Commodities to consolidate in 2018

Commodity prices have risen in the second half of 2017, boosted by strong Chinese demand and, in some cases, heightened geopolitical risk. Looking ahead, we expect prices to drift lower over the course of 2018 as optimism about China’s demand fades and most markets remain amply supplied. That being said, prices are unlikely to revisit the lows seen in late-2015. Global economic activity has picked up and the bulk of the appreciation of the US dollar is probably behind us. Meanwhile, growth in China’s economy is expected to slow next year, but there appears little risk of a “hard landing”.