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Broad commodity indices fell in December on the back of plummeting oil prices. But outside of energy, commodities withstood the first Fed rate hike in ten years better than many had anticipated. Precious metals in particular were hardly affected. What’s …
4th January 2016
The latest flare-up in tensions between Saudi Arabia and Iran is one of two main factors undermining global equities today, although we believe it has been much less important for financial markets than the negative headlines from China. Oil prices have …
Worries over China’s economy still look overdone to us, but today’s headlines are clearly unhelpful for sentiment towards industrial metals. More positively, the prices of crude oil and gold appear to have found a floor, albeit helped by renewed tensions …
US crude oil stocks saw the largest fall since early July last week, despite a slight increase in production, as net imports dropped sharply. However, product demand also declined, with production of distillates remaining particularly subdued. … US …
23rd December 2015
2015 has of course been a difficult year for those, ourselves included, who have had anything positive to say about commodities. We will publish detailed predictions for 2016 early in January after a suitable period of reflection over the mince pies. But …
The price of copper in US dollar terms has fallen by nearly 30% since the start of 2015. The catalyst for the decline in prices has been the slowdown in China’s economy and fears that it may experience a “hard landing”. Other factors such as US dollar …
After falling sharply in 2015, we expect US steel prices to recover slowly next year as a result of greater trade protectionism, further global capacity closures and improved demand. … Steel prices to recover slowly in …
The current weakness in crude oil prices partly reflects still-high production and stocks in the US, despite the collapse in the number of active drilling rigs there. But we expect the supply response to gather pace in the next few months, helping to …
Falls in currencies of major producers have played a key role in cushioning mining companies’ margins in recent years. However, with the prices of most precious metals trading below production costs even in local currencies, we expect that miners will be …
22nd December 2015
Governments are progressively tightening emissions and fuel economy standards for vehicles, a process that will only intensify following the deal on climate change reached at the recent Paris conference. As a result, manufacturers are looking to reduce …
21st December 2015
Currency fluctuations have been a key factor dragging agricultural prices lower in US dollar terms this year. Dollar strength and weakness in key producer currencies are likely to remain headwinds in 2016. … Weak producer currencies to keep prices under …
US imports of semi-manufactured silver remained subdued in September, suggesting that industrial demand is yet to recover. In contrast, investors continued to buy into falling prices, boosting demand for coins. Silver prices have since fallen further, in …
We expect platinum group metals (PGMs) demand from the auto industry to pick up over the coming years on the back of more stringent emission control standards globally and growing car ownership rates in emerging economies. … PGM prices to benefit from …
Continuing the resurgence that started in September, China’s metals imports remained strong in November. We think this reflects higher consumption, encouraged by the fiscal and monetary stimulus enacted earlier in the year, rather than opportunistic …
The muted responses in commodity markets to the first hike in US interest rates since 2006 were a tribute to the clear communications of the Fed (in contrast to those of OPEC!) and, in our view, largely justified. Looking forward, we continue to expect US …
18th December 2015
Of the eleven agricultural commodities we cover, the prices of six have posted gains since mid-November. However, in a number of cases price movements over the last month have seen some sharp changes in fortune. Indeed, while the S&P GSCI Agriculture …
In this second Energy Watch of the month, we take a brief look back at the coal and US natural gas markets in 2015. We then set out our forecasts for prices for 2016 and out to 2020. The previous Energy Watch , published last week, set out our central …
After a difficult year, there are signs that rare earth element (REE) prices are starting to stabilise, and some already appear to have passed their trough. We remain optimistic on the outlook for REE prices in 2016 as the impact of this year’s headwinds …
It now seems likely that the US will relax its restrictions on oil exports before the end of the year. However, the impact on prices should be negligible given the US’s continuing need to import oil and the still limited opportunities for US producers to …
17th December 2015
The muted responses in commodity markets to the first hike in US interest rates since 2006 are atribute to the clear communications of the Fed and, in our view, largely justified. Looking forward, though, we continue to expect rates to rise further in …
US crude oil stocks rebounded last week as net imports jumped again, production rose and inputs to refineries fell. The picture was no better in products, with demand for gasoline and distillates falling compared to this time last year. … US Weekly …
16th December 2015
After rising above 15 cents per pound in early December, the price of sugar has slipped back to 14.5 cents more recently. We expect prices to increase slowly through 2016 as a result of lower production and improved demand, which should result in the …
Although the S&P GSCI Commodity Index has fallen to its lowest level since the financial crisis over the past month, it hasn’t been all doom and gloom for commodity prices. Indeed, despite the slide in the price of crude oil due to a glut of supply and …
15th December 2015
We have of course addressed the potential impact of higher US interest rates on global commodity markets before. But with the Fed almost certain to hike tomorrow for the first time since 2006, now is an obvious opportunity to revisit the key points. In …
