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We no longer expect the US and China to strike a deal on trade, and now forecast that the two countries’ dispute will escalate further. In this Commodities Watch, we lay out what our new view on trade means for our commodity price forecasts. … What our …
17th June 2019
Markets appear to have come round to our long-held view that slower economic activity this year will weigh on the prices of most energy and industrial commodities. Not even an attack on oil tankers close to the Strait of Hormuz was enough to prevent a …
14th June 2019
Iron ore prices have soared on the back of disruptions to supply and strong growth in demand from China’s steel sector. We think that neither will last. Consequently, we expect the price of iron ore to drop by more than a fifth over the remainder of 2019. …
OPEC highlighted risks to demand and high stocks in its latest report which, coupled with lower prices, suggest that there will be little appetite for increasing production when the group meets later this month. … OPEC Monthly Oil Market Report …
13th June 2019
US crude stocks continued to rise this week, despite the increase in the refinery utilisation rate, a fall in net imports and lower production. This put further downward pressure on prices, which had already fallen sharply earlier today. Nevertheless, we …
12th June 2019
At first glance, the USDA’s latest set of projections appear bullish for the price of corn. However, we think that much of this is already priced in and as such we are not changing our corn price forecast. … A poor harvest unlikely to boost corn prices …
We have now factored into our forecasts a ratcheting-up of trade tensions between the US and China over the next year. Given this, we have shaved our projections for the prices of some metals. However, we still expect base metals prices to start rising …
11th June 2019
We have now incorporated an escalation in the US-China trade war into our global economic forecasts. As it happens, we think that the negative impact on global GDP growth will be relatively contained, so it has not led to a major downward revision to our …
10th June 2019
China’s commodity import volumes were subdued last month, which is consistent with our view of soft Chinese domestic demand and downward pressure on commodity prices. Moreover, while there was no apparent impact from higher US tariffs in May, they could …
Driven in large part by investors pricing in a greater degree of interest rate cuts in the US, the gold price leapt to its highest level in over a year this week. That same anticipation of policy support probably also explains the sharp recovery in the …
7th June 2019
US steel prices have tumbled by more than a third over the past year and we think that a weaker US economy, combined with rising imports, means prices should fall by a further 15% over the next year. … The US steel price bloodbath is not over …
Caught up in the broader sell-off in risky assets triggered by the latest escalation in trade tensions, oil prices have plunged in recent weeks, and the prices of most other energy commodities have fared almost as badly. We suspect that the latest fall in …
6th June 2019
The recent escalation in global trade tensions and ongoing weakness in the world economy have led to a sell-off in risky assets, including most industrial metals. In contrast, the price of gold has received a boost owing to a rise in safe-haven demand. …
Stocks of both crude and products jumped in the latest weekly data, despite slightly stronger refinery run rates. The apparent weakness of US demand and higher stocks will make it difficult for OPEC+ to decide to increase supply at its upcoming bi-annual …
5th June 2019
The combination of a scaling back of US interest rate expectations, a struggling S&P 500, and the dollar coming off the boil has lifted the price of gold to a three-month high during the past week. Looking ahead, we expect a faltering US stock market to …
After plunging in May, we expect the prices of most energy and industrial commodities to remain subdued in 2019 on the back of slower global growth and a rise in investor risk aversion. Grains may be an exception to this downbeat outlook given the recent …
4th June 2019
Subdued survey data suggest that China’s economy is likely to soften this quarter, which underpins our generally bearish view on industrial commodities prices in the coming months. … China’s commodities demand looks …
3rd June 2019
Trade was the big theme this week once again, with China suggesting it could restrict exports of rare earth elements to the US, as well as a rise in US-Mexico trade tensions. Consequently, the prices of oil and other industrial commodities fell, while the …
31st May 2019
China’s threat to restrict rare earth exports to the US has awoken the prices of rare earth elements (REE) from their slumber. While restrictions on Chinese exports to the US are unlikely to occur immediately, it is a credible threat from China and a step …
The relative scarcity of Brent crude and an abundance of WTI have led to a persistently wide price spread between the two oils. However, we expect enhanced pipeline capacity in the US and somewhat higher OPEC output to narrow the spread later this year. … …
After a number of surprising builds in US commercial crude stocks, last week’s small drawdown perhaps signals that a summer fall in stocks may be looming. If we are right, and stocks continue to decline, this could make the case for OPEC to roll over …
30th May 2019
The Trump administration’s latest farm aid package, announced on 23rd May, should provide some short-term relief to the ailing US farming sector. But direct payments to farmers could exacerbate the oversupply of soybeans in particular and act as a further …
The recent strength in global steel production is unlikely to continue as we expect growth in global steel demand to soften and prices to fall in the months ahead. … Weak demand to weigh on steel …
29th May 2019
Chinese and Indian gold imports rose sharply in April, in part owing to lower prices. However, our forecast of a rally in the gold price this year suggests that India’s jewellery demand, in particular, will dip. … China and India Gold Imports …
28th May 2019
Weak flash PMIs in major advanced economies, especially in the US, have led to increased worries about the demand for industrial commodities. As a result, the recent softness in industrial metal prices has now spread to oil. Yesterday, the price of Brent …
