%. For our part, we think that output would recover quickly if sanctions were lifted. Moreover, we see little risk of Iran’s oil industry suffering the same …
Sluggish demand is being reflected in falling supply Global steel production continued to contract y/y in October, and we think it will remain weak in the coming months given subdued economic growth in key consuming regions . The World Steel Association …
26th November 2019
OPEC+ has complied with its output quota so far … … but there is a high chance that it won’t comply in the coming months We think that this makes deeper output cuts less likely There is a high risk that a ramp-up in production in Russia pushes OPEC+ …
25th November 2019
Few signs of a rebound in imports around the corner Gold imports by China and India remained at historically low levels in October. Our view is that the gold price rally is now behind us, and that ongoing weakness in consumer demand will be one of the …
The prices of most industrial commodities traded in a narrow range this week in part owing to stronger-than-expected PMI data from the US and elsewhere. However, the bigger picture is that global economic growth is still relatively weak and we think that …
22nd November 2019
In our view, market participants have recently become too downbeat on the prospects for lead. In fact, we think there are several reasons to expect the price of lead to rebound in the year ahead . At first glance, the near-10% fall in the price of lead …
Recent market moves, most notably in US equities, suggest to us that there may be too much bad news priced into commodity markets. Accordingly, we expect a modest rise in commodity indices in 2020, but forecast that US equities will trade in a narrow …
21st November 2019
The price of lumber has surged in recent months. We think that prices will continue to rise in 2020 primarily on the back of ongoing strength in US housing starts and falling lumber supply from Canada . To recap, the price of US lumber has rallied by …
20th November 2019
SPR release prevents a drawdown US commercial crude stocks rose, in large part due to a significant outflow from the strategic reserve. That said, we expect stocks to remain relatively high as the economy slows and demand falters . The EIA’s weekly US …
Global production may have turned a corner Global aluminium output ticked up on a monthly basis in October, in large part due to the ongoing ramp-up of new capacity in Bahrain. It now looks likely that global production will be broadly flat this year as …
The price of zinc has risen a little since its recent low in September on the back of unanticipated disruptions to supply. But we expect it to fall back again next year, premised on a rebound in supply at a time of subdued demand growth . The price of …
19th November 2019
