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Hurricanes Harvey and Irma are likely to have a larger negative impact on US oil demand than on oil production over the next few months, which could delay market rebalancing. … Hurricane Harvey to depress US oil …
6th September 2017
The strength of the Chinese economy supported the prices of many energy commodities last month. Imports of oil, coal and LNG remained high and domestic consumption appeared to be strong. However, we expect China’s economic growth to slow over the next …
5th September 2017
A combination of investor optimism about future demand, the depreciation of the dollar and disruptions to mine supply have been the key drivers of this year’s rally in the price of copper. But, in our view, growth in demand is slowing and a supply crunch …
The prices of most metals rose in the last month. (See Chart.) Robust Chinese economic data boosted investor sentiment towards industrial metals. However, in many cases, we fear that underlying demand might not actually be that strong, making prices …
4th September 2017
The prices of most commodities rose this week. Another set of strong manufacturing PMIs in China supported industrial metals prices whilst a flare-up in tensions between the US and North Korea boosted demand for precious metals. In contrast, oil prices …
1st September 2017
Hurricane Harvey severly disrupted oil production, refining and trade in the US at the end of August. The US government was even forced to release crude supplies from its strategic reserve. Meanwhile, another set of strong PMIs in China supported …
While stronger manufacturing PMI readings imply an acceleration in industrial activity in August, we don’t think that the upturn will be sustained given the increasing headwinds from policy tightening. As such, we expect the prices of most industrial …
Elevated geopolitical risks and expectations that the Fed will only raise interest rates slightly this year and next have buoyed the price of gold. While we have revised up our end-2017 forecast to reflect heightened global risks, we are wary of being …
31st August 2017
Electronics and the electrical sector used to account for around half of total tin usage. But tin is finding new sources of demand in the green economy and in the transport and chemical sectors. In this Metals Watch, we delve more deeply into the demand …
30th August 2017
A sharp drop in imports and jump in demand from refineries helped to drain stocks last week. But the market’s focus remains on the impact of Hurricane Harvey. … US Weekly Petroleum Status …
Higher crude exports, falling stocks and the return of refineries shuttered by Hurricane Harvey should all help to boost WTI prices and narrow the Brent-WTI spread over the rest of the year. … Brent-WTI spread likely to …
29th August 2017
The prices of most commodities – notably industrial metals – rose this week. While fundamentals have been supportive, we think that the most recent rallies in prices have been exaggerated by speculative activity. Oil prices bucked the otherwise-positive …
25th August 2017
World Steel Association (WSA) data showed a 4.6% y/y rise in global steel production in January-July, with output rising in all major producers bar Japan. … Global Steel Production …
24th August 2017
The latest trade data for India and China show that gold imports started Q3 on a soft note. We think that demand will continue to weaken in the remainder of the year as slower growth in China and a new tax regime in India weigh on consumption. … China and …
Whilst fundamentals have played a role in the most recent rallies in industrial metals, we think that speculative activity has exacerbated the move up in prices. In some cases – notably copper – futures positioning looks particularly stretched and we …
Another fall in US crude stocks means that inventories are now about 30 million barrels below last year’s level. Crude stocks are likely to continue to fall over the next few months as demand remains relatively robust, which should support prices. … US …
23rd August 2017
The ongoing surge in ShFE tin stocks was the main story in the last month. In fact, inventories of most ShFE metals have risen in the last four weeks, while stocks of nearly all the LME metals have fallen. … No shortage of tin …
Crude oil prices have risen over the last month as demand has picked up and stocks have tumbled. However, supply, especially from Nigeria, Libya and the US has risen rapidly. This Energy Watch looks at how higher supply will affect prices over the …
The increasing frequency of terrorist attacks and international conflicts has prompted a spike in geopolitical risk in recent years. We find that, among commodities, gold and Brent offer the best protection for investors. However, not all geopolitical …
22nd August 2017
Some commentators are justifying the recent surge in a number of industrial commodity prices on the prospect of lower available supply as a result of the latest sanctions on North Korea. However, we are sceptical that this will translate into tighter …
21st August 2017
According to the International Aluminium Institute (IAI), global primary aluminium output rose by just 1% y/y last month, down from 7.1% y/y a month earlier. … Global Aluminium Production …
The performance of commodities was mixed this week. Softer Chinese activity and construction data for July did little to cool the rally in industrial metals prices whilst increasing geopolitical risks continued to buoy demand for safe havens, including …
18th August 2017
The recent backwardation in the Brent futures curve will encourage traders to continue to draw down stocks over the next few months, which should support spot prices. … Brent backwardation should help to reduce oil …
17th August 2017
The price of sugar has plummeted by 33% since the start of the year on expectations of a global surplus in the 2017/18 season (October-September). In this Commodities Watch, we discuss recent trends in the sugar market and what they mean for prices going …
Commodity prices held their own in the last month amid the escalation in geopolitical tensions involving the US and North Korea. The depreciation of the US dollar helped to support prices, along with falling expectations of interest rate rises on the back …
16th August 2017
