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For now, there is optimism that ongoing negotiations between the US and China will prevent a significant escalation in trade tensions. However, there remains a risk of rising protectionism, which would inevitably weigh on commodities demand and prices. … …
5th April 2018
Fears of a trade war between China and the US and heightened geopolitical tensions weighed on most metals prices last month as investors rotated out of risky assets and into safe havens. In contrast, the prices of US steel and gold were beneficiaries of …
4th April 2018
Inventories of crude oil slumped last week as exports rebounded and refineries processed more crude. However, production set another weekly record. We still expect prices to fall this year as surging output overtakes growth in demand, which could also be …
The price of copper has already fallen back sharply but we think this is more about heightened geopolitical risk than fundamentals. The price may revive in the near term if risks start to fade, but ultimately we think slower growth in demand this year …
3rd April 2018
Commodity prices drifted down in March, despite a relatively stable US dollar. However, given the slump in developed market equities, commodity prices held up relatively well. This was largely due to a surge in oil prices, which were driven higher by …
China’s unofficial and official manufacturing PMIs diverged again in March. The easing of pollution controls on heavy industry gave a boost to the official index, but slower growth elsewhere weighed on the unofficial index. This is consistent with the …
Commodity markets took something of a breather this week after last week’s sharp moves. Fears of a trade war between the US and China have receded a little, which helped to stabilise prices. The launch of a new crude contract in China stole the headlines …
29th March 2018
In this Commodities Watch , we review developments in the first quarter of this year and draw conclusions about what they mean for our price forecasts. … Taking stock of the first …
Inventories of crude oil rose last week as imports rebounded and production grew again. Admittedly, demand from refineries and consumers is strong. But we still expect soaring output to lead to higher stocks and lower prices in the second half of this …
28th March 2018
Oil prices have surged recently, partly due to expectations that OPEC will extend its production cuts into next year. However, some members of the group are emphasising the need for an exit strategy, to avoid shrinking OPEC’s market share by even more. …
The price of gold has benefited from heightened geopolitical risk in recent weeks. While prices are likely to remain well supported in the short term as global trade worries see investors rotate out of risky assets, we still think that higher US interest …
The latest trade data for India and China showed divergent trends in the two largest consumers. On the one hand, China’s gold imports remained robust although underlying demand appears to have weakened. On the other hand, India’s imports have continued to …
27th March 2018
Although China’s imports of most metals rose strongly in the first two months of 2018, other indicators imply weaker domestic demand, which could lead to lower volumes in the coming months. … China’s imports start the year on a strong …
26th March 2018
World Steel Association (WSA) data showed a 3.5% y/y increase in global steel production in February led by higher output in China, India and Brazil. US production also edged higher and we expect it to continue to rise as a result of the recent hike in …
Increasing tensions in the Middle East and expectations that OPEC will extend its output cuts have driven oil prices higher recently. However, even if President Trump reimposes sanctions on Iran, production is unlikely to fall by much. What’s more, we …
The US was the focus of markets this week. The Fed hiked its target rate by 25bp on Wednesday to 1.50%-1.75% but this had been widely anticipated and there was little reaction in commodity markets. In contrast, President Trump’s announcement of a 25% …
23rd March 2018
The Democratic Republic of Congo (DRC)’s decision to hike royalties on cobalt mining represents a threat to the electric vehicle industry and could accelerate the ongoing substitution with cheaper metals. That said, in the short term cobalt will remain a …
In our view, the new yuan-denominated crude futures contract should have no long-term impact on oil prices, even if it becomes a major benchmark. At any rate, a history of extreme volatility in China’s futures contracts and concerns about capital controls …
Contrary to almost all expectations, compliance with OPEC’s output quotas has been good so far. However, game theory suggests that higher oil prices increase the pay-off from cheating on the deal, which means that compliance could fall in 2018. What’s …
22nd March 2018
Robust demand and constrained supply have pushed the price of zinc higher over the past year. But fundamentals have deteriorated sharply in recent months and point to substantially lower prices ahead. … Zinc’s rally looks …
Somewhat counterintuitively, the price of gold gained 1.4% following the Fed’s decision to hike US interest rates for the sixth time in this tightening cycle. However, we think that the recent rally will not last as the Fed will tighten rates more …
The prospect of additional US rate hikes could weigh on commodity prices this year and will almost certainly lead to a lower gold price. But our negative outlook for industrial commodity prices is premised on other factors, including slower Chinese growth …
Inventories of crude oil fell last week as imports dropped and demand from refineries jumped. However, production is still rising rapidly. We expect soaring output to lead to higher stocks and lower prices in the second half of this year. … US Weekly …
21st March 2018
In this Commodities Watch, we will analyse supply and demand in the global rice market and explain why we think the price of Thai rice will struggle to hold on to its recent gains. … Rice prices to come off the …
20th March 2018
Despite the risk of further protectionist measures by President Trump and retaliation by China and the EU, we think that growth in world trade is likely to remain strong this year, which should help to ensure that oil demand will continue to be robust. … …
19th March 2018
