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Weaker refinery activity to boost stocks US crude stocks rose last week largely owing to a decline in refinery inputs. Relatively high stocks will continue to reassure the market that there are ample supplies to cover outages in Saudi Arabia . The EIA’s …
18th September 2019
Smelter outages in China have led to a surge in the ShFE price of aluminium, and there is mounting speculation that the LME price will soon follow suit. We disagree. In contrast, our in-house model suggests that aluminium prices will fall in the coming …
Given the uncertainty about the impact on supply of this weekend’s attack on Saudi Aramco, we are not changing our oil price forecasts yet. However, in this Update , we outline three possible scenarios that could develop and what they would mean for …
16th September 2019
The apparent thaw in US-China trade relations gave most industrial commodity prices a lift, but we have seen these sort of ‘goodwill’ gestures before and doubt that the two sides are any closer to resolving their underlying differences . One commodity …
13th September 2019
Surging Chinese smelter output and faltering demand mean we think that zinc prices are set to drop by more than 15% by the end of this year and are unlikely to start recovering until the second half of 2020 . Our long-held bearishness on zinc prices has …
12th September 2019
US product demand appears to be losing steam Another sharp fall in US stocks suggests crude demand is holding up well, despite some signs of deterioration in economic activity data. However, we suspect that crude stocks will soon start to build as …
11th September 2019
While we are revising up our once-bullish end-2019 forecasts for the prices of gold and silver, we think that the price rally this year has now run its course. Next year, we expect a recovery in bond yields and a rise in investor risk appetite to push …
Saudi Arabia likely to keep oil output low OPEC kept output below quota in August. We think that it will continue to under-produce in 2020, particularly as the Saudi Aramco IPO nears, and that this will be one factor supporting prices . The OPEC Monthly …
The usual seasonal uplift in demand should support the price of Pacific coal until end-2019. However, we expect average prices to fall in the years ahead owing in large part to weaker demand prospects . The price of Pacific coal has tumbled over the past …
10th September 2019
China’s commodity imports ticked up in August, in part due to strong infrastructure spending. But we expect them to weaken in the months ahead as temporary factors fade and construction activity tails off . China’s export growth turned negative in August, …
9th September 2019
Although the prices of most industrial commodities rose this week, we think that a sustained and broad-based recovery is still some way away . A trio of factors were responsible for this week’s rise: news that US-China trade talks will resume in October; …
6th September 2019
Oil & Gasoline – Oil prices continued to fall last month on concerns about a slowing global economy and rising US-China protectionism. Our forecast of a further downturn in global growth suggests prices could fall by more. That said, supply is …
We expect worries about the escalating US-China trade war and prospects for the global economy to continue to drive metals prices in the coming months. Precious metals are benefitting from the uncertainty, but there have been renewed falls in industrial …
US commercial crude stocks slump again, but not for much longer! US commercial crude stocks plunged again last week as net imports surged. Looking ahead, we expect higher US oil production and refineries going into scheduled maintenance to lead to …
5th September 2019
We continue to expect a modest rebound in coffee prices by end-2019 as currently low prices force many high-cost producers to exit the market altogether . Coffee prices have plunged since July, owing largely to a sharp depreciation of the Brazilian real. …
Overview – The escalation in US-China trade tensions led to investors becoming more risk averse, which boosted the prices of gold and silver but depressed the prices of agricultural and industrial commodities. Looking ahead, we expect trade tensions to …
4th September 2019
Indonesia’s announcement of an imminent ban on exports of nickel ore has sent nickel prices to a five-year high. While trending higher initially, we expect prices to slump next year as supply is incentivised . Last Friday, Indonesia - the world’s largest …
3rd September 2019
China’s official and unofficial PMIs diverged in August. But both remain consistent with slower year-on-year growth in the remainder of 2019, which does not bode well for energy and industrial metals prices . China’s Caixin manufacturing PMI jumped to …
2nd September 2019
While the US-China trade war has continued to escalate, commodity prices have clawed back a little of their lost ground since the trough at the end of last week. This was aided in part by President Trump seeming to strike a more conciliatory tone on …
30th August 2019
The next round of US tariffs on Chinese imports pose a key risk to metals demand While the direct effects across the base metals will vary, tin is likely to suffer most But the indirect effects of an escalating trade war will weigh on metals prices …
29th August 2019
The policies of the next European Commission are likely to speed up the EU’s ongoing transition towards a greener energy future. However, its impact will probably not live up to expectations . President-elect of the European Commission, Ursula von der …
Whopping drawdown lifts some demand gloom The huge weekly drawdown in US crude stocks clearly soothed some of the near-term fears surrounding softer demand, as evidenced by today’s gain in prices. But our forecast for a slowdown in the US economy suggests …
28th August 2019
Gold imports set to remain in the doldrums Gold’s price rally saw Indian and Chinese imports continue to tumble in July. And, given that prices have risen further in August, gold imports could record multi-year lows in the second half of 2019 . Data …
While the US-China trade war has escalated, we had already expected the two countries’ dispute to deepen. Meanwhile, although a thawing of US-Iran relations could mean a return to the market of Iranian exports, this seems a long way off. As such, we see …
27th August 2019
Ailing demand means steel production slump will continue July’s slowdown in steel production was probably a sign of things to come given environmental restrictions, squeezed margins and soft demand in China. Nonetheless, steel prices look set to fall …
