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The prices of many commodities drifted lower over the course of the week. But the negative tone was set more firmly on Friday by the release of data showing strong growth in US non-farm payrolls and an uptick in average earnings. This gave a boost to the …
2nd February 2018
India’s budget for FY18/19, released yesterday, was a mixed bag for gold. On the one hand, incomeboosting measures for the rural population are good news for jewellery demand. On the other hand, the budget has made it more costly to import gold. On …
Biofuels have become an important source of demand for many agriculturals over the past decade. In this Commodities Watch , we argue that concerns about the environment and the diversion of food towards fuel production, less government support and a …
Commodity prices trended higher in January, with all the major sub-sectors of the S&P GSCI recording gains. Energy led the way, rising by 4.5% m/m. Dollar weakness was the main driver of the rally in commodities prices last month. … Dollar weakness …
1st February 2018
China’s unofficial and official manufacturing PMIs diverged a little in January but both imply that activity held up relatively well. That said, they were not sufficiently strong to explain the gains in most industrial commodity prices. As such, we …
A slump in demand for oil from refineries and another increase in production combined to boost US crude inventories last week for the first time since mid-November. At least part of the recent surge in oil prices has been driven by the persistent falls in …
31st January 2018
Our analysis shows that dollar weakness can explain much of the recent strength in the price of gold. As such, given our view that the US currency will appreciate this year, we think that those gains will soon be reversed. … Is there more to the gold …
We think that about half of the surge in oil prices since the start of December can be attributed to the slump in the US dollar. However, a stronger dollar should put some downward pressure on oil prices over the course of 2018. That said, growing supply …
Most commodity prices rose this week on the back of further broad-based falls in the US dollar. At the same time, the euro strengthened as ECB President Mario Draghi struck a fairly positive note at Thursday’s press conference, declaring that the robust …
26th January 2018
The fall in crude stocks last week was overshadowed by rising US output, lower refinery runs and ballooning gasoline inventories. Indeed, US oil production is now within touching distance of 10m bpd. This is a key reason why we expect WTI prices to fall …
24th January 2018
World Steel Association (WSA) data showed a 3.9% y/y increase in global steel production in December and a 5.3% rise in 2017 as a whole. Expectations that the capacity closures in China would prompt a sharp fall in output were once again disappointed. We …
Global aluminium output bounced back last month, led by a jump in China’s production. It seems likely that refineries ramped up output to benefit from high prices and the capacity closures in parts of China. With no apparent shortage of supply, we expect …
22nd January 2018
The prices of many industrial commodities, including oil, fell this week despite the ongoing depreciation of the US dollar. The dollar was volatile, but ended the week lower. On Thursday, the publication of solid Chinese activity data for Q4 and December …
19th January 2018
China’s activity and investment held up well in December, although growth was markedly slower than earlier in the year. We expect the slowdown to continue in the coming months. … China Industrial Metals Demand Monitor …
A larger-than-expected draw in crude stocks last week is somewhat at odds with the rebound in production and fall in refinery runs. But what is clear is that gasoline stocks have continued to build on weak demand. As such, demand from refineries may …
18th January 2018
Today’s report showed an unexpected rise in OPEC’s production in December, despite a dramatic decline in Venezuela’s output. At the same time, the group made a small upward revision to its expectations of non-OPEC supply growth. But we still think that …
Commodity indices started 2018 on solid ground, holding onto their end-2017 highs and supported by a depreciation of the US dollar. All sub-sectors of the S&P GSCI Commodity Index rose over the month, but only energy and precious metals have extended …
17th January 2018
The USDA’s latest set of estimates provide little reason to revive bullish sentiment in the grains and soybeans markets. Estimates of global corn, wheat and soybeans ending stocks for the 2017/18 season are still at record highs. As such, we think that …
15th January 2018
A surge in cancelled warrants on LME stocks can explain some of the rally in the price of zinc. That said, inventories of most other metals have risen over the last month, suggesting markets are amply supplied. Indeed, we expect stocks to build further as …
The prices of most commodities edged higher this week. Industrial metals rallied despite Chinese trade data showing that domestic demand had weakened at the end of 2017. Meanwhile, heightened geopolitical risk and another large fall in US crude stocks …
12th January 2018
China’s commodity imports dropped in December, coming off strong growth in November. But volumes remained healthy for 2017 as a whole. We expect imports to fall back as growth in China’s economy slows, which should weigh on industrial commodities prices. …
Electric vehicle sales have skyrocketed over the past few years. As a result, the sector has become a growing source of demand for metals. In this Metals Watch , we look at the latest trends in electric vehicles sales and infrastructure and assess the …
11th January 2018
Adverse weather conditions in the US and China have boosted US gas consumption and highlighted China’s dependence on coal. But as the weather normalises, and domestic gas infrastructure improves, we expect China’s ongoing shift towards natural gas to …
US crude stocks continued to fall last week but product stocks have increased sharply since November as demand from refineries has not been matched by higher product consumption. This may pressure refineries to start maintenance runs soon, which could …
10th January 2018
At first glance, the recent poor performance of silver would appear surprising given that both gold and industrial metals prices rallied in 2017. However, we think that reduced safe-haven demand has undermined silver, as investors tend to favour gold when …