Persistent strength in refinery runs led to the biggest weekly decline in commercial crude oil inventories so far this year. We expect stocks to continue to fall, which should support oil prices. … US Weekly Petroleum Status …
The price of iron ore has staged an impressive rally since late June, fuelled by a combination of strong growth in China’s steel output and speculative activity. However, with steel demand and production set to fade and ongoing increases in iron ore …
15th August 2017
China’s July activity and investment data showed a marked downturn and reversed most of the gains recorded towards the end of the second quarter. We had always expected policy tightening to translate into slower growth in the second half, but we think …
14th August 2017
After a strong start to the week, most commodity prices fell back on Friday as concerns about the inflammatory rhetoric between the US and North Korea prompted investors to move out of riskier assets. One exception was the price of gold, which benefitted …
11th August 2017
The price of gold was a key beneficiary of the recent increase in tensions between the US and North Korea. While we think that the chances of a full-scale war are quite slim, there remains huge uncertainty as to how the current geopolitical crisis will …
The prices of wheat and soybeans plunged after the US Department of Agriculture (USDA) revised up its estimates of global production. What’s more, it is projecting that global inventories of wheat and soybeans will reach new record-highs in the 2017/18 …
After falling at the start of the year, robust demand and constrained supply have pushed the price of zinc higher in recent months. The strength in prices is likely to persist over the next couple of months as concentrate availability is reduced by …
10th August 2017
Another rise in OPEC’s production in July has not helped the group’s efforts to rebalance the oil market. However, strong demand and slower growth in non-OPEC output should still help to reduce stocks and lift prices over the rest of the year. … Rising …
PGM output slumped in June as miners struggled with rising costs and falling metal content. We expect output to drop further in the second half of the year. … South Africa’s Mine Production …
A weaker US dollar has given some support to oil prices over the last month. However, the inverse relationship is likely to break down again over the next year as rising US interest rates support the dollar but lower stocks give a boost to oil prices. … …
The ninth consecutive weekly fall in US commercial crude stocks provides further evidence that the market is rebalancing. We expect this trend to continue over the next few months at least, which should give a boost to prices. … US Weekly Petroleum Status …
9th August 2017
China’s commodity import volumes were generally weak in July. High stocks of many commodities and growing domestic production dampened demand for imports. What’s more, the prospect of cooling domestic demand points to further weakness ahead. … Poor start …
8th August 2017
A sharp rise in China’s July manufacturing PMI boosted the prices of most commodities last week, but we don’t think that the upturn in China’s economic activity will be sustained, given the increasing headwinds from policy tightening. Elsewhere, a strong …
4th August 2017
The lack of timely coal consumption data on a monthly basis – at least at a global level – makes it difficult to determine changes in coal demand in the short term. Our new Capital Economics World Coal Demand Proxy (CDP) shows that the recent jump in coal …
Global gold demand fell to the lowest level since 2009 in the first half of 2017. Higher prices, fading geopolitical risks and soft jewellery fabrication were the main factors behind the weakness in consumption. We expect appetite for gold to remain …
3rd August 2017
It was generally good news for energy commodities in July. Oil prices jumped as stocks in the US slumped, the market grew concerned about the possibility of sanctions on Venezuela and the dollar fell sharply against most other major currencies. Meanwhile, …
Another increase in refinery runs led to a fall in crude oil stocks last week. We expect refinery runs to remain high in the coming weeks. This should lead to a sharp drawdown in inventories and help the market to rebalance. … US Weekly Petroleum Status …
2nd August 2017
A weaker US dollar and stronger Chinese economic data boosted metals prices last month. Aluminium was the only exception. (See Chart.) In most cases, industrial metals prices are now more aligned with fundamentals. But, slower growth in China in the …
The prices of most commodities rose last month. In part, this was due to a weaker dollar. But stronger economic activity data for China also played a role. We think that growth in China is likely to slow over the coming months and, therefore, expect the …
1st August 2017
While the unofficial PMI data point to an acceleration in economic growth in July, we don’t think that the upturn will be sustained, given the increasing headwinds from policy tightening. This view underpins our forecast that the prices of most industrial …
This week, the prices of most commodities benefited from a further weakening of the US dollar and data showing that China’s growth accelerated in Q2. But individual fundamentals also played a role. In particular, a sharp fall in US crude and gasoline …
28th July 2017
Exchange stocks of most metals fell over the last month. With the exception of copper and tin, inventories are now substantially lower than at the start of the year, pointing to tightening markets. That said, higher prices have been incentivising …
27th July 2017
A surge in demand for US natural gas from Mexico and Canada as well as bourgeoning shipments of LNG to Europe and Asia should give a boost to natural gas prices over the next year. … Strong export demand to support US natural gas …
The latest trade data for India and China show that gold imports rose in June. Nonetheless, we think that demand will lose momentum in the second half of the year as slower growth in China and a new tax regime in India weigh on consumption. … China and …
The fourth consecutive weekly drop in commercial crude stocks in the US provides further evidence that OPEC’s output cuts are starting to have an impact on inventory levels. We expect this trend to continue over the next few months which should help to …
26th July 2017