After a quiet start to the week, Friday’s announcement of additional Chinese tariffs on US imports and Jerome Powell’s speech at Jackson Hole stirred prices (and President Trump) into action . Most industrial commodities fell as the news on trade fed into …
23rd August 2019
We think that a recovery in refined lead production, ailing demand, and elevated trade tensions should cause the price of lead to drop by almost 15% by end-2019 . To recap, LME lead prices have risen robustly this summer, despite a broad-based decline in …
So far, the current global economic downturn has been driven by a marked decline in manufacturing activity, with obvious negative implications for commodities demand and prices. Less intuitively, we think that if the malaise spreads to the services …
A no deal Brexit later this year could mean that the UK government decides to substantially reduce its strategic reserves of petroleum products. But even after a reduction, the UK’s reserves should remain ample. What’s more, any sell-off in product stocks …
US petroleum demand shows few signs of slowing While most of last week’s draw in US commercial crude stocks was down to a drop in net imports, the latest figures showed another strong week for both inputs to refineries and gasoline demand. But looking …
21st August 2019
The dramatic narrowing of the spread between the prices of Brent and WTI oil in the last month, reflects a structural change in the market as logistical bottlenecks in the US are being resolved. As such, we expect the Brent-WTI spread to trade in a much …
20th August 2019
Prospect of H2 rebound has diminished Global aluminium production remained in the doldrums in July. We had previously expected smelter ramp-ups and lower input costs to spur a recovery in China’s output in the second half of 2019. But this now looks less …
We forecast that a weaker South African rand coupled with the high prices of by-products at platinum mines will mean that the price of platinum stays firmly in the doldrums over the next couple of years . After years of a falling or lacklustre platinum …
19th August 2019
President Trump’s decision to delay the proposed 10% tariff on just over $150bn of Chinese imports gave a lift to most industrial commodity prices this week . That said, any optimism about an improved global growth outlook was tempered by the release of …
16th August 2019
The hurdle to further production cuts is high While another cut in Saudi Arabian oil output pushed OPEC production further below its quota in July, we doubt that the Kingdom is on the cusp of taking larger action in order to support oil prices . The OPEC …
Copper prices are hovering near two-year lows, reflecting investor concerns about the outlook for global growth. While dwindling mine supply should put a floor under prices, deteriorating investor sentiment will probably prevent any meaningful rebound …
OPEC the exception, not the rule Most commodity cartels have failed to manipulate prices for very long, and we think that any future cartels in commodity markets will be no different. Arguably, the Organization of Petroleum Exporting Countries (OPEC), the …
15th August 2019
Another surprise build for crude stocks Lower demand from refineries is the primary reason for another unexpected rise in commercial crude stocks. This exaggerated today’s fall in prices, which had already been dragged down by weak economic data. Looking …
14th August 2019
The higher-than-expected forecasts for wheat and corn production in 2019/20 included in the USDA’s latest projections have sent prices tumbling. While we think that agricultural markets are right to have turned more bearish on wheat prices, we suspect …
13th August 2019
Glencore’s decision to temporarily close the world’s largest cobalt mine by the end of this year has given cobalt prices a shot in the arm. As a result, the price of cobalt could rally by more than 60% by end-2021 as demand surges and the market swings …
The raft of liquefied natural gas (LNG) projects in the works suggests that the downward pressure on prices from surging global supply will continue this year and next. But with demand growth set to remain healthy, and the stream of new projects likely to …
The fall-out from Mr Trump’s threat to levy a 10% tariff on $300bn worth of Chinese imports continued to roil commodity markets this week. The prices of crude oil and most industrial commodities fell, with a particularly sharp drop in the iron ore price …
9th August 2019
Nickel prices have surged in recent weeks, owing to optimism over future demand from the electric vehicle sector and speculation that Indonesia’s ban on nickel ore exports could be brought forward from 2022. But the rally isn’t justified by current …
China’s commodity imports jumped in July, but this comes after pitifully low volumes in prior months and, in some cases, merely reflected improved availability. As such, it is unlikely to mark the start of a sustained recovery in demand . Export growth …
8th August 2019
We estimate that the new IMO rules will boost crude demand by 0.9m bpd in 2020 But overall growth in demand will remain subdued … constrained by weak global economic activity and sluggish growth in world trade The International Maritime Organization (IMO) …
The turning point looms for US crude stocks While much of last week’s decline in commercial crude stocks is down to the EIA’s opaque adjustment factor, the latest stocks report nonetheless paints a fairly weak picture of US demand. Given our view that the …
7th August 2019
Iron ore prices have plunged by a sixth so far in August and we think that rebounding output and slower Chinese demand growth will mean that prices will fall by a further 20% to $80 per tonne by end-2019 . Disruptions to supply from the three largest …
Despite sharp declines in recent days, we expect the prices of most industrial metals to fall further this year as demand falters in the wake of slower global economic growth. We are particularly negative on the outlook for Chinese steel and iron ore …
6th August 2019
Yesterday’s announcement by President Trump that a 10% tariff is to be levied on $300bn worth of Chinese goods came as a shock after reports of “constructive” trade talks between the US and China earlier in the week. While rising protectionism has …
2nd August 2019
Oil & Gasoline – The price of oil declined over the past month as US-China trade tensions escalated, adding to fears that the global economy will continue to slow. Looking ahead, we think that demand growth will be subdued as the Chinese economy remains …
