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Commodities have benefited in the past week from a continued improvement in investor sentiment, helped by a relatively dovish statement from the US central bank which weakened the dollar further. However, we are a little wary. The new median forecast of …
18th March 2016
Precious metals prices rallied over the past month, bolstered by a weaker US dollar and a lessening of fears over a slowdown in China. While gold benefited from the Fed’s dovishness in its latest meeting and rising inflationary pressures in the US, …
With a big Brazilian harvest now under way amidst large global stocks and strong competition in export markets, we think the US price of soybeans is more likely to fall than rise further this year. … Rally in soybean prices unlikely to be …
In the last week or so, we have received the short- and long-term plans of the Chinese government at the National People’s Congress (NPC) as well as activity and spending data for the first two months of this year. As such, it seems a good time to review …
The price of gold has been boosted further today by the apparent dovishness of the Fed. Indeed, the consensus view seems to be that the prospects for the precious metal can be distilled down to “higher US interest rates bad, weaker dollar good”. …
17th March 2016
With the stainless steel sector expected to remain in the doldrums, the prospects for nickel demand are poor. Falling production should still mean that the market deficit will deepen this year. However, high stocks will keep a lid on prices for some time …
US inventories of crude oil rose for the fifth consecutive time last week, despite a fall in US oil production and an increase in inputs to refineries. What’s more, gasoline stocks declined again as demand remained strong. … US Weekly Petroleum Status …
16th March 2016
Surging prices of a number of agricultural commodities since the middle of last month, helped by a weaker US dollar, pushed the S&P GSCI Agriculture index up by a little over 4%. Furthermore, the index is now up by 1% since the start of the year. However, …
Precious metals prices continued their upward trend over the last month, bolstered by a weaker US dollar and a scaling back of fears over a hard landing in China. While gold benefited from further monetary easing in the euro-zone and building inflationary …
Over the last few weeks, investors have appeared to come round to our long-held view that fears of a hard landing in China were overdone. Energy and metals prices, in particular, benefited from the change in sentiment. Solid Chinese import growth, an …
Russia’s announcement that it supports Iran’s right to increase production probably raises the chance of some sort of deal on freezing output. However, a credible and enforceable deal is far from certain and it is unlikely to make much difference to the …
15th March 2016
US imports of semi-manufactured silver are showing signs of improvement, suggesting that industrial demand could be on the mend. Meanwhile, US production of silver continued to fall, supporting our positive view on prices. … US silver imports and …
OPEC production fell in February. However, temporary pipeline outages were the cause of most of the decrease in supply, rather than any concerted effort to cut production. Indeed, it is likely that OPEC’s production will increase over the next couple of …
14th March 2016
A wide range of commodities benefited from improving sentiment towards the sector in the past week, even those – notably iron ore – where the underlying fundamentals remain distinctly bearish. Expectations of additional policy stimulus in China offset …
11th March 2016
Concerns about China’s demand have been weighing on the price of palladium in recent months. As such, we think the price will recover as investor fears of a hard landing in China are assuaged. However, high global palladium stocks will act as a cap on …
High stocks due to the exceptionally mild winter will prevent US gas prices from recovering much this year, but strong demand growth should set the scene for higher prices further down the line. … Recovery in US natural gas prices likely to be a …
10th March 2016
The fall and subsequent rebound in the dollar price of gold after today’s announcement of additional monetary stimulus from the European Central Bank (ECB) should help to settle the debate over what has been behind the recent improvement in sentiment …
Data released earlier today by Malaysia’s Palm Oil Board suggest that the market for palm oil continued to tighten in February, as falling production precipitated a further drawdown of stocks. … Malaysia Monthly Palm Oil Data …
The price of iron ore has strengthened significantly so far this year, and saw its largest one-day move on Monday when it rose by almost $10 per tonne. The fact that iron ore has fallen by more than other industrial metals prior to this recent rally might …
9th March 2016
US crude stocks rose again last week but a sharp drop in inventories of gasoline seems to have captured the market’s attention. … US Weekly Petroleum Status …
LME exchange stocks have generally been falling this year, while Shanghai-based stocks have been rising. We suspect that rising stocks in China are a reflection of hopes that ongoing stimulus measures will lead to higher growth in demand in 2016. … …
China’s total rare earth element (REE) exports were lower in January and February than in December, largely due to the Chinese New Year holidays. But exports in both months were still higher than average monthly export volumes since 2012. … China’s REE …
8th March 2016
The draft outline of China’s latest five-year plan spells more bad news for global coal prices as the government focuses on energy efficiency and reducing carbon emissions, while continuing to support local producers. … Another five years of rejection …
The recent surge in the price of iron ore should be seen in the context of improving sentiment towards industrial commodities in general. The even larger price falls that occurred before have also left lots of room for (more) surprises on the upside. …
China’s commodity import volumes dipped in February from a month earlier, in large part due to seasonal disruption associated with the Lunar New Year holiday. But the bigger picture is that imports of industrial commodities were still growing strongly in …
