Filtered by Subscriptions: Commodities Use setting Commodities
This year’s sizeable falls in most commodity prices have highlighted two points that have actually been clear for much longer but are still not yet acknowledged by many commentators. First, even if some commodities are in the early stages of a multi-year …
20th December 2011
Declining stocks on global metal exchanges are often given as a reason to expect prices to rise. However, we are sceptical that the recent decline in reported copper stocks is due to strong end user demand. Instead, we think it is more likely that it …
15th December 2011
The first estimates of the manufacturing PMIs for both China and the euro-zone remained well below 50 in December. Despite the prospect of further monetary easing by the People’s Bank of China, buoyant Chinese demand for commodities should not be taken …
OPEC’s decision today to raise the official target for the cartel’s oil output to close to the current level of production will make no real difference on the ground, especially as it reportedly did not even discuss the setting of new quotas for …
14th December 2011
The volume of China’s commodity imports rose markedly in November, bolstered by weaker prices spurring restocking, probably instead of any upturn in final demand. Indeed, recent steps by the Chinese authorities to loosen policy indicate that sluggish end …
12th December 2011
The regular OPEC meeting on 14th December will be overshadowed by the crisis in the euro-zone and tensions with Iran. Our oil price forecasts give more weight to the fall-out from a further escalation of the economic and financial crisis in Europe, which …
9th December 2011
We expect the price of platinum to fall from $1,520 per ounce to $1,300 in the next year due to ailing industrial demand. However, this will probably prove to be a cyclical low unless the rand weakens dramatically against the dollar. … Platinum’s low to …
7th December 2011
Commodity prices ended November little changed, thanks to the technical rebound in WTI and the recovery in risk assets generally late in the month. The markets have taken the view that the cut in the already-low interest rate on an existing and …
2nd December 2011
Brazil, the world’s largest sugar producer and exporter, has revised down its sugar production estimate for 2011/12 due to bad weather. However, ample global stockpiles and improved harvests in other countries should more than compensate for this loss. We …
28th November 2011
China’s unofficial manufacturing PMI for November fell back markedly, to well below 50, raising fears of a hard landing in the largest commodity consumer. We still believe that a hard landing in China is unlikely, given the potential for policy loosening. …
23rd November 2011
The recent weakness of the gold price largely reflects the return of a degree of confidence in the US dollar, which has more than offset persistent worries about the sovereign debt crisis in the euro-zone. Nonetheless, we continue to expect gold to …
22nd November 2011
The recent pick-up in Chinese imports of refined copper has been interpreted as a sign that underlying demand is rebounding in the world’s largest consumer of industrial metals. However, a closer look at copper trade flows to that country supports our …
21st November 2011
The gap between the cost of Brent crude and the traditional US benchmark, West Texas Intermediate (WTI), is finally closing, but the episode has been another example of how speculative pressures can drive commodity prices well away from levels that can be …
17th November 2011
The consensus view is that continued buoyant demand from China will prevent the prices of industrial commodities, such as crude oil and copper, from falling very far, despite the worsening financial and economic crisis in the euro-zone. But this view is …
16th November 2011
Our baseline scenario is that an escalation of the crisis in the euro-zone will contribute to further large falls in almost all commodity prices over the next year or so, with gold and silver among the few exceptions. However, it is also worth …
15th November 2011
The price of a barrel of Brent could spike from current levels of around $114 to anywhere between $135 and $210 in the unlikely event of a military strike on Iran’s nuclear facilities by the US or Israel. However, this threat is itself a very powerful …
14th November 2011
Tin is caught in a battle between Indonesian producers, who have halted exports as they wait for the metal’s price to rise from $21,500 to $25,000 per tonne, and consumers hoping exports will resume before prices recover to this level. We expect consumers …
11th November 2011
Thailand, the world’s largest rice exporter, has lost up to a quarter of its main rice harvest due to recent floods. However, ample global stockpiles, improved harvests in other major rice producing countries, and the lifting of the Indian export ban …
The recovery in China’s commodity imports continued to gather pace in October. We remain of the view that this is mainly due to importers restocking, encouraged by lower prices, rather than any significant improvement in final demand. … China’s imports …
10th November 2011
The question of whether gold should be regarded as a “currency” might seem academic, but a discussion of the possible answers may shed some light on how best to analyse and forecast its price. Our view is that gold can be seen as a currency, and as such …
9th November 2011
Our already low end-2013 forecasts for the prices of a range of major commodities, including Brent crude ($75 per barrel), copper ($5,000 per tonne) and corn (500 cents per bushel), assume that the eurozone crisis escalates only gradually, contributing to …
3rd November 2011
The recovery in most commodity prices in October now seems like ancient history. The hopes generated by the apparent pick-up in Chinese demand, renewed talk of a third round of quantitative easing (QE3) in the US, and the initial euphoria over the …
1st November 2011
The price of copper has rallied by 20% in the past week, to over $8,000 per tonne, following its earlier steep decline. But we believe this rebound is a false dawn and continue to expect the price of copper to fall to $5,000 by the end of 2013. … Copper …
29th October 2011
The increasingly tight correlations between the prices of commodities and those of other assets, notably equities, have prompted some to question whether commodities can still be regarded as an asset class in their own right. We think they undoubtedly …
28th October 2011
The pick-up in China’s unofficial manufacturing PMI has eased concerns that the economy is about to crash land, but a period of relatively weak growth still lies ahead. What’s more, the latest euro-zone PMIs should add to recession fears in Europe ahead …
