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The headlines over the last month have focused on the possibility of a deal between Russia and OPEC on oil supply, which culminated in yesterday’s announcement of an agreement to freeze output. Elsewhere, natural gas prices continue to be driven by …
17th February 2016
Although the latest data show that rare earth metal import growth has been slowing in the European Union (EU), this is largely due to base effects. Meanwhile, a number of indicators suggest EU rare earth (REEs) demand is set to rise this year. … Is REE …
Several years of bumper harvests have left key agricultural commodities in abundant supply, helping to drag prices down to levels not seen since 2010. While many prices are probably close to the floor, ample stocks combined with renewed US dollar strength …
The combination of falling supply and stronger demand should set the scene for a recovery in the prices of many industrial metals this year. Meanwhile, although gold will struggle to make further gains in the face of higher US interest rates and renewed …
It has been a quiet few weeks for news from China, as disruption associated with the Lunar New Year holiday has made it difficult to determine exactly how the economy has fared so far this year. Instead, investors’ perceptions on the possible path of US …
16th February 2016
Despite a slump in Malaysian exports to China, overall Chinese palm oil demand has remained strong. However, the increased competitiveness of soy oil is likely to weigh on Chinese demand for imported palm oil, which should ultimately help to lower the …
The oil markets have given a lukewarm response to the tentative deal between Saudi Arabia and Russia to hold their output at its January levels. We are wary too, as it was unlikely that either country would have increased production further anyway. For …
After a weak start to the year, precious metals prices surged last month, bolstered by a weaker US dollar. Gold and silver continued to benefit from safe-haven demand as global equity prices tumbled, but the rally seems to have lost steam as financial …
China’s overall commodity import volumes increased in January, but dipped for some key commodities. However, the seasonal disruption associated with the Lunar New Year holiday was probably behind some of the weakness in the latest figures. … Slow start …
15th February 2016
Given the negativity in global equity markets, the relative stability of industrial commodity prices (especially metals) over the last few weeks has been reassuring. Even Brent crude, while slipping back again in the past week, is at least still above its …
12th February 2016
For most of the last few months the headlines have been dominated by the rout in commodity prices. More recently, the focus has understandably shifted to the bear markets in equities. Nonetheless, the relative stability of industrial commodity prices …
While subdued industrial demand has been one of the main reasons behind the weakness in silver prices over the last few years, 2016 could be the turning point. Indeed, a recovery in the global electronics sector should boost silver usage for industrial …
In its latest World Demand Trends report, published today, the World Gold Council described a strong end to last year for gold demand, as a disappointing H1 gave way to robust growth in the second half of 2015. Indeed, in Q4, demand was up by 4% y/y, …
11th February 2016
Even though we continue to think that oil prices will finish the year much higher than they started it, there is a growing risk that US shale producers will continue to defy forecasts of their demise. … Resilient production could keep oil prices lower …
The recent strength in China’s copper imports has been dismissed by many commentators as a response to an import arbitrage opportunity, rather than as a sign of a pick-up in demand. While the arbitrage window could indeed be boosting imports, we think …
Stocks of crude oil fell slightly last week, while gasoline stocks continued to rise, albeit at a slower pace. The key driver of the dip in crude stocks was a sharp drop in net imports. A small slowdown in product demand bolstered gasoline inventories. …
10th February 2016
OPEC production rose in January as output rebounded after December’s small fall. Even though demand is set to grow by over 1m bpd this year and non-OPEC supply should fall, bulging stocks and high OPEC production will mean that the market will still take …
Upward revisions by the USDA to its estimates for world end-year wheat and soybean stocks have only added to the gloomy outlook for prices, which we think are likely to ease further this year. … More misery for world wheat …
Global central banks increased their gold reserves in December, with China and Russia once again particularly active. We expect further official purchases to continue to be one of several factors supporting the price of gold in the next few years. … …
Data released earlier today by Malaysia’s Palm Oil Board show that palm oil inventories fell sharply m/m in January for the second consecutive month. … Malaysia Monthly Palm Oil Data …
Exchange stocks of lead and tin are now at very low levels and total stocks of most metals have fallen since the start of the year. Of course, there may well be unreported stocks but, at face value, markets appear to be tightening. … Low stocks are …
9th February 2016
With El Niño reducing rice production in key producing and exporting countries, a tighter world market should give the price of Thai rice a lift this year, despite headwinds from weakness in the baht. … Tightening world rice market to give prices a …
8th February 2016
Iron ore prices have now recovered from December’s lows, close to our end-year forecast. We expect demand from China’s steel sector to disappoint this year, so wouldn’t be surprised to see prices dip over the next few months. But production cuts should …
Oil prices have slumped dramatically over the last six months, but have rebounded a little over the last week. In this Energy Watch we focus on the main factors likely to drive prices over the next few years. Given that the outlook is unusually uncertain, …
5th February 2016
Tin usage should pick up in 2016, led by a recovery in the global electronics sector. Given constrained supply, the price of tin could rally strongly. … Tin to outperform other base metals this …
