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Somewhat stronger global growth – helped by the recent fall in oil prices – and, in some cases,uncertain supply prospects suggest that base metal prices should rise in 2015. However, we alsoexpect metals prices to become more differentiated over the next …
18th December 2014
The conventional wisdom is that lower oil prices will add to the downward pressure on the prices of other commodities, many of which have indeed weakened. But while this may continue to hold true for other energy prices and some agriculturals, we expect …
17th December 2014
Continued softness in flash PMIs this month, particularly in China, does not provide hope that commodity prices will benefit from a significant pick-up in demand. … PMIs signal demand still …
16th December 2014
Although $60 per barrel is a fair long-run estimate, there is no single “magic number” for the oil price below which enough North American production becomes unprofitable for supply cuts to start to bite. Indeed, short-term operating costs for many US …
12th December 2014
The outlook for global grain and soybean production has received a further boost, with the USDA upgrading its production estimates for the 2014/15 season. Assuming no severe supply-shocks, we think that ample global supplies and rising …
The international coal market continues to be oversupplied and demand remains fragile, not least in China. Despite a weak long-term outlook, there are some reasons to be optimistic in the short-term as Indian buying remains strong and production growth …
8th December 2014
Lower prices encouraged some opportunistic Chinese buying of commodities last month but the likelihood is that, in many cases, stocks were being replenished rather than this being a sign of a sustained recovery in demand. Indeed, exports of steel …
The fall in the price of Thai rice since August has coincided with the resumption of sales by the Thai government from its enormous stockpiles. Continued official sales into an already well-supplied market will put further downward pressure on prices in …
5th December 2014
The slump in oil prices has been the catalyst for falls in other commodities, including copper. We think this ignores the very different fundamentals of the two commodities. Moreover, by boosting global GDP, lower oil prices could actually lead to higher …
4th December 2014
The prices of most commodities fell in November, dragged down by the sharp fall in oil prices. However, supply concerns buoyed the prices of some agricultural commodities and industrial metals. Meanwhile, the strength of the US dollar continued to weigh …
1st December 2014
Despite concerns about a chocolate shortage, the world cocoa market remains well supplied. With a slightly larger market surplus than originally estimated, and plentiful stocks, we think there is scope for the price of cocoa to fall further. … Price of …
Aluminium production is a highly energy-intensive process, so shifts in global energy prices can have significant implications for output. That said, we expect government policy in China to be the ultimate game changer for the industry. … Policy will …
28th November 2014
It was no great surprise that OPEC left its output target unchanged today, so the fact that global oil prices still took another large tumble towards our long-held forecast of $70 per barrel underlines how negative the sentiment in the market has become. …
27th November 2014
The impact of lower oil prices will be reflected in global oil-indexed gas prices in coming months. This will put pressure on the profitability of upcoming higher-cost LNG projects, most of which are underpinned by long-term oil-indexed contracts. Despite …
26th November 2014
The extension of the talks between Western powers and Iran over its nuclear programme doesn’t come as a surprise. Nonetheless, lower oil prices should increase the pressure on Tehran to reach a deal in the first half of next year. … Iran nuclear deal …
24th November 2014
Industrial metals prices rallied on the news of Chinese interest rate cuts. However, while the central bank’s move suggests the authorities will continue with targeted stimulus measures, the cuts themselves are unlikely to lead to markedly higher metals …
Gold remains out of favour with Western investors and commentators focused on the prospect of tighter US monetary policy and further dollar strength. But we see scope for a decent recovery in the price of the precious metal over the next year or two, with …
Tin prices have underperformed this year amid relatively subdued demand. However, slower growth in supply and solid demand should set the scene for price rises in 2015. … Tin prices to soldier on, and …
21st November 2014
The likelihood of an El Niño weather event this year has increased again. With ample sugar and wheatsupplies, any disruption to the upcoming harvests in the Asia-Pacific region is unlikely to lead tosignificantly higher prices. However, coffee prices …
20th November 2014
Falls in the flash PMIs for China and the euro-zone do not bode well for commodity prices. Activity indicators were weak in both regions, suggesting downward pressure on the prices of industrial metals, particularly copper, for the remainder of this year. …
Despite rejection yesterday, the Keystone export limited (XL) pipeline is likely to be approved early next year when the Republicans take control of the Senate. Eventually this should add to the downward pressure on the price of Brent, but any impact is …
19th November 2014
Hopes that the European Central Bank (ECB) will include gold on the list of assets to be purchased as part of a programme of full-blown quantitative easing (QE) will almost certainly be disappointed. There is a better chance, albeit still slim, that the …
The next meeting of the Organisation of the Petroleum Exporting Countries (OPEC), on 27 th November, should be the most interesting since the change from individual quotas to a group target in early 2012. The recent sharp fall in oil prices has increased …
18th November 2014
On paper, copper mine supply should surge next year. But the copper mining industry has a long history of supply disruptions and we see no reason why these will not continue. This is one factor underpinning our expectation that copper prices will rally in …
14th November 2014
Additional proposed gas exports from Russia to China are unlikely to have a major impact on European gas prices. We see a greater threat arising from the potential long-term price impact of Europe’s diversification away from Russian supplies in the wake …
13th November 2014
