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China’s PMIs dipped in January, but they offered little indication of the state of the economy in the wake of the coronavirus outbreak. Though a slump in Chinese activity in Q1 now seems almost certain, the evolution of the epidemic over the coming weeks …
3rd February 2020
Commodity prices lost ground last week, as the rapid spread of the Wuhan coronavirus has dented China’s near-term growth prospects . Indeed, both oil and base metals prices have fallen 10% from their respective January peaks. While it is impossible to …
31st January 2020
The outbreak of coronavirus in China threatens to derail the recovery we were expecting in the price of copper this year. In fact, when our estimate for the potential loss of copper demand is plugged into our forecast for the market balance, a surplus …
Overview – Provided that the coronavirus is contained, a gradual pick-up in global economic growth at a time of constrained supply should set the scene for higher oil prices in 2020. In contrast, we expect the average prices of natural gas and coal to …
30th January 2020
Palladium’s blistering price rally has probably run its course, but we expect prices to remain close to historic highs in 2020. The market is mired in a deficit and demand growth looks set to remain solid, even if it softens from last year. Admittedly, …
Our analysis suggests that it is difficult to square the coronavirus-led sell-off in oil markets with the fundamentals. Instead, we think the move is rooted in a marked deterioration in investor sentiment which, if signs emerge that the virus is being …
29th January 2020
Stocks may remain elevated for a while yet US crude stocks rose last week owing in large part to lower refinery activity. Crude stocks may remain high for some time in light of high gasoline inventories, but we expect them to ease back later in the year …
Overview – A gradual rebound in global economic growth and, in many cases, constrained supply mean that we are broadly positive on the outlook for most commodity prices in 2020-21. One exception is the price of gold, which we expect to fall on the back of …
27th January 2020
Little joy in store for steel production in 2020 China continued to diverge from the rest of the world in December, with steel output rising sharply. In contrast, other major producers continue to feel the pain of weak demand and oversupply. However, we …
Fears that the outbreak of a new coronavirus in China could dent demand hit industrial commodity prices hard this week, erasing almost all year-to-date gains . We don’t pretend to be experts on public health issues. However, experiences of previous …
24th January 2020
After last year’s collapse, a continued decline in the price of European coal is likely Low natural gas prices and a weak economy will weigh on coal prices in the short term And decarbonisation efforts will push down prices in the long term European coal …
Weakness in economic growth and unfavourable demographics mean that we expect most of the developed world, and China, to experience ‘Japanification’. One of the commodities most affected would be steel, which is why we are bearish on the long-term outlook …
Recovery in US economic growth to push down stocks this year US crude stocks declined last week despite a drop in exports and refining activity. We think that crude inventories will begin to fall more rapidly later this year as economic growth recovers …
23rd January 2020
Signs of hope heading into 2020 Global aluminium production for December rounded off a dismal 2019, but we think the prospects for output in 2020 are a bit brighter. The main positive contributions are likely to come from China, the GCC and Russia, which …
20th January 2020
The lukewarm market reaction to the signing of the Phase One trade deal between the US and China lends weight to our view that an agreement had already been priced by commodities markets . For our part, we think that China is unlikely to meet its US …
17th January 2020
There has been a muted response in commodities markets to the signing of the Phase One trade deal between the US and China, perhaps because the good news was already priced in. That said, it may also be a reflection of the fact that China’s promises to …
16th January 2020
The deal signed yesterday between the US and China was broadly as expected and has not led us to change our economic forecasts. The apparent ceasefire in the battle over tariffs removes a downside risk to growth. But tariffs remain high and we suspect …
Crude and product stocks to fall back later this year US commercial crude stocks fell, mainly because of a drop in net imports. We expect crude inventories to decline further through the course of the year as US exports creep higher and the economy …
15th January 2020
We think that a combination of stronger supply, and weaker demand, growth will push the wheat market into a surplus this year. As a result, we expect wheat prices to drop by about 20% in 2020 . To recap, the price of wheat has surged to around 570 cents …
OPEC output to remain low OPEC production fell again in December, led once more by Saudi Arabia. We continue to think that OPEC will maintain its production restraint for the remainder of 2020 to support prices . The OPEC Monthly Oil Market Report (MOMR), …
While the price of gold remains elevated at present, we think it’s only a matter of time before it begins to ease back. Subdued gold imports in China and India and softer safe-haven demand should depress the price. Meanwhile, we expect that some US dollar …
14th January 2020
China’s commodity imports were strong in December, and in 2019 as a whole, in part because a number of one-off structural factors boosted volumes. Looking ahead, we expect growth in commodity imports to ease back this year as China’s economy slows . …
We think that the prices of wheat and soybeans will tumble this year on the back of high stocks. However, the outlook is more encouraging for the prices of some of other agricultural commodities, such as corn, which should rise due to a gradual upturn in …
13th January 2020
Oil prices yo-yoed last week, as US-Iran warmongering faded almost as quickly as it started. Similarly, the price of gold spiked, but ended the week unchanged . Meanwhile, the market reaction to the slowdown in US non-farm payrolls growth in December was …
10th January 2020
We think that oil prices will rise in 2020, as the market moves into a small deficit. In contrast, we expect natural gas prices to fall owing to strong supply growth and for this, in turn, to dampen coal prices . Last year, we forecast that the global …
Following the recent rise in US-Iran tensions, we estimate that the risk premium in the oil price briefly turned positive. After all, prices rose without there being any disruption to the physical supply of oil. However, regardless of what happens to the …
9th January 2020
December was a relatively strong month for both precious and industrial metals, with prices rising almost across the board. A weaker US dollar and safe-haven buying buoyed gold prices, while base metals prices benefitted from signs that industrial …
Overview – The easing of US-China trade tensions and the escalation of US-Iran geopolitical tensions has caused oil prices to surge in recent weeks. In contrast, the prices of natural gas and coal have slumped owing in part to ample supply of natural gas. …
Slump in crude exports not a cause for concern The surprise build in US crude stocks last week was mostly the result of a plunge in exports. At the same time, while product stocks increased again, we expect this trend to reverse through the course of the …
8th January 2020
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 …
