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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.
Caroline Bain Chief Commodities Economist
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Commodities Update

Risk of tighter agricultural export restrictions growing

The recent tightening of export restrictions has been limiting the supply of staple agricultural commodities available to global markets and pushing up prices. In light of the ban on wheat exports from India, we’ve raised our forecast for the price of wheat from 800 US cents per bushel to 900 by end-2022.

23 May 2022

Commodities Weekly Wrap

Easing of lockdown lifts metals prices, for now…

The prices of many industrial metals (IM) picked up this week on news of an easing of COVID-19 restrictions in China. However, we think weak demand and improved supply in China will send IM prices lower in the coming months, even if high energy prices keep them historically elevated. On the energy front, crude oil prices are currently little changed w/w at around $110 per barrel. We think the likelihood of fewer Russian exports in the coming months will keep prices elevated, although slower demand growth and greater non-Russian supply should nudge prices closer to $100 by year-end. Next week, energy and agriculture prices will continue to be driven by the implications of the war in Ukraine. It will be worth watching out for any payment problems reported by European importers of Russian natural gas, given that it is still not clear whether importers can make payments in a way that satisfies both the European Commission and Russia. On the data front, commodity prices could take direction from May PMI data for the US, Europe and Japan on Tuesday, as they will shed more light on demand.

20 May 2022

Commodities Update

Auto sector woes to weigh on natural rubber prices

After a post-pandemic rebound in 2021, we expect growth in global demand for natural rubber (NR) to slow this year in tandem with a downturn in industrial activity, notably in the NR-intensive auto sector. That said, the market will remain in a deficit and higher energy prices will act as a floor under prices.

18 May 2022

More from Caroline Bain

Energy Data Response

US Weekly Petroleum Status Report

Commercial crude oil stocks fell, but this reflected solid demand from refineries. Implied product demand – particularly for gasoline – slumped, suggesting that the public were cautious about travel in the wake of surging cases of the Omicron variant. These fears are likely to persist for a few weeks yet.

5 January 2022

Metals Data Response

Global Steel Production (Nov.)

Global steel production contracted in y/y terms in November, mainly owing to depressed output in China. Although China’s power rationing came to an end last month, there are no signs of an upturn in steel supply. Given our expectation that construction-related steel demand will remain subdued, a sustained rebound in China’s steel production appears unlikely in the coming months.

22 December 2021

Energy Update

Oil risk premium to fall in 2022, but risks abound

Our estimates show a fall in the risk premium in the oil price since the emergence of the Omicron variant, as concerns over demand resurfaced. But the risk premium is still large, which adds weight to our view that oil prices will fall next year as the market moves into a surplus. Note: Central Bank Drop-In – The Fed, ECB and BoE are just some of the key central bank decisions expected in this packed week of meetings. Neil Shearing and a special panel of our chief economists will sift through the outcomes on Thursday, 16th December at 11:00 ET/16:00 GMT and discuss the monetary policy outlook for 2022.

16 December 2021
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