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Disappointing growth in demand at a time of high stocks is weighing on the price of platinum. Weexpect lower prices to encourage some buying, notably of jewellery, but a sustained recovery is onlylikely when stocks are depleted, possibly some time next …
24th September 2014
The recent slide in the Bloomberg index of spot commodity prices to its lowest level since 2010 has caught the attention of many commentators. But the underlying picture is far more nuanced than the headlines might suggest and it is actually encouraging, …
23rd September 2014
The increase in the flash PMI for China has helped to assuage fears about a hard landing. However, the index is still low by historical standards and the fall in the euro-zone’s flash PMI highlights the risk to commodity demand from Europe. … …
Indonesia appears to be exercising its power as the world’s largest tin exporter, withholding shipments when prices are low. However, with only subdued growth in demand, there is a risk that other exporters or producers can fill the gap without the need …
19th September 2014
Zinc prices have started to fall in recent weeks. Whilst acknowledging that the market was set to tighten in 2015, we had felt the recent rally was premature. However, the scale of mine closures planned for 2015-16 coupled with sound demand prospects …
18th September 2014
Rising global temperatures are often assumed to be unambiguously negative for the output of agricultural commodities. However, while there is plenty of debate about the causes and impacts of climate change, even among those who agree it is happening, …
17th September 2014
The general economic uncertainty created by a “yes” vote in Scotland’s independence referendum could hamper investment in the oil and gas sector too. Nonetheless, an independent Scottish government would have a greater incentive to create a favourable …
16th September 2014
The price of major grains and soybeans are at near five-year lows thanks in part to another large upward revision in the USDA’s expectations for global crop output. However, assuming there is no severe adverse weather over the next month, we still think …
15th September 2014
Unusually, both base and precious metals prices have fallen this week. The common factor appears tobe the strength of the dollar and the prospect of imminent US monetary tightening. In our view, this isa knee-jerk reaction by markets that, in some cases, …
12th September 2014
Some of the factors that have dragged the price of Brent crude below $100 per barrel may prove temporary, notably the weakness of European demand. Saudi Arabia might also cut output again in an attempt to stabilise the market. Nonetheless, the big picture …
11th September 2014
Sluggish Chinese demand amid a ramp up in supply, notably from Australia, has sent iron ore pricesinto freefall. Higher-cost producers will eventually be forced out of the market and prices will at leaststabilise. But this will take some time and, in the …
The recent sharp falls in imports of coal by China and consumption of coal in the US are just the latest evidence that environmental measures enacted over the last year have begun to reduce demand in some major consumers. What’s more, whilst the tensions …
9th September 2014
China’s commodity import demand weakened in August as the slowdown in the property sector continued to weigh on industrial metals consumption. While crude oil imports increased, this was matched by strong growth in exports of refined petroleum products, …
8th September 2014
Today’s announcement that both sides have agreed on a ceasefire should help to ease tensions inUkraine and move the government and rebels towards a sustainable peace deal. Admittedly, we havealready seen a number of ceasefires break-down quickly after …
5th September 2014
Nickel prices have risen sharply this year on supply concerns. However, for now, stocks still seemample. This is set to change in 2015, when the full impact of Indonesia’s ore export ban will be felt. Asa result, we expect a renewed move up in prices next …
3rd September 2014
The rebound in the price of Thai rice over the last few months has been driven by the suspension ofgovernment sales and reinforced by the recent stock write-offs. However, Thailand’s rice stocks willstill be huge and the new military government is …
2nd September 2014
Many commodity prices, with the exception of oil, were rangebound in Augustas optimism about the US economy was countered by renewed concerns aboutChina and Ukraine. Meanwhile, the strength of the US dollar weighed on allcommodity prices and there were …
1st September 2014
Recent headlines have focused on the latest escalation in the conflict in Ukraine or with the Islamic State. However, these conflicts have had little impact on oil output in key producers. In this Energy Watch we look at the latest developments in four …
29th August 2014
This is the time of year when the gold price is traditionally assumed to be boosted by a seasonal pick-upin demand. Some months have tended to see larger changes in the price of gold than others, but, asthe potential for arbitrage would suggest, any …
28th August 2014
The current strength of equity prices has left gold in the shade and we are lowering our price forecastsfor the precious metal accordingly. But we still expect the positives to outweigh the negatives over thenext few years, and forecast that the gold …
27th August 2014
The flash PMIs for China and the euro-zone in August are perhaps not as worrying as some of the headlines might suggest, but they do underline the downside risks to commodity demand from Asia and Europe. The relatively hawkish tone of the US Fed minutes …
21st August 2014
The recent rise in palladium prices can be attributed to actual and potential disruptions to supply andto solid demand growth. But the scale of the price increase is looking increasingly hard to justify. Inour view, Western sanctions are unlikely to …
20th August 2014
Improvements in drilling technology and processes have continued to boost US shale oil output, evenwhen the number of rigs actually drilling has remained flat. These improvements should reduce costsand allow output to increase even further, whilst helping …
19th August 2014
Copper prices have slipped in the last week and we expect a more concerted move down as supply bottlenecks ease at a time of subdued demand growth. However, prices should stabilise and start to move up over the course of 2015 as global economic growth …
Reports that Ukrainian forces have attacked a military convoy from Russia have pushed up oil prices today, but the bigger picture is that they remain much lower than only a few weeks ago. We suspect that this is due to a decline in the geopolitical risk …