The dip in the price of Brent below $80 per barrel in the last 24 hours is consistent with our long-held view that the world will soon be awash with oil. Indeed, global oil prices look set to hit $70 much sooner than even we had anticipated. … Brent …
The shift in the US political spectrum towards the Republicans could result in the restrictions on US oil exports being eased sooner than otherwise. However, the Republicans are likely to put most of their efforts into fighting the EPAs environmental …
11th November 2014
Global corn, wheat and soybeans remain on course for record harvests this year. Combined with high stocks, lower energy costs and a stronger US dollar, we continue to expect crop prices to fall further. … Lower production estimates won’t stop grain …
There were signs of a pick-up in copper imports in China’s October trade data, while iron ore and crude oil imports were still up strongly in year-on-year terms. However, exports of some refined raw materials also grew strongly last month, suggesting that …
10th November 2014
A new subsidy programme for Chinese cotton producers outside of Xinjiang province is unlikely to have a major impact on the market and we still expect the global price of cotton to fall. Nevertheless, the subsidy is likely to reduce some of the expected …
Concerns about demand, notably from China, have been one of the key factors cited by commentators to justify recent copper price falls. However, not all indicators of demand are flashing red. As such, we continue to expect steady growth in demand in 2015 …
7th November 2014
Although the price of US corn has fallen to levels last seen in early 2010, lower livestock numbers, limits on ethanol demand and lower international corn trade will prevent a large pick-up in demand. … Demand for US corn to remain weak despite falling …
5th November 2014
The recent unseasonably warm weather has given US natural gas companies additional time to boost stocks before heating demand picks up. However, the amount of gas in storage is still significantly lower than in previous years, which could result in a …
A sharp drop in the price of oil and the strength of the US dollar weighed on all commodity prices in October. Only the prices of those commodities with falling stocks or potential supply disruptions managed to make gains. … “A perfect storm” batters gold …
3rd November 2014
Talk of a collapse in the gold price is overblown (or at least out of date). The price of gold has arguably held up rather better in recent weeks than many might have anticipated, given the general strength of the dollar. One possible catalyst for a …
The deal between Russia and Ukraine should ensure that gas supplies flow freely to Europe this winter and should also reduce the geopolitical risk premium currently in European gas and coal prices. … Russia & Ukraine opt for treaties over …
31st October 2014
Nickel prices have been in freefall since mid-2014 as, contrary to consensus expectations, the market has been comfortably supplied and stocks have been rising. We think this situation will prove temporary and that a supply shortfall will emerge in 2015, …
29th October 2014
Amid reports that Russia’s autumn-sown crop is heading into winter in worse condition than five years ago, which preceded a slump in output and saw global wheat prices double, we caution against comparing the situation now and the events of 2009-10. With …
The current slump in coal prices is unlikely to lead to a significant fall in coal production over the next year. Instead, output should continue to grow, just at a slower pace than in recent years. … Coal output will still increase, but at a slower …
28th October 2014
We doubt that the recent fall in oil prices will have a significant impact on oil production over the next few years. The vast majority of global oil production, including US shale oil, is still economically viable with oil prices at current levels or …
27th October 2014
Growth in global steel production, even in China, has started to slow suggesting that the much-needed rationalisation of the sector has begun. However, it is likely to be a slow process. This is one reason why we retain our forecast that US steel prices …
Notwithstanding the possibility of consecutive weather-damaged harvests in Brazil, given the combination of this year’s fall in Brazilian output in advance of an “off” year, and pressure on stocks as the market moves into deficit, we think the market will …
24th October 2014
The recent sharp fall in oil prices should make it easier for governments in developing countries to reduce oil subsidies without dramatically increasing inflation. Meanwhile, a reduction in oil subsidies is likely to keep demand for oil subdued over the …
23rd October 2014
While China’s headline flash PMI rose in October, falls in the activity and new orders components do not bode well for commodities prices. Meanwhile, the euro-zone’s flash PMI suggests the region continues to teeter on the brink of recession. … PMIs …
Lead prices have fallen this year, in large part owing to slower demand growth in emerging economies. However, supply prospects (both mined and refined) are deteriorating and official stocks are low so that even if demand growth remains subdued, prices …
22nd October 2014
The hype about a supposed “super-cycle” at the start of the decade has been replaced by fears of a prolonged period of “secular stagnation” in commodity prices. As usual, the reality lies somewhere in between. We therefore believe that market sentiment …
20th October 2014
We think that the recent sharp falls in oil prices have more to do with increased production than a collapse in global demand. As such prices may rebound a little this year, as the worst fears about demand prove unfounded, before falling again in 2015 and …
17th October 2014
For the third time since 2013 the price of gold has found decent support at around $1,200 per ounce. That level might be tested again soon, as fears over the global economy fade and the focus returns to the prospect of tighter monetary policy in the US. …
The outlook for global grain and soybean production received another boost late last week as the United States Department of Agriculture (USDA) further increased its estimates for the 2014/15 harvest. Rising production and high stocks have helped corn, …
13th October 2014
The recovery in China’s commodity imports last month was mainly driven by an increase in processing and re-exports, rather than stronger domestic demand. Indeed, the weakness in China’s property sector is likely to keep domestic demand for commodities …