A visitor from Mars might have been confused by the responses of commodity markets to US economic data in the past few days. Prices jumped in dollar terms after the publication on Wednesday of a weak non-manufacturing survey, only to give back some of …
US exports of semi-manufactured silver remained subdued in November, consistent with the weakness of global industrial demand at the time. In contrast, investors continued to buy into falling prices, boosting demand for coins. … US silver imports and …
The dollar prices of many commodities have been boosted this week by declines in the value of the US currency. Any recovery may be good news for producers regardless of the underlying cause. Nonetheless, swings in commodity prices driven largely by FX …
The recent sharp falls and partial recovery in the price of Brent crude oil have grabbed the headlines. But focusing on Brent (or the traditional US benchmark WTI) alone doesn’t tell the whole story. The OPEC basket price has plunged even further and …
US oil production has been surprisingly resilient since oil prices collapsed in 2014 as companies have slashed costs and jobs and concentrated on only the most productive sweet spots. In this Energy Watch we examine how US shale oil producers have managed …
4th February 2016
The prices of industrial metals fell further in early January, unsettled by a renewed collapse in the crude oil price and by uncertainty surrounding exchange rate policy in China. However, sentiment revived later in the month as oil prices rebounded (on …
The S&P GSCI Agriculture index has started the new year where it left the last: down, falling by close to 1%. However, the beginning of 2016 has seen a divergence in the performance of the prices of the different sub-categories of agricultural …
Precious metals’ performances continued to diverge in January. The prices of gold and silver rallied on the back of safe-haven demand following the recent turmoil in global equity markets. In contrast, high stocks and fears of a slowdown in demand for …
3rd February 2016
The further gains in the price of gold today (to a high of $1,140 per ounce) are consistent with the relatively positive view we have had on the precious metal for some time. However, we are in no hurry to revise our existing end-2016 forecast of $1,250, …
Stocks of both crude oil and gasoline jumped again last week, primarily due to an increase in imports of crude and weak demand for products respectively. However, the weather probably bears at least some responsibility for last week’s stock builds. … US …
The release of the USDA’s winter wheat seeding report, the agency’s first estimate of US winter wheat acreage, points to the possibility of a fall in production this year, not just for winter wheat, but also the overall US wheat harvest. Moreover, the cut …
2nd February 2016
Russian ministers are set to meet on Wednesday to decide whether or not to remove the wheat export tax. We think the removal of the tax would put more downward pressure on wheat prices, although the full effect might not be felt for a few months and may …
It was a poor start to the year for commodities with the prices of energy, industrial metals and agricultural commodities all falling owing to persistent concerns about Chinese demand and continued oversupply, especially of oil. Indeed, the Bloomberg …
1st February 2016
Despite the rally in the oil market at the end of January, the big picture over the last few months has of course been one of further sharp falls in the prices of most industrial commodities. What's more, the positive note for oil may yet prove to be a …
This week’s big story has, of course, been the rebound in oil prices (to nearly $35pb) on unconfirmed reports that Russia and OPEC may finally be willing to agree coordinated cuts in output. We are sceptical that anything tangible will come of this, but …
29th January 2016
While the response to India’s Gold Monetisation Scheme has been fairly muted so far, the Sovereign Gold Bond Scheme has been a success, having attracted the equivalent of almost four tonnes of gold demand in less than three months. Going forward, we think …
In December, China’s rare earth (REE) exports were up by nearly 50% m/m – much higher than the 10% m/m average growth seen since the start of 2012. We believe the sharp increase was partly seasonal, as a number of firms probably brought forward orders …
The jump in oil prices today (to a high of $35) on speculation that Saudi Arabia and Russia could soon agree to cut output is at least consistent with our forecasts of a rebound by year-end. Nonetheless, we remain sceptical that anything tangible will …
28th January 2016
US crude oil stocks rose to a record level last week, driven by another drop in refinery inputs. What’s more, despite lower refinery production, there was another large jump in gasoline stocks. However, demand for oil products rose substantially. … US …
27th January 2016
Recent reports suggest that the Chinese government will stop supporting domestic corn producers and let the market determine prices. If implemented, this could put further downward pressure on global prices, as China’s import demand for corn ebbs in …
There are a number of risks which could cause oil prices to slump to as low as $20 per barrel in the first half of this year. However, our central forecast is that the prices of Brent and WTI will stabilise around current levels of $30 over the next few …
26th January 2016
The detailed Chinese import data for December, released earlier today, suggest that the strength of demand for agriculturals continued to ease at the end of 2015. … Chinese import demand for ags slows at the end of …
China’s imports of palladium plunged in 2015 as stocks were drawn down, but a pick-up in car production suggests that demand should recover soon. Meanwhile, imports of platinum were up strongly on the year. … China’s imports suggest platinum back in …
Gold imports by China and India shot up in 2015, to the highest level since 2013. We expect demand from emerging markets to remain strong in 2016, helping to underpin our positive view on prices. … China and India’s gold imports …
December was the fourth consecutive month of strong Chinese metals imports. Although low prices have probably played a role, we think that robust consumption, driven by increased infrastructure stimulus spending, has been the primary driver of import …
