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The Indian government’s decision to reverse an order that brought the gem & jewellery sector under anti-money laundering legislation is certainly good news for the gold industry. That said, demand is unlikely to be as strong as in previous years since …
10th October 2017
The collapse in US net oil imports over the last few weeks has helped to draw down crude inventories in the country. This has raised hopes that market rebalancing is accelerating and has been one reason for the recent rise in oil prices. However, the …
9th October 2017
The jump in alumina prices is probably premised largely on the prospect of winter capacity closures in China. But given that aluminium production could also fall, the market may not be as tight as it seems. … Does the rally in alumina prices have …
It was a relatively quiet week on the news front, at least until the US labour data on Friday. The 33,000 drop in non-farm payrolls came as a surprise, even though markets had expected hurricane-related distortions to the data. We think employment will …
6th October 2017
Vehicles are a growing source of demand for metals, including platinum group metals (PGMs), zinc, aluminium, steel, nickel and copper. In this Metals Watch we look at the latest trends in global auto sales and see what they can tell us about the strength …
If President Trump refuses to waive the sanctions on Iran’s oil exports then we would expect oil prices to rise. However, it is not clear that Congress would vote to re-impose sanctions on the country and, in any case, sanctions are unlikely to be as …
The prices of most metals fell in September as a rising US dollar and upward revisions to expectations of US interest rate hikes weighed on investor sentiment. Signs of somewhat softer economic activity in China also raised concerns in the more industrial …
5th October 2017
A surge in exports to the highest level on record last week helped to draw down crude stocks. We expect exports to remain high while the Brent-WTI spread is wide which should help to reduce stocks further. … US Weekly Petroleum Status …
4th October 2017
The rallies in the prices of coal and oil look like they may have run out of steam in the last week. The prices of both had been boosted by stronger demand and supply disruptions. However, global production of coal is rising rapidly and US oil output has …
Oil prices surged in September, which in turn boosted the prices of agriculturals. In contrast, concerns about demand and dollar appreciation weighed on metals prices. Looking ahead, the price of oil could ease back as supply remains ample for now, while …
2nd October 2017
China’s official and unofficial PMIs diverged in September, but both suggested that smaller, private sector manufacturers are struggling. The authorities appear aware of the sector’s woes as the cut in the reserve requirement ratio, announced over the …
There were some sharp moves in metals prices this week, as investors took positions ahead of the weeklong holiday in China. Meanwhile, oil prices edged higher on speculation that OPEC will extend its output cuts beyond March 2018. However, higher US …
29th September 2017
Palladium was in the spotlight yesterday as its price traded at a premium to platinum for the first time in sixteen years. However, unlike platinum, investors’ net-long position in palladium looks stretched and there is a risk that prices might fall …
The last three months have seen a turnaround in the oil market as investor sentiment turned positive and prices jumped. This Energy Watch will briefly take stock of what has been driving prices up recently before examining what is likely to happen to …
Global oil demand was given a boost in the second quarter of this year largely due to a stronger global economy. The latest data point to a bright outlook for oil demand over the next year as the global economy continues to expand. This should help to …
28th September 2017
A surge in exports and demand from refineries last week helped to draw down crude stocks. We expect these trends to continue which should help to narrow the Brent-WTI spread over the next few weeks. … US Weekly Petroleum Status …
27th September 2017
The latest trade data for India and China show that imports remained soft in August. We had always believed that demand in India would weaken in Q3 as a result of the implementation of the Goods & Services Tax (GST). In China, we expect imports to pick up …
26th September 2017
Much of the focus this week was on the outcome of the Fed’s FOMC meeting. In the event, it seems that a clear majority of Fed officials continue to expect another rate hike in 2017. This was a factor weighing on all the metals prices this week, but gold …
22nd September 2017
The recovery in the Baltic Dry Index (BDI) since early 2016 corroborates data showing a pick-up in global growth and the strength of commodity prices, notably the metals. However, we think that the BDI adds little to what we already know about global …
21st September 2017
World Steel Association (WSA) data showed a 4.9% y/y increase in global steel production in January-August, with output rising in all the major producers except Japan. That said, global output was down slightly on a month-on-month basis. … Global Steel …
