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World Steel Association (WSA) data for December show that global steel output fell in all major producing regions last month. Production was down by 2.8% in 2015 as a whole, with the pace of decline accelerating towards the end of the year. Indeed, global …
25th January 2016
The sharp drop in crude oil prices has led to markedly lower Asian liquefied natural gas (LNG) prices and poses a risk to the economic rationale of US LNG exports. That said, the flexibility of US contracts and lower LNG transport costs should ensure …
After another poor start, the prices of industrial commodities ended the week on the up. The main positives were hints of additional monetary policy support from the ECB and the absence of any more bad news from China (where the official Q4 GDP data …
22nd January 2016
We expect global coffee output to rise only slightly in 2015/16, leading to a drawdown in global stocks, which should result in stronger prices. Our forecast that the Brazilian real will remain weak will maintain the incentive for Brazil to export, …
After taking the gold medal for price gains in 2015, cocoa has quickly fallen off the podium. Supply risks could see the price rebound over the short term before ending the year lower. … Cocoa price still likely to end the year …
Negative sentiment towards commodities in general, high stocks, a warm start to winter in the US and renewed fears about the Chinese economy have all contributed to the downward pressure on the prices of energy commodities, with the prices of natural gas, …
News that Renault failed emission tests on some vehicles has weighed on the price of platinum over the past few days. However, we think that sentiment towards platinum is excessively negative at the moment and that demand should actually benefit from more …
US crude oil stocks rose last week, driven by a drop in refinery inputs. What’s more, despite lower refinery production, there was another large jump in gasoline stocks. However, demand for oil products rebounded sharply, offering a glimmer of hope. … …
21st January 2016
In recent weeks, the focus of has been on the supply of metals and whether producers will cut to rebalance the markets. But in the case of zinc, lower supply almost seems inevitable. As such, it will be demand that dictates the scale of the market deficit …
Saudi Arabia has been willing and able to weather an extended period of low oil prices in order to squeeze out higher cost producers in the US, while perhaps also gaining some satisfaction from the pain being inflicted on Iran and Russia. But with prices …
20th January 2016
A downturn in China’s equity market since the start of the year and concerns about the country’s economic growth prospects reignited turmoil in global markets and dragged commodity indices lower. In addition, the lifting of sanctions linked to Iran’s …
After a poor 2015 for agriculturals, with a number seeing double-digit price falls, 2016 has started on a weak footing. While less affected by the economic cycle than other commodities, agriculturals aren’t completely immune from a deterioration in …
Saudi Arabia has been willing and able to weather an extended period of low oil prices in order to squeeze out higher cost producers in the US, while perhaps also gaining some satisfaction from the pain being inflicted on Iran and Russia. But with …
The turmoil in global equity markets has weighed on the prices of the more industrial precious metals (PM) over the past month, with platinum and palladium recording the worst losses. In contrast, gold, and to some extent silver, have benefited from …
According to the International Aluminium Institute, global output grew by just over 1% y/y in December. Excluding China, output rose by nearly 2% y/y. … Global Aluminium Production (Dec. & …
We don’t expect China’s recently-announced aluminium stockpiling scheme to provide prices with anything more than a temporary boost. Indeed, depending on how the scheme is implemented, it could actually dampen the pace of market rebalancing, delaying any …
18th January 2016
OPEC production slipped in December, led by Saudi Arabia and Nigeria, but the group’s output is still near record highs. Even though demand is set to grow by over 1m bpd this year and non-OPEC supply should fall, bulging stocks and high production from …
Confirmation that Western sanctions linked to Iran’s nuclear programme are to be lifted might be expected to add to the downward pressure on oil prices, but there are three main reasons why the impact should be limited. (We also made these points earlier …
15th January 2016
Although we are broadly positive on the outlook for industrial metals prices in 2016, it is hard to find the upbeat narrative for nickel. Demand is weak and stocks are high. That said , we do expect the market to fall into deficit this year, which should …
Brent’s renewed slide below $30 per barrel today has led to another wave of speculation about how much further oil prices could fall. For some time our view has been that the near-term risks are skewed to the downside and that additional declines – …