The rebound in the price of Brent crude to as high as $40 per barrel today is consistent with our end- 2016 and end-2017 forecasts of $45 and $60, respectively, so we would not want to argue with it too much. However, there is little new in the latest …
7th March 2016
While supply is clearly tightening, the outlook for tin demand is still uncertain. As such, improved investor sentiment seems to explain much of the latest rally in the tin price, making it increasingly vulnerable to temporary correction. That said, we …
Some “just right” US economic data, with activity and inflation neither too hot nor too cold, has boosted the prices of equities and commodities this week. What’s more, the gold price has resumed its climb, as rising inflation expectations have offset …
4th March 2016
We already had a relatively positive view on the outlook for precious metals. However, two new developments have encouraged us to revise up our medium-term projections for the price of gold and, as a result, for silver. The first is the resilience of gold …
The prices of industrial metals rose in February. In the first half of the month, the combination of lower US interest rate expectations and some weakness in the dollar appeared to be supporting prices. However, metals prices proved relatively resilient …
3rd March 2016
The recent poor performance of silver is surprising given the resilience of the gold price and the recovery in industrial metals generally. One explanation is that reduced safe-haven demand has undermined silver, whereas gold has been supported by …
While a weaker US dollar was a supporting factor for energy, industrial and precious metals commodities last month, it couldn’t stop the S&P GSCI Agriculture index continuing its downhill slide. The index fell by more than 2% in February, to reach its …
US crude oil stocks jumped by the most in eleven months last week. However, this was mainly driven by a surge in imports which offset a fall in crude production and rise in refinery inputs. Meanwhile, gasoline stocks ticked down again. … US Weekly …
2nd March 2016
The ongoing tussle between gold bulls and bears often boils down to a view on the outlook for US interest rates. If the Fed resumes its tightening soon as global risks fade, supporting the dollar, the gold price might reasonably be expected to fall …
Commodity prices generally enjoyed a month in the black in February, with three of the four sub-indices posting gains. A weaker US dollar was a supporting factor, although it couldn’t prevent the agricultural index moving towards its lowest level since …
1st March 2016
The restart of Japan's nuclear power plants is likely to reduce the country's demand for oil and gas while also allowing a rebalancing of the remaining consumption of fossil fuels towards coal. However, this will not be enough to offset lower demand for …
For the most part, industrial commodity prices have stabilised or, in many cases, been rising recently. However, today’s manufacturing PMI data for February suggest that activity was subdued in China and elsewhere. This corroborates our view that the …
Several years of bumper global harvests have seen a sustained downward trend in the prices of corn and wheat. At the same time, US exports of both crops have slumped in the current 2015/16 marketing year. However, lower prices should, all else being …
29th February 2016
It is often easy to forget that China is not only the largest single consumer of metals but, in many cases, also the dominant producer. Of course, in recent years, strong growth in demand meant that China still needed to import ores and metals. However, …
Aside from a rebound in the cost of sugar prompted by lower production forecasts, the key driver of most commodity prices this past week has been an improvement in sentiment in global financial markets generally. The incoming data have been mixed – …
26th February 2016
Since the start of 2016, gold has benefited from a resurgence in safe-haven demand on the back of global financial market woes. While the gold price could fall back a bit if, as we expect, the Fed hikes rates later in the year, strong buying from both …
A potential agreement between some OPEC members and Russia to freeze oil production at January’s levels, along with fears about slowing economic growth in China and the US, have intensified debate about when the oil market may rebalance. In this Energy …
25th February 2016
While gold imports by China plummeted in January, India’s buying remained strong. Looking forward, local price premiums suggest that the weakness in imports of gold is likely to have persisted through February. However, we expect this soft patch to prove …
Lower Indian wheat harvests this marketing year and next are likely to lead to output falling short of consumption in the world’s second-largest producer. But abundant stocks in the country mean that India’s import demand is unlikely to pick up by much, …
US crude stocks hit another high last week, but gasoline stocks fell, both partly reflecting reduced refinery activity. … US Weekly Petroleum Status …
24th February 2016
Looking past the day-to-day volatility, the prices of many industrial commodities – including oil and base metals – appear to be finding a floor. This is at least consistent with our relatively positive outlook for the rest of 2016, although we are wary …
The recent surge in the price of iron ore is not supported by fundamentals. Chinese steel production fell sharply in January, while efforts to boost iron ore supply are ongoing. As such, we expect prices to ease back in the near term. … The rally in the …
We think that recent reports suggesting China’s aluminium consumption surged last year and that the world market recorded a deficit don’t accurately reflect the fundamentals of the sector. The reality of the situation is that significant oversupply …
23rd February 2016
With the prospect of further sales of China’s vast state cotton stocks continuing to depress Chinese import demand, and US production rising, we think the price of cotton will drop further this year. … Cotton prices to fall as China plans further sales …
World Steel Association (WSA) data, released today, show that global steel output fell by 7.1% year on year in January. Output fell in all major producing regions for the second consecutive month, but there was a particularly sharp drop in China. … …
