Commodities Focus

Commodities Focus

Sky-high European steel prices on borrowed time

After soaring towards the tail end of 2020, steel prices in Europe have eased back in recent months. And we think that prices will fall much further over the next couple of years, as a combination of healthy profit margins and low inventories continue to underpin a rise in steel production across the region. In view of the wider interest, we are also sending this Metals Focus to clients of our Commodities Overview service.

18 November 2021

Commodities Focus

The impact of renewables on energy commodities

We think that the adoption rate of renewable electricity will accelerate in the decades ahead, which should contribute to a near-continuous decline in demand for coal. Demand for natural gas should still eke out some growth over the next decade or so owing in part to its use as a back-up in renewables-based electricity systems, but the outlook beyond 2030 is similarly bleak.

26 August 2021

Commodities Focus

The anatomy of a supercycle

History shows that supercycles are usually demand-driven, and that the performance of individual commodity prices has varied hugely both within and between past supercycles. In addition, supercycles can temporarily give way to shorter-run boom/bust cycles. All of this underpins our view that the recent rally in commodity prices is a short-run cyclical upturn, not the start of a new supercycle.

17 March 2021
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Commodities Focus

The impact of China’s trade restrictions on Australia

We estimate that the exports of goods and services that are already facing restrictions by China contribute around 1.8% to Australia’s GDP. While we still expect iron ore and liquefied natural gas exports to remain spared, that figure could rise to around 2.8% of GDP if China targeted other products for which it isn’t hugely dependent on Australian imports. While Australia should be able to divert some shipments to other countries, the escalating trade war is another reason why Australia’s economy will never return to its pre-virus path even once the pandemic has been brought under control.

23 December 2020

Commodities Focus

What a Biden victory could mean for commodities

A victory for the Democratic party in November’s presidential election has several potential implications for commodity markets. Very broadly, Joe Biden’s pledge to actively promote decarbonisation of the economy should accelerate the move away from coal, boost natural gas demand in the near term and be positive for agriculturals used to make biofuels. In the longer term, it has negative implications for the supply, demand and prices of all fossil fuels and biofuels. Elsewhere, if Biden’s infrastructure spending plans are realised, there would probably be a marked increase in US consumption of industrial metals.

30 October 2020

Commodities Focus

COVID-19 to hasten peak oil demand

In this Focus, we argue that the medium-term impact of the COVID-19 pandemic on both global economic growth and consumer behaviour has brought forward “peak oil demand” to around 2030. As a result, we expect that real oil prices will be falling for much of the next decade and beyond.

8 October 2020

Commodities Focus

Lasting blow to supply capacity is not inevitable

It is by no means inevitable that the coronavirus crisis puts a big permanent hole in the supply capacity of economies (i.e. their ability to produce goods and services). With the right government policies, many economies should be able more or less to revert to the path of output they were on before the crisis. Nonetheless, with demand likely to be slow to recover fully, this could still take several years. And there will be several important exceptions to this generally optimistic picture.

Commodities Focus

China slowdown key to commodity prices in the 2020s

The structural economic slowdown which we expect in China over the coming decade will weigh heavily on consumption of industrial commodities and their prices. Steel will be by far the most affected commodity, but copper and aluminium will also suffer. In contrast, oil is likely to weather the slowdown relatively unscathed.

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