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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 …
Amid widespread market turmoil yesterday, the factors which have been driving the price of gold higher caused it to hit an all-time high of just over $1,680 per ounce. Later on in the day, though, gold plunged by almost $40 per ounce. While we would not …
6th August 2011
The prices of many commodities have held up comparatively well in the past few weeks, despite the rout in financial markets. Nonetheless, the sharp decline in prices of commodity-related equities, which have generally underperformed the broader stock …
Despite the deal to extend the US debt limit, the price of gold hit record highs late yesterday. We think this makes sense. Although the deal may cut investors’ aversion to risk, it signals the onset of fiscal tightening which will put even more onus on …
4th August 2011
Concern over ongoing and potential strike action at mines has helped send the price of a number of commodities higher in the past month, especially industrial metals. In our view, the attention placed on these stoppages has been excessive and distracted …
3rd August 2011
Most commodity prices rose in July, especially those which had fallen sharply over the previous two months. This occurred despite weakening demand prospects. Instead, supply-side developments were a major factor behind rallying prices, with strikes in …
2nd August 2011
The prices of gold and silver are obvious beneficiaries of the increasing worries about US government debt. But other commodities have also held up rather better than might have been expected, encouraging some commentators to suggest that these prices are …
28th July 2011
The International Energy Agency (IEA) decided not to announce a further tapping of oil from strategic reserves today after the 30-day review of the release of 60m barrels last month. However, the group noted that stocks from that action are still entering …
22nd July 2011
The ongoing deceleration in China’s economy signalled by the flash PMI for July should offset at least some of the reassurance provided to commodity markets by the seemingly robust official data on GDP in the second quarter. … PMI signals Chinese demand …
We continue to expect the price of a barrel of Brent, currently $119, to fall back to $85 by the end of the year. This forecast is based largely on persistent sluggishness in demand, a stronger dollar, and increased nervousness in financial markets. But …
20th July 2011
China’s steel output may well be higher than the official figures suggest, but the outlook for prices depends on what happens to demand. … Interpreting China’s steel …
19th July 2011
With the price of gold approaching $1,600 per ounce and hitting new highs this week in other major currencies too, many are asking how high prices could still go. A variety of methods suggests a target price anywhere between $1,870 and $5,000. … How high …
16th July 2011
China's imports of industrial commodities dropped sharply in the second quarter, indeed by more than they did during the global recession. Imports may well rebound in the second half of the year, but the recent weakness is a useful reminder that buoyant …
12th July 2011
Today's weak employment report should go some way towards dashing the renewed optimism about the US economy which, combined with reduced fears of an imminent Greek default, had propped up commodity prices earlier this month . … US demand likely to …
9th July 2011
Changes in supply and in the demand from consumers can only explain part of the recent swings in commodity prices, with the rest largely due to speculation. What’s more, speculation can affect prices over both short and longer periods, and in both spot …
8th July 2011
The time of the year is fast approaching when the price of gold is traditionally assumed to be boosted by a seasonal pick-up in demand. We are sceptical that calendar effects can ever be that significant, but we do expect the gold price to rise further …
6th July 2011
Commodity prices continued to fall in June. But while concerns about demand were the main driver in May, last month saw attention shift to the prospects for supply. This explains the divergence between the prices of industrial metals, which generally held …
5th July 2011
The decline in China’s imports of industrial metals may partly reflect a drawdown of inventories, but underlying demand also appears to have weakened and shows no sign of rebounding. … Can China’s destocking alone explain lower metals …
30th June 2011
Oil prices have probably overreacted to the International Energy Agency’s (IEA’s) decision to release emergency stockpiles, just as they overreacted (in the opposite direction) to OPEC’s decision to leave production quotas unchanged earlier this month. …
25th June 2011
The continued deceleration in China’s economy signalled by the flash PMI for June supports our view that commodity prices – industrial metals in particular – have further to fall. There is plenty of evidence of weakness in other regions too. … Chinese …
24th June 2011
Similar to many other agricultural commodities, supply problems have caused the price of coffee to more than double since the start of 2010. However, there is a clear uptrend in coffee consumption too, which should continue to support prices even as …
22nd June 2011
We expect slowing industrial demand, especially from the automotive sector, to cause the price of platinum to slide from around $1,800 per ounce to a low of $1,500 in 2012. Palladium may be better supported in the short-term by developments in China, by …
16th June 2011