The prices of precious metals (PMs) have continued to fall since mid-November. While expectations for a December rate hike by the Fed and a strong dollar have been among the biggest catalysts for changes in gold and silver prices, fears of a hard landing …
14th December 2015
The agreement in Paris on climate change over the weekend adds further pressure on countries to reduce their carbon emissions. Even though there is likely to be little immediate impact on commodities from the deal, it will further encourage nations to …
Brent crude's renewed slide below $40 per barrel was the damning verdict on OPEC's failure to agree on a number even for what is largely a notional output target. In principle, prices could keep falling. As we have noted before, the running costs of an …
11th December 2015
In this Energy Watch we briefly review oil prices in 2015, a year which many investors will probably be glad to see the back of. We then set out our central forecasts for 2016 and out to 2020. However, given the current overhang of supply and …
After twelve years of increases, we expect mine supply to be broadly flat in 2015 and to decline by 3% in 2016 due to shrinking margins and production cuts across the industrial metals industry. While primary silver mines are still ramping up production, …
Having fallen sharply over the first eleven months of the year, the price of aluminium reached a six-year low in late November, although it has since recovered a little ground. In 2016, we expect demand for aluminium to remain strong, while supply growth …
OPEC production rebounded in November, led by Iraq, which will only add to the glut of oil in the market. Even though demand is set to grow by over 1m bpd next year and non-OPEC supply should fall, bulging stocks and high production from OPEC will mean …
10th December 2015
The combination of ample global supplies and strength in the US dollar have weighed on corn, wheat and soybean prices this year. With the likelihood of additional exports from Argentina, we think prices are likely to fall further over the coming months. …
2015 may not be quite over, but this year’s trends in exchange inventories of key industrial metals are clear. For the most part, stocks have fallen, not so much because of strong demand but because of tightening supply. Given that we expect demand to …
Data released earlier today by Malaysia’s Palm Oil Board show that while palm oil production fell sharply in November, a large fall in exports pushed stocks higher. … Malaysia Monthly Palm Oil Data …
US crude stocks registered their first fall in almost three months last week, despite another jump in net imports and a decrease in refinery runs. … US Weekly Petroleum Status …
9th December 2015
Expectations for a December rate hike by the Fed and a strong dollar have seen the price of silver fall to the lowest level in over six years. But, all is not lost: low prices have triggered a strong response from retail investors, with demand for silver …
Global central banks continued to add gold to their reserves in October, albeit at a slower pace. However, preliminary data for November suggest that the slump in gold prices might have stimulated additional buying last month. We expect further official …
Brent’s (short-lived) dip today below $40 per barrel is a further damning verdict on OPEC’s bungled communications after its meeting last Friday. However, it was never likely that the group would agree to cut output to boost prices. Instead, any recovery …
8th December 2015
The value of China’s imports fell once more in November, although the decline was not as large as anticipated. More significantly, commodity import volumes rose strongly, which suggests that low prices and government policy measures are starting to …
Although cotton is shaping up to be one of the best performing commodities in 2016, its price has been on a downward trend over the second half of the year. We think that large global inventories will continue to drag the price lower into next year. … …
Figures released today by Brazil’s Sugarcane Industry Association, UNICA, show that 18.7 million tonnes of cane were harvested in the second half of November in the main Centre-South cane-growing region. This was 19% higher than in the same period last …
South Africa’s PGM production rose in October after three months of declines. However, labour disruptions and weak prices have forced the largest miners to restructure and cut their capital expenditure. As such, we expect production growth to continue to …
With exchange stocks at six-year lows and refined output falling, the tin market looks increasingly tight. However, stronger demand, which we expect in 2016, is needed for a sustained rise in prices. … Banging the tin …
7th December 2015
The price of US lumber has fallen sharply this year, despite an ongoing improvement in the US housing sector. This divergence can be explained in part by the depreciation of the Canadian dollar, which has made imports more competitive. But with the bulk …
We, and we suspect many others, are still trying to work out exactly what OPEC decided at Friday’s meeting. Usually reliable sources have reported that OPEC has agreed to raise its output target from 30m to 31.5m barrels per day (bpd). In the event, …
4th December 2015
A general strengthening of the US dollar in recent weeks, on expectations that the Fed will begin to raise interest rates this month, has been a key factor dragging agricultural prices lower. Along with ample supply, this has contributed to a further …
3rd December 2015
The prices of most energy commodities fell in November as negative sentiment towards commodities in general, high stocks, a warm start to winter in the US and further announcements by China about reducing its carbon emissions weighed on prices. That being …
Towards the end of November, there were a number of announcements of supply cuts from China’s metal producers. In particular, producers of nickel and zinc pledged to cut output by 20% next year, while copper producers promised to lower production by …
2nd December 2015
US oil stocks grew again last week despite strong growth in refinery inputs, as a surge in imports overwhelmed higher demand. … US Weekly Petroleum Status …
The prices of the major precious metals continued to fall in November, weighed down by the strength of the US dollar and persistent concerns over a hard landing in China. While demand and supply fundamentals have started to move in favour of future price …
