China PMIs herald a period of slower growth

China’s June survey data show softer growth in activity and supports our forecast that economic growth will slow from here, which will weigh on the prices of most commodities, especially the metals.
Caroline Bain Chief Commodities Economist
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Commodities Weekly Wrap

OPEC+ sticks to its plan, no forecast change required

Oil prices fell briefly on Thursday after OPEC+ decided to push ahead with its plan to raise oil output by 0.4m bpd a month, despite plunging oil prices since news of Omicron broke. Prices recovered shortly after, though, probably because OPEC+ left the door open to making quota changes before its next meeting in early January. It appears the group needs more time to mull over the oil-demand implications of Omicron. We have revisited our own oil market outlook. Turning to next week, China’s trade data for November comes out on Tuesday. We expect imports to have fallen, reflective of softer construction activity. We’ll be holding a Drop-In on the same day (08:00 GMT/16:00 HKT) with the China team to discuss the data and China’s commodities demand outlook (Registration). And more broadly, markets will be closely monitoring Omicron-related developments next week.

3 December 2021

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.

1 December 2021

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.  

29 November 2021

More from Caroline Bain

Energy Data Response

US Weekly Petroleum Status Report

US crude stocks fell for the sixth consecutive week amid the ongoing rebound in product demand as the virus-related restrictions continue to be lifted. That said, if OPEC+ decide to gradually raise output from August (as we expect) and US import volumes pick up, stocks may stabilise in the coming months.

30 June 2021

Industrial Metals Update

Making sense of the rise in exchange stocks

Exchange stocks of base metals have risen this year, which usually suggests that markets are well supplied. But much of the recent build in stocks has been opportunistic and driven by financial considerations rather than a surplus in the market. Regardless, we think that supply of most metals will pick up in the coming months, which should boost stocks further and weigh on prices.

29 June 2021

Commodities Weekly Wrap

Rebound in prices likely to be short-lived

Most commodity prices recouped some of their post-FOMC losses this week. Investor concerns surrounding Fed tightening have seemingly eased, which weighed on the dollar. At the same time, news that a bipartisan agreement has been reached over a US infrastructure deal looks to have also provided a boost to prices. However, we think that the rally in the greenback will resume soon, which should put renewed downward pressure on commodity prices before long. What’s more, given that we didn’t expect the initially-proposed $2 trillion infrastructure package to have too much of an effect on commodity markets over the next few years, the watered-down $1 trillion deal is likely to be even less significant for demand and prices in the near term. Turning to next week, all eyes will be on the July OPEC+ meeting on Thursday. We expect the group to raise production quotas in response to improving demand and high prevailing prices. At the same time, it will also be fairly busy on the economic data front. We think that China’s manufacturing PMIs (Wednesday/Thursday) will have ticked down in June, which could prompt a fall in industrial metals prices. And, in the US, the employment report on Friday is likely to be closely watched but, if we are right and  employment growth held steady this month, there will not be a major impact on commodity prices.

25 June 2021
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