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Despite the rebound in the PMIs in both China and Japan in June, prospects for industrial commodity prices remain weak for now. Sluggish euro-zone manufacturing activity and the downturn in China’s property sector should more than offset any support for …
23rd June 2014
The situation in Iraq could play out in many ways. In a “good” scenario, the crisis would ease soon and there could even be some positive fallout for the region. (Our current forecast that Brent will drop back below $100 per barrel within the next 6-12 …
20th June 2014
We expect US lumber prices to rise over the next year as US house building picks up pace after the extremely cold winter. This should more than offset the impact of slowing property investment in China. … Higher demand should boost US lumber …
Despite the recent surge in US oil exports, the volumes of crude leaving the US remain minute. It is looking increasingly likely that some export restrictions will be relaxed, but this could take years. In the meantime, though, US refiners can retool to …
18th June 2014
Sentiment in the silver market has remained bearish this year, despite higher gold prices and the strength of global equities. Silver and gold can become disconnected at times, reflecting their very different demand profiles. However, in our view, the …
The capture of a number of Iraqi cities by insurgents over the last few days has served to highlight the difficulty Iraq will have in meeting its lofty aims for oil output. However, the impact on crude oil prices should still be limited. … Iraq now …
12th June 2014
Good growing conditions in the US and elsewhere recently have boosted hopes of another set of bumper harvests. If realised, this should lead to sharp falls in prices, especially of soybeans. … Corn prices are likely to continue to fall this …
11th June 2014
The twice-yearly OPEC meeting in Vienna this week is likely to confirm the official production target of 30m barrels per day. But this is unlikely to prevent the oil price from falling over the next year or so. … Saudi Arabia to shoulder more of …
10th June 2014
China’s imports of all the main commodities fell sharply in May. This suggests that slower economic growth and the attempts to clamp down on financing deals are starting to have a negative impact on commodity import levels. However, in a year-on-year …
9th June 2014
With China’s economy slowing and moving out of its most commodity-intensive phase of development, attention is turning to other developing countries and whether they can replicate China’s consumption growth. In our view, urbanisation and industrialisation …
6th June 2014
The UK’s production of fossil fuels is likely to continue declining for the next few years. However, the prospects for shale gas are looking more positive, even if commercial production is still a long way off. … Fracking to provide small but growing …
5th June 2014
All the signs are that commodity demand as part of Chinese financing deals is set to fade. The profitability of the schemes is being eroded and the authorities are stepping up efforts to curb some forms of shadow banking. This should improve transparency …
4th June 2014
The rules proposed by the US Environmental Protection Agency should ultimately serve to reduce demand for coal and put downward pressure on prices, even if there are lengthy legal challenges. … The latest salvo in the war on …
3rd June 2014
Energy and industrial commodity prices were boosted by stronger US economic data in May and signs that China’s economy stabilised in the second quarter. Meanwhile, the supply outlook for a number of agricultural commodities improved and prices fell. … A …
2nd June 2014
The recent decline in the price of gold can largely be explained by a reduction in safe-haven demand, as concerns over the wider fallout from the crisis in Ukraine have eased and global equities have rallied. But there a number of potential catalysts for …
30th May 2014
Strong growth in demand and supply bottlenecks will offer some support to aluminium prices and premiums this year, despite a backdrop of Chinese overproduction and high global stocks. As long as a disorderly drawdown of stocks can be avoided, prices …
29th May 2014
Proposed exports of Russian gas to China will have limited impact on the potential supply to the rest of Europe. Indeed, the price of LNG may actually be lower than otherwise as a result of the increased competition in Asian markets from pipeline gas. … …
22nd May 2014
Today’s flash manufacturing PMI data for China suggest that the economy is stabilising. While stronger export orders and manufacturing activity are positive news for commodity prices, the commodity-intensive real estate sector remains weak. This should …
The price of Arabica coffee has soared this year as the market looks likely to fall into deficit after four years of excess production. However, stocks are high and there is a huge risk premium in prices which should start to come down in the next few …
21st May 2014
We expect cocoa prices to fall back in 2014-15 as market expectations of surging consumption growth appear misplaced. Indeed, we expect the market to return to a small surplus in 2013/14 after two years of deficits. However, a big upside risk to our price …
19th May 2014
The surge in US oil stocks on the Gulf coast means that the pipeline constraints which had been holding back the price of WTI now look largely to have been resolved. However, excess supplies of light, sweet shale oil are still a problem as US refineries …
16th May 2014
A sharp increase in US steel imports from Asia in the first quarter serves to highlight the overcapacity and overproduction of Asia’s steel industries. Surplus Asian output is undermining the global steel price. Without output cuts, particularly in China, …
15th May 2014
The latest WASDE report, released on Friday, supports our view that supplies of grains and soybeans are likely to be abundant this season. This should lead to sharp prices falls, especially of soybeans. … Soybean supply set to be more than ample this …
12th May 2014
Compared to those of other metals facing supply disruption, platinum prices have been relatively unresponsive and traded in a narrow range. Nonetheless, we believe that strong demand growth and reduced supply will lead to higher platinum prices by the end …
9th May 2014
China’s imports of key commodities grew strongly again last month despite lacklustre industrial activity. However, the growth mainly reflects temporary factors such as earlier shipments from Brazil, financing deals and opportunistic buying. … Surge in …
