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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
US commercial stocks to increase US commercial crude stocks rose on the back of higher net imports and a fall in inputs to refineries. We expect a slowdown in the US economy to lead to further builds in inventories in the coming weeks . The EIA’s weekly …
6th November 2019
A cocktail of an apparent softening of US-China trade tensions coupled with several supply outages pushed the prices of most base metals higher in October. Perhaps somewhat unusually, the price of gold also gained ground as investors remain concerned …
Overview – Despite signs that the global economy continued to slow in October, only coal prices fell. While we expect global growth to remain subdued in the year ahead, we think that a recession will be avoided, which underpins our forecast of somewhat …
5th November 2019
There were few big moves in commodity prices this week despite some encouraging data out of China and the US, and a 25bp cut in the Fed Funds rate . Admittedly, the economic data were not uniformly positive, but should still have assuaged some concerns …
1st November 2019
Overview – We have revised up our end-2020 forecast for the prices of gold and silver to reflect the fact that we now expect roughly as much monetary easing by the Fed as the market. Meanwhile, we have trimmed our price forecasts for most base metals but …
There was a marked divergence between China’s October official and unofficial PMIs, which makes it difficult to gauge the underlying strength of the manufacturing sector. The rise in the Caixin PMI suggests that China’s economy may have started Q4 on a …
Overview – The apparent thaw in the US-China trade dispute gave a lift to the prices of most industrial commodities in October. However, we are sceptical that a lasting resolution to the trade conflict will be reached. Instead, we think that the ongoing …
31st October 2019
Output cuts by Chinese smelters mean that the price of tin is unlikely to fall further in the coming quarters. But with growth in major consumers set to slow and tin particularly exposed to “List 4” US tariffs on China, we see little upside for prices in …
The September attacks on oil facilities in Saudi Arabia re-ignited discussion of the “risk premium” in the oil price. Since the risk premium is not directly observable, we have created a methodology to estimate it indirectly . Our model found that, based …
Strong gasoline demand, for now US commercial crude stocks surged last week owing to a jump in net imports. Over the coming months, we expect a slowdown in the US economy to lead to further builds in inventories . The EIA’s weekly US Petroleum Report, …
30th October 2019
Recent construction delays to Nordstream 2 mean that the Russia-EU gas pipeline is likely to miss its scheduled completion date of December 2019. While we suspect that surging supplies of LNG from the US and Australia would limit any short-term price …
25th October 2019
This week has been relatively quiet in commodity markets, but there could be some bigger moves in prices in the next seven days given that the Fed meets on Thursday and a raft of economic data is scheduled for release. We think that the Fed will cut …
Output to pick up from here, but not by much Temporary shutdowns in China and Japan caused annual growth in global steel production growth to contract in September. We expect production to bounce back a little as these temporary factors fade, though …
Consumer demand to remain in the doldrums Gold imports by China and India fell once again in September. With the Chinese economy set to slow and Indian consumer preferences slowly drifting away from gold , Asian physical demand is likely to remain weak …
Surprise drawdown is cold comfort US crude stocks fell last week on the back of strong demand for both distillates and gasoline. But with stocks still comfortably above the five-year average, and the US economy set to slow further, this reading doesn’t …
23rd October 2019
Overview – Oil prices are likely to remain subdued in the near term as the global economy continues to slow and risk aversion prevails. And while natural gas and coal prices could rise in the coming months as part of the usual season upturn in demand, the …
Getting close to the trough Global aluminium output contracted again in September. But with a recovery in Chinese and Canadian production likely in the coming months, global aluminium supply may now be close to bottoming out . According to the …
21st October 2019
Despite the much-vaunted “mini-deal” on US-China trade, most industrial commodity prices fell this week . Uninspiring activity data across major commodity consumers, notably for the US and China, appear to have reignited fears over the health of demand. …
18th October 2019
