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Most commodity prices fell this week as the Federal Reserve left the door open to another interest rate hike before the end of the year , and indicated that rates will remain higher for longer. However, we are sticking with our view that US inflation will …
22nd September 2023
A healthier picture of aluminium supply An increase in year-on-year production growth, coupled with upward revisions to the back data, means that global aluminium supply is much stronger than previously thought. Production reached a record high in August …
20th September 2023
We expect that the global cotton market will be finely balanced in 2023/24 as demand picks up and supply falls across key producers. We forecast that the US cotton price will rise gradually from here, but will not revisit the highs of 2022. The cotton …
18th September 2023
Note: Join our online briefing on Tuesday, 19 th September about oil prices and the risks to the global inflation outlook. Register here . The mood was upbeat in commodity markets this week, with prices rising across all sectors. Oil stood out, with …
15th September 2023
Based on our view that US economic growth will prove resilient, despite the rise in interest rates, and that US inflation will ease, we expect the gold price to fall to $1,800 per ounce by year-end. Since rising to around $2,000 per ounce on safe-haven …
We think the recent rally in the iron ore price will soon go into reverse. Steel demand in China has surged in recent months, but we think that will prove temporary. China’s steelmakers should cut back on production once the boost to demand from a pick-up …
14th September 2023
Note: Join our online briefing on Tuesday, 19 th September about oil prices and the risks to the global inflation outlook. Register here . While we think Saudi Arabia and Russia’s supply cuts, which have sent oil prices surging in recent weeks, will be …
Prices will remain buffeted by weak global economic growth and a strong dollar, at a time of mounting supply risks and some policy stimulus in China. These conflicting pressures suggest that prices will be fairly rangebound in the coming months. In …
8th September 2023
It was a mixed week for commodity prices as they faced conflicting pressures in the form of the appreciation of the US dollar, mounting supply risks and signs of some resilience in China’s demand. Although the stronger dollar has probably acted as a lid …
China’s commodity import volumes rose strongly in August compared to July. Crude oil imports were probably supported by the ongoing recovery in the aviation sector, which we expect to continue in coming months. But greater enforcement of steel output …
7th September 2023
China’s announced support for the property sector and the extent of fiscal stimulus is modest, but it will help to support base metals demand in the coming months. Accordingly, we expect prices to tread water over the rest of 2023. Prices should rise in …
6th September 2023
Energy prices will remain historically high over the remainder of this year. OPEC+ output cuts, which have kept the oil market constrained, will continue until the end of the year, while demand in the US and China has held up. The natural gas market …
Most commodity prices rose this week (see Chart 1) after data showed that US labour market conditions are easing (see here and here ), lowering expectations for US interest rates and weakening the dollar. Chart 1: S&P GSCI Sub-Indices (2 nd Jan. 2023 = …
1st September 2023
While doom and gloom builds around China’s growth, PMIs for August provided some encouragement this week, even if they didn’t paint a picture of booming commodities demand. They suggest infrastructure spending has begun to support metals demand and that …
We think that the silver price will fall over the next few months. But as macroeconomic and financial factors switch from a drag to a boost to demand, and as photovoltaic demand gathers pace, the price should recover in 2024. While the silver price has …
31st August 2023
China’s energy demand has been a bright spot in the gloom of an ailing property sector and disappointing economic growth. We think China’s crude oil and natural gas demand will rise further next year, however, coal consumption should fall as hydropower …
30th August 2023
Absent major fiscal stimulus in China, global steel demand growth will be weak in the next few months. Accordingly, we forecast price declines in major steel markets towards year-end. Only when economic growth recovers and interest rates fall do we see …
29th August 2023
It has generally been a positive week for commodity prices. Most metals and agricultural prices rose on the week, in somewhat of a turnaround from recent trends. By contrast, energy commodities fell for the second consecutive week, as concerns about the …
25th August 2023
The government’s ambition of developing a globally-competitive manufacturing sector, combined with relatively slow progress on shifting away from using coal for electricity production, means India will become the world’s biggest polluter in the …
23rd August 2023
Global steel production continues to stagnate Global steel production will probably continue to edge lower in the next few months, following the latest month-on-month decline revealed by the WSA today. Crucially, we think that steel demand will soften as …
22nd August 2023
Global aluminium supply slides into contraction Global aluminium production growth slowed for the seventh consecutive month and dipped into contractionary territory in July on the back of weakness in China. We think production growth will stagnate as …
21st August 2023
Price volatility in the wake of news of possible strike action at Australian LNG export terminals serves as a reminder that natural gas markets are still carrying the scars of Russia’s invasion of Ukraine. High volatility is likely to remain until …
Commodity prices generally fell this week, dragged down by a surging dollar and data that showed China’s economy struggled in July. Asia LNG and EU natural gas prices were the exception, rising as the spectre of strikes at several LNG facilities in …
18th August 2023
The outlook for industrial metals demand has deteriorated alongside the weakening of China’s economy this year, particularly in the property sector. Monetary and fiscal stimulus might paper over the cracks, but we doubt it will be enough to do much more …
16th August 2023
Given the dominance of coal in China’s energy mix, a medium-sized electric vehicle (EV) produced there currently starts life with a “carbon debt” almost twice that of an equivalent internal combustion engine (ICE) vehicle. However, the greater efficiency …