Last week’s increase in US crude stocks is mainly due to the lingering impact of Hurricane Harvey. Demand for petroleum products remains reasonably strong, which should help the market rebalance. … US Weekly Petroleum Status …
20th September 2017
According to the International Aluminium Institute (IAI), global primary aluminium output declined by 1.3% y/y last month. This compares with a 1% y/y increase a month earlier. Nonetheless, production is still up by 5.2% y/y year-to-date, suggesting that …
China increased its output of most refined metals in the first eight months of the year. The main exceptions were zinc and nickel. … China Metal Output …
A new, yuan-denominated crude futures contract should have no impact on oil prices. The development of more futures contracts makes sense given China’s high consumption of most major commodities and will especially appeal to consumers who want to avoid …
19th September 2017
We are revising our coal price forecast up to take account of the recent rise in prices. However, increasing supply, slowing Chinese demand and more efficient energy alternatives are all likely to weigh on the price of coal over the coming year. … Should …
There has been a dramatic drawdown of Shanghai lead inventories in the last month and a surge in LME copper stocks in the last week. Otherwise, total stock movements have been relatively subdued, with small rises for aluminium, tin and zinc, while copper …
18th September 2017
There were some big gains this week in some of the agricultural commodities, primarily as a result of supply concerns. In contrast, weak Chinese August activity and spending data weighed on the prices of the base metals. In fact, both industrial and …
15th September 2017
Sentiment towards metals remained broadly positive in Q3 as the prospect of capacity cuts in China later in the year supported industrial metals prices whilst heightened geopolitical risks buoyed demand for safe havens – notably gold. That said, we think …
China’s August activity and spending data suggest that the slowdown that started in July continued into August. In particular, a downturn in infrastructure spending does not bode well for metals demand. We expect the economy to continue to cool in coming …
14th September 2017
Commodities prices trended higher in the last month, supported by increased speculative activity and a weaker dollar. Metals benefited from robust Chinese activity data and heightened geopolitical risks. At the same time, Hurricanes Harvey and Irma …
13th September 2017
As we expected crude oil production rebounded last week but many refineries remained shut, swelling crude stocks and pulling down gasoline inventories. Next week’s report should show a significant fall in crude stocks as refiners return to business. … US …
The US Department of Agriculture (USDA)’s latest set of estimates painted a broadly bearish picture for grains – notably corn – and soybeans. While the price of wheat increased following the release of the report, stocks are still projected to rise to a …
OPEC has recently been hinting that it may prolong its production cuts. However, some members are planning to increase output next year and compliance with the current agreement will probably have to improve before Saudi Arabia signs on. However, even if …
OPEC production fell last month, but early indicators suggest that it is likely to rebound in September. Unless output falls significantly over the next six months, stocks will remain above their five-year average. … Lower OPEC production likely to be …
12th September 2017
The impact of hurricanes in the US provided direction for many commodities this week. The price of crude oil started to recover as refineries in Texas restarted, but some agriculturals made gains on the risk of hurricane-related crop damage. In contrast, …
8th September 2017
We believe that increased speculative activity was the main driver of the recent rally in the price of palladium, which hit a 16-year high on Monday. While it is difficult to know when, if ever, investor sentiment will turn, we think that palladium looks …
China’s commodity import volumes picked up in August as rising metals prices encouraged refiners and steel mills to import raw materials. However, we expect import volumes to subside later in the year, in part as a result of government-mandated capacity …
Hurricanes routinely, but temporarily, disrupt oil production in the Gulf of Mexico, especially at offshore and coastal facilities. But the destruction wrought by Hurricane Harvey, which seems likely to be compounded by Hurricane Irma, could have …
7th September 2017
Refinery shutdowns due to Hurricane Harvey caused a surge in crude oil stocks but a slump in gasoline inventories last week. Stocks are likely to be exceptionally volatile over the next month. … US Weekly Petroleum Status …
The weak July data for South Africa’s PGM mine output add to evidence that the market is tightening. We expect output to remain soft in the remainder of the year. … South Africa’s Mine Production …
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 …