15th August 2014
Despite weak domestic demand, China’s steel industry continues to raise output. Exports are providing an outlet for some of the oversupply, but this is only a partial solution. Prices will remain under downward pressure until the surplus production and …
14th August 2014
There is still scope for some small falls in nominal grain prices and larger ones in soybean prices in themedium term, especially if oil prices continue to fall back. Over the longer term we also expect the realprices of grains and soybean to resume their …
12th August 2014
The enactment of import bans by Russia on agricultural commodities from a number of Westerncountries should put downward pressure on international food prices over the next year, withcommodities such as dairy products likely to be affected by more than …
8th August 2014
China’s imports of key commodities were mixed in July, reflecting opportunisticbuying, the slowdown in the property sector and lower import activity related tofinancing deals. … Soybean imports likely to fall next …
Mild summer weather in the US combined with an increase in production has pulled down US naturalgas prices over the last few months. However, we think that in the long term, higher demand from gaspower plants and exports should put upward pressure on the …
6th August 2014
The perceived wisdom is that the very high correlation between commodity and equity pricemovements during 2009-12 was an aberration caused by the global financial crisis and itsramifications. We do not agree. Instead, our view is that the financialisation …
4th August 2014
An increase in oil supply from Libya outweighed an increase in geopoliticaltensions elsewhere causing oil prices to fall in July, whilst continued goodweather in the US led to a drop in the prices of grains and soybeans.Meanwhile, better Chinese PMI data …
1st August 2014
Subsidies in developing nations allow manyconsumers access to fuel at a fraction of itsmarket cost. However, rather than helping thepoor, most of the benefits of these subsidiesaccrue to richer people who use more energy.What’s more, these types of …
30th July 2014
The UK government’s announcement that it will open a new round of bidding for fracking licencesunderlines its enthusiasm for developing its shale resources. However, it will be many years if notdecades before any substantial volumes of shale gas are …
28th July 2014
It is looking increasingly likely that an El Niño weather phenomenon will develop in the Pacific Ocean later this year. This has raised fears that crop production across the Americas, South-East Asia, India and Australia could be disrupted. However, with …
Despite the rise in the PMIs in both China and the euro-zone in July, the near-termoutlooks for industrial commodity and oil prices remain weak. Indeed, there arelingering concerns that the euro-zone’s recovery may already be losing steam, and thedownturn …
24th July 2014
Freight costs, as measured by the Baltic Dry Index (BDI), have fallen 68% since the beginning of 2014,largely reflecting the oversupply of vessels. However, in our view, the recent falls in the BDI appearoverdone given the positive outlook for both demand …
The combination of stronger growth but less stimulatory monetary policy in the US is more likely tobe a net positive for commodity prices – especially industrial metals – than for those of other assets.This should finally allow commodities to reverse some …
21st July 2014
Tin prices have barely moved this year, probably because unofficial stocks are being drawn down tomeet demand. However, in our view, there remains a strong case for prices to rally as demand appearsto be picking up at a time of only limited mine supply …
Russia is a vital source of global supply of a wide range of commodities, from energy to metals andgrains. At the time of writing, the likely repercussions of the shooting down of a civilian aircraft flyingover Ukraine are still unclear. However, if the …
18th July 2014
Extraordinarily high levels of stocks, excessive production and increasing competition from man-madefibres should all put further downward pressure on the price of cotton over the next few years. … Slump in cotton prices not over …
We expect renewed weakness in the copper price later this year as mine supply picks up and Chinese copper imports continue to fall due to waning demand from financing deals. However, we expect prices to start to recover in 2015 as stronger global growth …
11th July 2014
China’s imports of key commodities were weak in June reflecting the slowdown in the property sector as well as lower import activity related to financing deals. In our view, these factors are likely to continue to constrain imports for some months yet. … …
10th July 2014
We are cautiously optimistic about the reopening of some Libyan oil fields and ports. Although previous attempts at restarting production have ended in failure, the deal this time around seems like a much more serious effort at finding a permanent …
9th July 2014
The latest batch of emerging market (EM) PMIs suggests that the rebound in EM manufacturing gatheredpace in June. The best performers are still in Asia and Central Europe, as well as Mexico, but there hasalso been a welcome improvement in the BRICs, …
4th July 2014
That the zinc market will tighten in 2014-15 owing to the closure of some large mines appears inevitable. But, for now, stocks (official and unofficial) are high and while consumption growth appears to be picking up, it is from a low starting point. We …
3rd July 2014
We are forecasting that the Fed will hike US interest rates sooner and raise them further than the markets currently anticipate. A tightening of policy by the world’s most important central bank might be expected to be negative for the prices of most …
2nd July 2014
Large stocks of corn, high crop quality ratings and a surge in soybean planting have pulled down grain and soybean prices in recent months. In the absence of a period of adverse weather over the summer, prices should continue to fall. … High prices …
1st July 2014
Industrial commodity prices were supported by stronger Chinese data in June, whilst further unrest in the Middle East lifted oil prices and boosted safe-haven demand for gold. However, the supply outlook for most key agricultural commodities improved. … …
After many twists and turns, it now appears that the five-month long strike at South African platinum mines is finally over. At first sight, this should mean that mine supply will recover quickly. However, in our view, there are still substantial risks to …
24th June 2014