9th January 2018
The prices of most commodities trended higher this week, supported by a weaker US dollar. Falling US stocks and heightened geopolitical risk pushed the oil price higher. In contrast, industrial metals mostly fell despite the pick-up in China’s Caixin …
5th January 2018
A combination of falling US stocks, mounting geopolitical risk and OPEC’s deal to extend its output cuts has pushed the price of oil higher in recent weeks. However, we think that rising non-OPEC output will prevent any marked shortfall in oil supply in …
Aluminium production in China is likely to continue to fall over the next few months as the Chinese authorities impose output cuts. While this would give the impression of a tighter market, Shanghai-based stocks have soared and we expect demand to weaken …
Persistent strength in demand from refineries and an increase in exports pushed US crude stocks lower last week. However, petroleum product stocks jumped as demand plummeted during the holiday season and US oil production rebounded to a near-record high. …
4th January 2018
The prices of most metals rallied in 2017, bolstered by strong Chinese economic growth, a weaker dollar and, in some cases, supply concerns. But, overall, industrial metals outperformed precious metals last year, as Fed tightening acted as a powerful …
A number of temporary factors, including unusually cold winter weather and supply disruptions, gave a last-minute boost to the price of oil in 2017. Coal and LNG prices also benefitted from high seasonal demand. However, the oil supply disruptions have …
Commodity prices surged in December as the US dollar weakened. Looking at the sector breakdown, most sub-sectors of the S&P GSCI rose, led by industrial metals. Agriculturals were the only exception, ending the month broadly flat. … Optimism fuels a …
2nd January 2018
China’s official and unofficial manufacturing PMIs diverged again in December, but both point to a solid performance at end-2017. However, we remain cautious on the outlook for 2018 and expect tighter monetary conditions to weigh on economic activity. … …
The prices of most commodities edged higher this week, bolstered by a weaker US dollar. There is now evidence that the government-mandated winter cuts in China have started to take their toll on industrial metals production. However, we doubt that output …
21st December 2017
US crude stocks fell sharply again last week as refineries churned out more products and net imports dropped back. However, stocks of petroleum products are still rising meaning that some refineries may be tempted to start maintenance runs early. This …
20th December 2017
World Steel Association (WSA) data showed a 3.7% y/y increase in global steel production in November and a 5.2% rise in the year-to-date with all major steel-producing countries recording increases over the year. Whilst production in China fell sharply on …
The latest output data for November point to a tighter aluminium market. We had always expected this to happen as the planned closures in China began last month. However, growth in demand has also slowed. As such, we expect prices to edge lower over the …
Strong Chinese demand for oil this year has helped to rebalance the market. However, a slowing economy, an increasing focus on anti-pollution measures in major cities and a reduction in strategic stockpiling could weigh on China’s growth in demand for oil …
19th December 2017
Total exchange stocks of most metals fell in 2017 on a combination of constrained supply and solid growth in China’s demand in the first half of the year. We expect stocks to build over the course of 2018 as supply bottlenecks ease and growth in China’s …
18th December 2017
It has been a good week for industrial metals, with prices rising on the back of data showing relatively stable industrial activity and solid growth in investment spending in China. The Fed’s rate hike on Wednesday had been widely anticipated and there …
15th December 2017
China’s latest activity and investment data point to more subdued metals demand than earlier in the year. Despite curbs on supply, we still think prices are reflecting undue optimism about demand. … China Industrial Metals Demand Monitor …
14th December 2017
Somewhat counterintuitively, the price of gold gained 1.6% following the Fed’s decision to hike US interest rates for the third time this year and the fifth time in this tightening cycle. The lack of revisions to the Fed’s inflation and interest rate …
Commodity indices took a tumble at the start of December, coinciding with a slight appreciation of the US dollar. The downturn in commodity prices over the month was broad-based, with falls in all the sub-sectors of the S&P GSCI Commodity Index. … …
There were no major surprises in the latest set of estimates published by the US Department of Agriculture (USDA). Projected 2017/18 ending stocks for the grains and soybeans were raised further, whilst both production and ending stocks of cotton were …
13th December 2017
US crude stocks fell sharply again last week. However, surging US production could potentially push the global oil market back into a surplus next year. What’s more, stocks of petroleum products are rising rapidly, meaning that demand from refineries may …
Today’s report showed that OPEC’s production fell again last month. However, the group also increased its expectations of non-OPEC supply growth. We think that the cartel is still being too optimistic with its projections for non-OPEC output next year and …
The weather is arguably the main determinant of agricultural commodity prices. However, there are other factors that influence prices, including the oil price, the US dollar, global growth prospects and interest rates. In this Commodities Watch , we will …
12th December 2017
While a flattening US yield curve has, at times, been associated with a rising gold price, the relationship is far from perfect. Indeed, although we expect the curve to continue to flatten over the next year, we think that the price of gold is more likely …
Commodity prices mostly fell this week. A stronger US dollar – following the US Senate’s approval of the “Tax Cuts and Jobs Acts” last Saturday – was the main reason behind the declines in prices. Data showing robust Chinese commodity import volumes in …
8th December 2017
China’s commodity import volumes rebounded strongly in November, after the October weakness. The data may have been boosted by holiday-related distortions but it also appears that policies to curtail industrial output in a bid to curb pollution are …