25th October 2011
The prospect of further strength in the US dollar is a clear and present danger to commodity prices of all types. But if the main driver is worries about sovereign debt, gold should still outperform. … Dollar gains to add to downward pressures on …
22nd October 2011
The sharp falls in commodity prices in the third quarter illustrate the importance of macroeconomic and financial market factors on the demand side, which once again have more than offset the perceived tightness of supply. A substantial rescue package for …
19th October 2011
We have been asked one or both of the same two oil-related questions by several clients this week. In summary, what are the implications of the addition of Brent to the basket for the Dow-Jones UBS commodity index? And how vulnerable are oil prices to …
15th October 2011
China’s commodity imports rose in the third quarter, particularly those of iron ore and copper. In our view, this was more a reflection of bargain-hunting rather than a strong upswing in underlying demand. But at face value the news might help put a …
14th October 2011
The boom in China’s construction sector has played an important role in driving demand for industrial metals, notably copper but also steel. Although there are two good reasons why the sector should be able to avoid an outright collapse, the poor outlook …
11th October 2011
Despite the price of many industrial metals having plunged by a quarter in recent months, we believe that crumbling demand growth will lead to prices falling further. However, in the case of aluminium and especially tin, cuts in supply from the largest …
5th October 2011
The deterioration in global manufacturing confirmed in the September PMI supports our view that underlying demand for commodities is weakening and that their prices have not simply been caught up in the general panic in financial markets. We expect the …
4th October 2011
The sharp falls in commodity prices in September are a timely reminder that the health of the global economy and financial system is at least as important as developments on the supply-side. The falls are also another rebuff to those who argue that …
1st October 2011
Copper prices have been a major casualty of the recent sell-off in commodities and have already dipped below our long-held forecast of $7,500 per tonne for 2012. Prices may well bounce in the coming weeks, helped by a stabilisation of sentiment in …
28th September 2011
The recent sharp falls in the dollar price of gold have led some to question its status as a refuge from problems elsewhere, especially now that the US currency is strengthening across the board. However, if (or when) there is a further escalation in the …
24th September 2011
A triple whammy of weak PMIs in China and the euro-zone plus a downbeat assessment from the Federal Reserve about the long-term economic outlook has sparked sharp falls in commodity prices in the last 24 hours. We see little prospect of a significant …
23rd September 2011
Thailand, the world’s largest rice exporter, is set to introduce a generous price floor for local rice farmers, fuelling speculation that global rice prices are about to surge. However, we expect any impact to be small and short-lived. … What does …
22nd September 2011
Gold’s spectacular rise over the past decade has seen its price climb from $256 per ounce in 2001 to more than $1,900 at its recent peak. After such a long bull market and some large daily falls in the past few weeks, more people are asking whether gold …
21st September 2011
Any further easing from the US Fed will probably be limited to lengthening the maturity of its existing holdings of Treasury securities (“Operation Twist”) rather than a third round of outright purchases (“QE3”), at least until core inflation starts to …
15th September 2011
The factors that we had thought would undermine oil prices over the course of the year have been gradually falling into place, namely slower growth both in advanced and emerging economies, a reduction in Middle East risks, increased nervousness in global …
9th September 2011
The slowdown in the global economy and nervousness in financial markets undermined the prices of industrial metals and oil in August. Admittedly, these prices ended the month on a more positive note, helped by some less-bad US data and hopes of additional …
3rd September 2011
Stocks held on the London Metal Exchange (LME) have traditionally been seen as a barometer of the overall balance between supply and demand in the base metal markets. As such, the recent increase in LME aluminium inventories of nearly 300,000 tonnes could …
26th August 2011
Not for the first time, commodity prices have been propped up by hopes of additional monetary stimulus from the Fed. However, we doubt these hopes will be realised anytime soon. What’s more, even if Bernanke does signal another round of quantitative …
25th August 2011
The stabilisation in China’s economy signalled by the flash PMI for August, along with (surely premature) hopes of additional monetary stimulus in the US, is providing some temporary support for commodity prices. However, fears of an imminent “hard …
24th August 2011
The market response today has been muted, but we still think that regime change in Libya could ultimately knock $10 from the price of a barrel of Brent. … Libyan regime change to undermine oil prices …
23rd August 2011
In isolation, the news that the Venezuelan government is nationalising its gold industry and planning to repatriate its overseas gold reserves might be seen as negative for the price of the metal. However, as today’s surge to a new record high shows, …
19th August 2011
The recent bounce in oil prices, at least prior to today’s drops, had been interpreted by many as strong evidence of underlying tightness in the global market for crude. In contrast, we continue to expect the price of Brent to fall significantly further …
Last week, the price of gold exceeded that of platinum, albeit only temporarily, for the first time since December 2008. In our view, this rare occurrence will be repeated and the spread will widen to record levels in the next two years, assuming no major …
17th August 2011
China’s commodity imports rose m/m in July, particularly those of copper and soybeans. Overall, this was more a reflection of weak imports in June and to a lesser extent the entire first half of the year, rather than of strong demand. … China's commodity …
11th August 2011
In line with our forecasts, the prices of many commodities have fallen by more than 10% in recent days, with the exception of gold. We continue to believe that the prices of industrial metals and oil have further to fall and that the price of gold will …