Overview – While there appears to be little to lift spirits in the near term, we think the macro-economic backdrop for commodity markets will turn more positive during 2020. We expect global economic growth to pick up over the course of the year, which in …
Strong distillate demand is here to stay US crude stocks surged last week in part because of a decline in refinery throughput. We expect further builds in stocks over the next few months as the US economy slows, which will curb gasoline demand . The EIA’s …
17th October 2019
Subdued global economic activity will weigh on oil demand next year. That said, we expect GDP growth to gradually pick up over the course of the year, and new International Maritime Organization rules (IMO 2020) to boost crude demand from the shipping …
16th October 2019
Despite the latest “mini-deal”, we think it is only a matter of time before trade tensions between the US and China escalate again. Either way, we think that the recovery in global economic growth that we expect over the course of 2020 will be a far …
15th October 2019
China’s commodity imports held up rather better than imports of other goods in September. However, we think import volumes will tail off in the months ahead amid faltering economic activity . China’s imports and exports contracted last month. (See the …
14th October 2019
With little in the way of major economic data releases this week, most commodity prices rose on the back of news that the US and China may agree a “mini deal” as part of ongoing trade talks . This could reduce the immediate risk of a further rise in …
11th October 2019
While we broadly agree with the USDA’s latest corn supply forecasts, we are more positive about demand owing to recent changes to US ethanol policy. As a result, we expect corn prices to rise in the year ahead . The October World Agricultural Supply and …
On the whole, dwindling exchange stocks have had a muted impact on prices this year as global growth has slowed. But as inventories creep towards critical lows, this sets the scene for a sustained recovery in prices in 2020 if, as we expect, global growth …
Low production still not enough to lift prices OPEC’s September production data were distorted by the attacks on Saudi oil facilities, but overall output remained subdued. Deeper supply cuts are likely to be discussed at OPEC’s December meeting, but we …
10th October 2019
Crude stocks are on a rising trend US crude stocks rose again last week and we suspect that they will increase further owing to ongoing refinery maintenance and the prospect of lower product demand as the US economy slows . The EIA’s weekly US Petroleum …
9th October 2019
We expect that global oil supply will remain constrained in 2020. But we also forecast somewhat stronger growth in demand next year and a pick-up in risk appetite on the back of monetary easing. As a result, we are raising our forecast of the price of …
At first glance, weak global aluminium output so far this year can be chalked up to the slump in prices. However, lower Chinese production growth has more to do with government-led crackdowns on excess capacity which should continue even if, as we expect, …
Most industrial commodity prices fell this week as concerns about global economic growth intensified . A raft of weak economic data from the US and the euro-zone seems to suggest that the recent sluggishness in manufacturing may have now shifted into the …
4th October 2019
Strikes at South African mines would hit global supply of platinum and palladium hard But given stronger demand growth and lower stocks in the palladium market … … strikes would give much more of a boost to the price of palladium There is a significant …
After some fleeting optimism on the back of an apparent easing in US-China trade tensions in September, the recent run of weak US survey data saw demand concerns return to the fore. We think that global economic growth will slow further over the coming …
3rd October 2019
Overview – Energy prices diverged in September. There were strong gains in European gas and coal prices in part owing to strikes at France’s utilities at a time when seasonal demand is also picking up. Meanwhile, oil prices have been falling amid fears …
Crude stocks to continue rising as the US economy slows US crude stocks increased last week as inputs to refineries fell. We expect crude stocks to continue to rise in the coming months as a weaker US economy leads to softer growth in gasoline demand . …
2nd October 2019
With question marks hanging over the outlook for global economic growth, it has become increasingly difficult to get a handle on the true state of physical copper demand. Therefore, we have turned to the Capital Economics Copper Demand Proxy for answers. …
Overview – Oil prices dipped in September despite the attacks on Saudi Aramco. In contrast, the prices of most other commodities increased owing to a rise in investor risk appetite. However, we expect US equities to fall in the coming months, which should …
1st October 2019