8th May 2014
We expect lead prices to fall in the near term, reflecting concerns about the outlook for China’s demand and a relatively comfortable stock position. However, the market is likely to fall into deficit this year as supply growth slows amid steadily rising …
7th May 2014
As of end-April, nickel prices had risen 32% since the beginning of 2014, defying the otherwise downward trend in industrial metals prices. The catalyst was a ban on ore exports by Indonesia. Subsequently there have been fears of disruption to Russia’s …
2nd May 2014
Extremely low levels of natural gas stocks in the US are likely to put upward pressure on prices over the rest of this year and potentially even into 2015. … Low stocks will put upward pressure on US natural gas …
1st May 2014
Many commodity prices rose in April, boosted by supply concerns around industrial metals, agricultural commodities and crude oil. In particular, the price of coffee surged again after early harvests confirmed substantial damage to the crop in Brazil. But …
The unwinding of financing deals in China that use copper as collateral is set to add to the downward pressures on prices from a further slowdown in China’s economy, led by the property sector. We therefore reiterate our view that the global price of …
29th April 2014
An El Niño weather event appears likely in the second half of 2014, which may disrupt the supply of some commodities. The disruption could lead to sharply higher prices where stocks are already low or demand is growing strongly, but these conditions are …
24th April 2014
Global LNG supply is set to soar over the next five years as a number of large projects in Australia come on stream and the US starts to export. The greater availability of more flexible gas supply should boost the bargaining power of consumers. In this …
22nd April 2014
China’s official GDP data for the first quarter, released earlier today, could reasonably be interpreted either positively or negatively for commodities. The commonest reaction appears to be relief that growth has not slowed further. However, the …
16th April 2014
The main upward pressures on commodity prices have recently been coming from the supply-side, including weather shocks (many agriculturals), export bans (some industrial metals), and unplanned outages (crude oil). Most of these pressures are likely to be …
15th April 2014
We think that the drivers of the recent surge in grain and soybean prices are likely to prove temporary. Lower demand from China coupled with large harvests from Brazil should put downward pressure on crop prices this year, more than reversing the recent …
10th April 2014
The consensus is finally coming round to our long-held bearish view on the price of copper, but we still think there will be one last (big) move lower. The most likely trigger is disappointment at the lack of major policy stimulus in China, combined with …
China’s imports of key commodities grew strongly in the first quarter of this year despite slowing industrial activity. However, we think it is too soon to conclude that growth in commodity demand is going to remain strong. Instead, falling prices in the …
All else being equal, the return of US inflation-adjusted interest rates to more normal levels might be expected to lead to a sharp fall in the gold price. However, we expect the pace of normalisation of US monetary policy to be slow, at least over the …
9th April 2014
Large unplanned supply outages have helped keep oil prices high over the last three years, despite a surge in production from the US. We expect the factors holding back supply to ease over the next couple of years but progress is likely to be slower than …
7th April 2014
Aluminium prices have been falling since 2011, despite solid growth in demand. The underlying problem is the scale of excess capacity and output in China which will remain a drag this year at least. But this has been compounded by high premiums owing to …
4th April 2014
Large potential plantings of soybeans, corn and wheat by US farmers underpin our view that US grain and soybeans prices are likely to fall over the course of this year. … US farmers to prioritise soybeans over …
1st April 2014
There was considerable variation in individual commodity price movements in March. Weak Chinese economic data weighed on both industrial metals and energy prices, but the prices of some agricultural commodities continued to strengthen on supply concerns. …
We expect China’s oil demand to continue to grow at a sluggish pace over the next few years. However, rather than this primarily being due to slower economic growth, we would put more emphasis on measures to increase vehicle efficiency and promote public …
28th March 2014
It is often taken as given that demand for coal will continue to rise inexorably as developing countries use it to power their growing economies. However, coal’s poor environmental credentials are leading many developed economies, and some emerging ones, …
27th March 2014
Palladium prices have risen 11% since the beginning of this year. A number of recent developments, including the risk of disruption to Russia’s exports of palladium, have provided a boost. But we believe that solid demand prospects and ever-present risks …
25th March 2014
The latest manufacturing PMIs confirm that China’s economy is continuing to slow and that the recovery in the euro-zone lacks strong momentum. This should continue to weigh on the prices of industrial commodities, notably copper and oil. … No sign of …
24th March 2014
Iron ore prices have fallen by nearly 20% since the beginning of this year, despite still strong Chinese imports. Prices may recover somewhat as we move into the second quarter, a time of seasonal strength in China’s steel output. However, a surge in new …
21st March 2014
The recent surge in Iraqi oil production is a good sign that Baghdad’s ambitious plans to dramatically increase output may be on the right path after stalling for the last year. However, there are still major problems to overcome before higher production …
We think that the sharp rise in agricultural prices since the beginning of the year is likely to be a spike rather than the start of an upward trend. Indeed, the surge in prices is mainly due to a mixture of adverse weather, political tensions and …
20th March 2014
As copper and iron ore prices went into apparent freefall last week, one might have expected a general sell-off in metals markets. However, the response of other metals prices was more nuanced, with some actually gaining on the week. This lends supports …
19th March 2014