24th May 2019
Investor positioning in the futures markets for both metals and agriculturals has taken a downward turn recently. While the picture is not uniform across commodities, we think that investor selling will further weigh on the futures prices of these …
23rd May 2019
We have revised up our estimates of palladium demand, despite weak car sales, due to higher loadings in China and Europe. We still expect the price of palladium to fall back from $1,310 per ounce currently. But we have increased our end-2019 forecast to …
US commercial crude stocks rose again this week partly due to a release from the Strategic Petroleum Reserves (SPR), which caused prices to drop sharply today. Despite this, we still think that crude stocks will fall over the next few months owing to a …
22nd May 2019
Car sales in the world’s largest markets have slumped since mid-2018. In this Metals Watch we explain our forecast for sales to begin recovering later this year. … Recent drags on car sales are set to …
The recent problem of oil contamination in Russia presents an upside risk to our oil price forecast in the short-term. If this develops into a longer-term theme, it could pose a serious risk to European oil security. In this Energy Watch , we discuss …
21st May 2019
Market moves in the wake of this weekend’s Joint Ministerial Monitoring Committee (JMMC) meeting suggest that some investors expect OPEC to roll over output cuts when they expire in June. In contrast, we think that developments over the next month could, …
20th May 2019
April’s aluminium production data and the recent closure of Chinese alumina refineries suggest that the rebound in global primary supply growth that we had expected may be postponed. Despite this, we still think that subdued demand will lead to lower …
Softer April activity and spending data out of China and negative sentiment surrounding the impasse in US-China trade talks weighed on the prices of many metals this week. We had always suspected that the stronger Chinese data in March had been driven by …
17th May 2019
Our in-house proxies of growth in China’s demand for industrial metals have generally risen in the first third of 2019, fuelled by a surge in construction. Despite government stimulus this year, we expect this upturn to reverse as property sales slow, and …
China’s decision to raise its tariff on US LNG imports from 10% to 25% from 1st June effectively rules the US out of the world’s second-largest, and fastest-growing, market. It will also weigh on spot LNG prices in the future as the US will need to find …
16th May 2019
US crude stocks returned to their recent run of unseasonal builds last week. This was despite the refinery utilisation rate, net imports and production all implying a drawdown. That said, there is rarely a simple arithmetic read-across from these factors …
15th May 2019
Industrial metals prices have slid in recent weeks and despite investor positions approaching a three-year trough, we think that further investor selling will contribute to even lower metals prices this year. … Investor gloom set to …
14th May 2019
Following the recent escalation of US sanctions on Iran’s crude exports, attention has been focused on OPEC’s next move. An upward revision to global demand for OPEC crude could give some members license to increase output in the coming months to ensure …
Coffee prices recently reached their lowest levels in around a decade. That said, we suspect that prices are bottoming out and should pick up slightly by the end of this year. But looking beyond 2019, productivity gains and burgeoning output in newer …
Persistently high production and stocks have led us to revise down our price forecast for wheat. Indeed, in its first estimate of the 2019/20 season, the USDA expects the market to be in a large surplus. … Oversupply plagues the wheat …
President Trump’s decision to ratchet up the pressure on China by raising trade tariffs weighed heavily on most commodity prices this week. However, market sentiment improved a little on Friday as it became clear that goods already in transit (as of the …
10th May 2019
A total breakdown in US-China trade talks would undoubtedly be a further negative for the prices of most industrial metals. However, regardless of the latest tariff increase, we had already expected a subdued global economy, and weak growth in China in …
The price of oil rose a little last month owing in part to supply concerns regarding the US decision to end sanction waivers on Iran’s oil exports. We now expect Iran’s output to fall further and have slightly raised our oil price forecasts. However, we …
9th May 2019
The prices of most industrial metals fell over the past month, and were hit particularly hard in recent days by downbeat Chinese manufacturing surveys, and US-China trade talks taking a turn for the worse. But while a full-on breakdown of negotiations …
8th May 2019
After US crude stocks reached their highest since September 2017, the beginning of May saw a partial reversal in recent builds. The latest stock draw was fuelled by a fall in net imports and an extended refinery maintenance period ahead of new IMO marine …
Aside from oil, China’s commodity imports have generally been soft since the start of this year and there are now signs that export volumes are starting to come off the boil. Imports may pick up later in the year as policy stimulus feeds through into the …
The risk of an escalation in the tariff war between the US and China has negative implications for our already subdued outlook for the global economy and commodity prices this year. … “No trade deal” back on the …
7th May 2019
Weaker-than-expected Chinese manufacturing surveys and a fairly hawkish statement from the Fed sent the prices of most commodities lower again this week. Industrial commodities prices were also hit hard by preliminary data from the US showing the lowest …
3rd May 2019
The prices of oil and iron ore made further gains in April owing to continued supply-side concerns, but the prices of most other commodities fell. Indeed, we also expect iron ore and oil prices to drop back in the months ahead as slower global economic …
2nd May 2019
While flattered by base effects, a surge in central bank buying and strong inflows to exchange-traded funds (ETFs) meant that gold demand grew by a healthy 7% y/y in Q1. While central banks should continue to expand their gold reserves, we think that …