There were few large moves in commodity prices this week. China’s activity data for the first two months of the year, published on Wednesday, were reasonably strong but failed to give a material lift to industrial commodity prices. The focus will move to …
16th March 2018
Commodity prices tend to go through extended boom and bust periods, sometimes known as super-cycles. The presence of super-cycles in commodity prices matters for a number of reasons but most importantly they can help to determine the long-term prospects …
The solar industry has been the fastest growing source of demand for silver in recent years. While we expect photovoltaic capacity to continue to increase at a fast pace over the next decade, we think thrifting and substitution will dent silver demand …
15th March 2018
Commodity prices have rebounded, after slumping in the wake of the global equity sell-off in late January, although they have dipped a bit lately, despite dollar weakness. The agriculture index has been the star performer since the start of 2018, while …
14th March 2018
Another rise in US production drove crude stocks higher last week, despite lower net imports and a rebound in demand from refineries. Surging oil supply from the US is a key reason why we expect oil prices to fall over the remainder of this year. … US …
There was another significant rise in OPEC’s forecast of non-OPEC production in 2018, reflecting recent strong growth in the OECD. However, the cartel still expects the market to be in a deficit this year. In contrast, we expect the market to be in a …
There have been some big jumps in stocks of copper, aluminium and zinc since the start of 2018, but inventories of the other base metals have fallen slightly. Given that we expect demand to soften this year as China’s economy slows, stocks of most metals …
The liquefied natural gas (LNG) market looks set to remain comfortably supplied this year, particularly as we expect growth in Asian LNG demand to slow. Given that we are also forecasting a fall in the oil price, LNG prices should ease back this year. … …
12th March 2018
The big news this week was confirmation of President Trump’s tariffs on US steel and aluminium imports on national security grounds. This sent US steel prices even higher, but weighed on prices in China. Meanwhile, the latest data show that China’s …
9th March 2018
President Trump’s tariffs on imports of steel and aluminium are likely to be a bigger deal for the price of US steel than aluminium. But US steel prices have already surged, which coupled with higher-priced imports, seems likely to depress demand. As …
Whilst we do not think that the renegotiation of NAFTA is likely to have a significant impact on demand for most energy commodities, the possibility of more protectionist measures and the subsequent reduction in trade and GDP growth could weigh on demand, …
8th March 2018
Dwindling mine supply and, more recently, strong winter demand for car replacement batteries have given a boost to the price of lead. However, demand is weakening which, coupled with increasing secondary output, should ensure that prices fall back over …
China’s commodity import volumes fell back sharply in February, but this can probably be explained by the week-long New Year holiday which fell in the middle of the month. The bigger picture is that total imports in the first two months of the year showed …
A rebound in net imports and jump in US production drove crude stocks higher last week. Surging oil supply from the US is a key reason why we expect oil prices to fall over the rest of this year. … US Weekly Petroleum Status …
7th March 2018
If the US were to withdraw from NAFTA, it could lead to downward pressure on US agricultural prices. But the impact on the more industrial commodities, including energy, is likely to be limited. … Do the NAFTA talks have implications for …
The prices of metals diverged last month. The prospect of a blanket tariff on US imports led to a jump in the price of US steel. At the same time, concerns about demand, notably from China, weighed on the prices of some of the other industrial metals, …
Even if the US imposes sanctions on Venezuela’s oil sector we doubt that the impact on oil prices will be substantial. The US has already halved its imports from Caracas with no discernible effect on prices, whilst spare capacity in the rest of OPEC is …
6th March 2018
Strong growth in China’s stainless steel output and supply disruptions have buoyed nickel prices so far this year. In this Metals Watch , we take a look at the most recent developments in both demand and supply and assess the outlook for prices in 2018. … …
It was generally a negative week for commodity prices. Oil prices tumbled and precious metals prices were buffeted by Jerome Powell’s testimony, which all but ensured a rate hike this month. China’s official manufacturing PMI dipped sharply, which is …
2nd March 2018
Energy prices were volatile in February, buffeted by equity market gyrations and changing weather forecasts. Oil prices were particularly frothy, but still slumped on the month as US production continued to rise and stocks increased. Similarly, surging …
President Trump’s announcement of tariffs on steel and aluminium imports was expected. But what is perhaps more surprising is that the tariffs are particularly punitive and threaten to ignite retaliation, which could have significant ramifications for …
Commodity prices fell sharply in the wake of the sell-off in global equity markets in late-January, but have recovered much of the lost ground. The key sub-sectors of the S&P GSCI are now close to where they started the year. The main exception is …
1st March 2018
China’s unofficial manufacturing PMI edged higher in February, but the official survey reading dropped sharply. The trends in the PMIs are broadly consistent with the recent dip in metals prices. We expect prices to drop back further as economic growth …
A rebound in net imports drove crude stocks higher last week. Admittedly, imports are volatile so this could be reversed this week. But US oil production also resumed its upward trend and demand for gasoline eased back. We expect oil prices to fall …
28th February 2018
Global oil demand looks set to grow strongly again this year driven by accelerating economic growth in the US, Europe and India. However, a sharp slowdown in China’s economic growth will limit the increase in global oil consumption. Oil demand growth will …
27th February 2018