Although expectations for the current 2015/16 Brazilian crop have been revised higher, smaller harvests elsewhere and a receding threat of Indian exports mean that we are maintaining our forecast that prices will rise through 2016, albeit only slowly. … …
Cost curves are a widely-used tool to determine the potential direction of commodities production and prices. Given the weakness in the latter over the last few years, cost curves are currently of particular interest in determining where the floor for …
14th January 2016
China’s imports of major commodities in volume terms rose in December. Of course, low prices probably encouraged some buying, but it also seems likely that policy support, including higher infrastructure spending, is feeding through into stronger domestic …
13th January 2016
There were few significant increases in stocks last year, despite reports of oversupply in most metals markets. Indeed, stocks of many metals could be drawn down swiftly if, as we expect, supply falls this year and demand picks up. … Stocks will not …
Cerium is the most abundant rare earth element (REE) and one of the most widely used. We expect the rise in cerium demand to outweigh increases in supply this year and next, putting some upward pressure on prices. But prices are still set to remain low …
The end of unusually warm winter weather in the US helps to explain the surge in natural gas prices since December. But we expect contracting supply, the start of LNG (liquefied natural gas) exports and the increased use of natural gas in electricity …
Precious metals’ performances diverged in December. Gold and silver prices were broadly flat despite the Fed hiking interest rates for the first time since 2006, while platinum and palladium recovered some of the losses from previous months. More …
Data released earlier today by Malaysia’s Palm Oil Board show that palm oil inventories declined in December for the first time since the middle of last year as production fell sharply again. … Malaysia Monthly Palm Oil Data …
11th January 2016
The prices of key industrial commodities fell further in the first full week of 2016, led by oil, as China worries resurfaced again. The markets also concluded (rightly, in our view) that the escalation of tensions between Saudi Arabia and Iran will …
8th January 2016
Silver’s prospects will remain closely tied to those of gold in 2016. While Fed tightening and renewed dollar strength should continue to weigh on the prices of gold and silver over the next year or so, we still expect the price of gold to recover …
After falling below US$40 per tonne late last year, iron ore prices have edged higher more recently. Although we expect global demand to grow only moderately this year, we forecast that prices will be relatively stable in 2016 (ending the year at US$45 …
The recent slide in the oil price is weighing on the price of copper, in part because it is a reflection of negative investor sentiment towards commodities in general and China’s economy in particular. It may also cut costs of production in the copper …
Record global harvests and stock levels, further depreciation in the currencies of key producers and subdued Chinese demand all look likely to drag the global price of soybeans lower this year. … More weakness for soybean prices likely in …
December was a month of mixed fortunes for agricultural commodities in an otherwise pretty forgettable year. Indeed, the S&P GSCI agriculture index plunged 12% y/y in 2015 – the third consecutive yearly decline. … 2015 laggards end year on a …
7th January 2016
We continue to expect the price of Brent, currently around $33 per barrel, to recover to $60 in 2017 and $70 by 2020. Nonetheless, with OPEC in disarray and China uncertainty persisting, we are cutting our end-2016 forecast from $55 to $45. Oil prices …
Malaysia has imposed a 3-month ban on bauxite mining and with further measures likely to follow, alumina supply could struggle in 2016. That said, demand will also be constrained by slower growth in aluminium output and high alumina stocks in China. With …
US crude oil stocks slipped last week despite a slight increase in production and a fall in refinery inputs. However, a sharp fall in gasoline demand and a huge rise in inventories has stolen the headlines. … US Weekly Petroleum Status …
6th January 2016
The prices of industrial metals recouped a little lost ground in the final month of 2015, but still fell sharply last year. The relative resilience in December probably reflected a number of factors including producers discussing supply cuts, firmer …
We expect further Fed tightening and renewed dollar strength to continue to weigh on the price of gold over the next year or so. Nonetheless, we still see scope for a partial recovery driven by a revival of demand for inflation hedges and safe havens, and …
5th January 2016
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
