Commodities Update

Commodities Update

The implications of the Russia-Ukraine crisis

The deadlocked end to talks between Russia, the US and NATO and subsequent hawkish noises from Russian officials have caused a risk premium to emerge on Russian asset prices and will keep the prospect of tighter Western sanctions on the table. The downside risks for the ruble and Russian assets are building, as are the upside risks for European natural gas prices. In view of the wider interest, we are also sending this Emerging Europe Economics Update to clients of our Commodities Overview, Energy, FX Markets and Global Markets services.

14 January 2022

Commodities Update

Prices to come off the boil in 2022

After a stellar run in 2020-21, we expect the prices of most commodities to ease back this year as economic activity slows, notably in China, and supply bottlenecks start to ease. Drop-In: Neil Shearing will host an online panel of our senior economists to answer your questions and update on macro and markets this Thursday, 13th January (11:00 ET/16:00 GMT). Register for the latest on everything from Omicron to the Fed to our key calls for 2022. Registration here.

13 January 2022

Commodities Update

China PMIs show demand stabilising, not reigniting

The December PMI data for China point to a healthy pick-up in commodity demand. But this only partially reverses the declines from earlier in 2021, and the big picture remains that commodity demand in China is set to struggle this year as headwinds facing the manufacturing and construction sectors intensify.

4 January 2022
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Commodities Update

Rise in China commodity imports may be misleading

The sharp rise in China’s commodity imports last month could be taken as a sign that underlying demand growth is undergoing a renewed acceleration. But given that this is just one month’s data, and that other indicators point to a further softening in demand from commodity end-users, we are sceptical. In view of the wider interest, we are also sending this Commodities Overview Update to clients of our Metals Service.

Commodities Update

China PMIs still paint a bleak picture for commodities

Taken together, China’s manufacturing PMIs point to somewhat stronger industrial activity in November, but this was almost entirely due to improved power supply last month rather than a pick-up in underlying demand. Accordingly, there was little to offer support to commodity prices in the data.

Commodities Update

Omicron puts demand back in the spotlight

We were already downbeat on the outlook for most commodity prices in 2022, not least because we thought that prices had lost touch with demand fundamentals. The risk of Omicron-related effects on demand just adds weight to our view. In view of the wider interest, we are also sending this Commodities Overview Update to clients of all our Commodities services.  

Commodities Update

The slump in the Baltic Dry Index is all about iron ore

Some commentators have pointed to the slump in the Baltic Dry Index as a sign that shipping bottlenecks are easing. But we think it is more a symptom of lower Chinese steel output and plunging iron ore prices.

Commodities Update

What will the COP26 deal mean for commodities?

Although the climate deal struck at COP26 appears to have fallen short on many counts, it does at least reaffirm our view that demand for traditional energy commodities will struggle in the long run.

16 November 2021
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