15th August 2023
We think that Arabica and Robusta coffee prices will remain historically high over the next 12 months or so, but especially the Robusta price owing to greater El Niño-related supply risks. With that said, we forecast that global coffee supply will …
Natural gas prices were the biggest mover in commodity markets this week, jumping higher on the back of news of potential industrial action at LNG plants in Australia. We don’t think gas prices in Europe are likely to return to their peaks of last year , …
11th August 2023
Weak economic activity in developed economies and a stronger dollar will temper gains in most commodity prices over the rest of the year. In oil markets, Saudi Arabia’s output cuts have kept supply constrained while demand in the US and China has held up. …
9th August 2023
Energy prices will remain historically high over the remainder of this year, albeit significantly lower than their peak in 2022. Supply in the oil market is constrained and demand appears to be holding up well. The natural gas market appears comfortably …
We expect targeted stimulus in China to put a floor under base metals prices in the remainder of 2023. But the slowdown in developed economies (DMs) will prevent significant gains. Prices should start to pick up in 2024 as monetary easing takes hold in …
8th August 2023
China’s commodity import volumes fell in July compared to June. Policy support should help lift metals imports over the next few months. And although crude oil imports fell sharply, we think that rising international aviation to and from China will …
It’s been a mixed week for commodity prices. Industrial metals price generally struggled as activity surveys for China paint a grim picture of demand . (See Chart 1.) We suspect prices will tread water over the rest of the year as Chinese fiscal …
4th August 2023
The outlook for global agricultural supply has deteriorated since the start of the year as a result of extreme weather, the end of the Black Sea Grain Initiative, the prospect of an El Niño weather event and rising agricultural protectionism. We have …
Saudi Arabia’s announcement yesterday that it would extend its unilateral oil production cut of 1m bpd into September sent the Brent crude oil price climbing to $85 per barrel, where it remains today. We think the price will remain at around this level …
We think the price of rice is set to climb after India’s additional rice export restrictions have exacerbated global shortage concerns. For now, though, we don’t expect other major producers to follow suit. India recently tightened rice export …
1st August 2023
China’s PMIs suggest that commodities demand has come completely off the boil. For the recent rally in industrial metals prices to be sustained, China’s policymakers will have to deliver on promises of stimulus. In continuing a recent theme, the official …
The message from electric vehicle sales data is now clear: the EV revolution is alive and kicking and poses important implications for oil demand. We are slightly more optimistic on the pace of EV adoption than other forecasters and suspect the drag on …
31st July 2023
Most commodity prices rose this week on hopes of Chinese fiscal stimulus and a “soft landing” in developed markets. That said, a stronger US dollar later in the week meant that the prices of precious metals fell w/w. The star performer, however, was the …
28th July 2023
Global growth in steel output stagnating Global steel production growth picked up in June, albeit only to a pace consistent with stagnant growth. With the rise in output in China on shaky ground and weak demand beginning to weigh on supply in other …
25th July 2023
In a week when the US dollar strengthened and the 2-year US Treasury yield rose, agricultural and energy commodity prices still climbed on the back of supply concerns. In the case of agriculturals, those relate to Russia pulling out of the Black Sea Grain …
21st July 2023
Aluminium production remains strong but growth is softening Global aluminium production growth eased again in June, in a sign that smelters are responding to weak demand growth. We think that production growth will remain subdued over the next few months …
20th July 2023
China’s recent announcement of export restrictions on two metals used to make semiconductors serves as a reminder that China dominates production of metals needed for the green transition. We have warned in the past that the green transition is unlikely …
While the wholesale European natural gas price is now close to pre-energy crisis levels again, we don’t expect EU gas consumption to rise in response. Rather, we think that EU gas consumption has structurally fallen. This is the main reason why we think …
The widely-differing impact of El Niño across continents means that the net effect on global mining output is not clear cut. On balance, though, the likelihood is that it will lead to lower ore output, particularly of copper, and that it will be a factor …
18th July 2023
For the most part, commodity prices rose this week. A weaker US dollar in the wake of a lower-than-expected June CPI reading in the US was a key factor boosting prices. Not surprisingly, the prices of the precious metals rose sharply (1) . Chart 1: US …
14th July 2023
El Niño is coming but the picture is more nuanced than one of doom and gloom for global production of all crop types. For corn, soybeans, wheat and rice, larger harvests in some regions can outweigh declines in others. For prices, there are still upside …
China’s commodity import volumes remained high in June, helped by the economic re-opening, but they were held back by softening input-related demand for the manufacture of goods for export. As economies in Europe and the US flirt with recession, this will …
13th July 2023
Not so long ago, a higher 10-year TIPS yield almost invariably meant an underperformance of US “growth” stocks vis-à-vis their “value” peers, a lower gold price, and a stronger dollar. That’s changed in 2023, though, with the relationships weakening …
The spot price of Asia LNG should trade at a premium to Europe’s TTF gas at end-2023 given stronger demand growth in Asia and the fact that LNG is more costly to produce. The spot price of liquefied natural gas (LNG) in Asia has periodically moved …
12th July 2023
The likelihood of an El Niño event in the second half of this year adds to upside risks to global inflation and downside risks to activity. For the advanced economies, higher prices of agricultural commodities could slow the decline in food inflation. But …
