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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 …
20th December 2019
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
The prices of industrial commodities tumbled this week amid uncertainty about whether a “Phase One” trade deal between the US and China will be signed and further signs of weakness in China’s construction sector. While a partial trade deal seems likely, …
15th November 2019
OPEC turns a bit more positive on 2020 OPEC’s November Report, and recent comments by the organisation’s secretary general, suggest OPEC is becoming more optimistic about the prospects for demand for its crude in 2020. This may be an indication that …
14th November 2019
Higher production boosts crude stocks US commercial crude stocks rose, in part owing to higher domestic production but there was also a significant outflow from the strategic reserve. We think that above-trend US stocks will remain a factor weighing on …
We think that aluminium consumption figures are being flattered by a resurgence in off-exchange stockpiling. As such, and contrary to consensus expectations of a market deficit in 2019, we think that the aluminium market is currently comfortably supplied …
Palm oil prices have soared recently in part because of unfavourable weather, which has clouded the outlook for supply. At the same time, we think that demand from the world’s top consumers is set to rise strongly. As a result, we expect prices to …
13th November 2019
Our forecast of a downturn in China’s property sector bodes ill for the price of Chinese steel. Moreover, falling iron ore prices and a bleak outlook for China’s steel exports will add to the downward pressure . The price of Chinese steel rebar has ticked …
Commodity price moves were surprisingly muted this week considering the news that the “Phase One” trade deal between the US and China may involve the lifting of some of the tariffs already in place . That said, there is still considerable uncertainty …
8th November 2019
Despite steadily rising supply, strong demand growth and expanding export opportunities should ensure that the average price of US natural gas (Henry Hub) will be higher in 2020 than 2019 . The year-to-date average Henry Hub price is 14% lower than in …
China’s commodity imports were generally weak in October, and we expect volumes to remain subdued in the coming months given our forecast of a further slowdown in China’s economy . The contraction in China’s imports and exports in US dollar terms eased …
We have revised up our end-2020 forecasts for the prices of gold and silver as we now expect a smaller rise in US Treasury yields next year. That said, we retain our view that a softening in safe-haven and consumer demand will cause the prices of gold and …
We think that the forthcoming Saudi Aramco IPO is unlikely to have much of an impact on Saudi Arabia’s oil policy or on global oil prices either now, or in the future. Instead, Saudi output in the coming decades is likely to be dictated by a need to sell …
7th November 2019
