Commodities Watch

Commodities Watch

How the American Jobs Plan could affect commodities

In this Commodities Watch, we take a first look at some of the most important features of President Joe Biden’s $2 trillion infrastructure package, known as the American Jobs Plan, from a commodities perspective. The upshot is that even if it is passed in its current form (which we think is unlikely), we doubt there would be much of an impact on prices in the near term. Further ahead, we think the effects of the Plan would only really be felt in a handful of commodity markets, including coal, natural gas, cobalt and nickel.

14 May 2021

Commodities Watch

Taking stock of China’s agricultural “buying spree”

In this Commodities Watch, we consider the impact that the recent surge in Chinese agricultural commodity imports has had on prices and whether it will be sustained. In our view, the rapid growth in Chinese agricultural imports is being driven largely by temporary factors and we suspect that the pace of buying will slow later this year.

26 February 2021

Commodities Watch

Why we are not in a new commodity supercycle

The latest rally in many commodity prices has prompted some commentators to herald the arrival of a new commodity supercycle. In this Commodities Watch, we outline what is meant by a supercycle and discuss why we are not at the start of a long-run bull market in commodity prices. In our view, a prolonged surge in metals prices is likely as efforts to decarbonise the world economy take effect, but we are sceptical that it is already underway.

8 February 2021
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Commodities Watch

Chinese stimulus not enough to prompt a price rally

China’s stimulus spending in 2009 in the wake of the Global Financial Crisis (GFC) prompted a dramatic recovery in commodity prices. In this Commodities Watch, we discuss the stimulus plans outlined at the National People’s Congress and why they won’t be quite as positive for commodity prices.

Commodities Watch

OPEC springs a surprise

Today, OPEC+ announced that it will deepen its oil output cut by 0.5m bpd to 1.7m. More surprising, is that it looks as though Saudi Arabia will cut supply by a further 167,000, despite the fact that it is already producing well below quota. This could tip the oil market into deficit and help to support prices.

Commodities Watch

It can only get better for natural rubber

In this Commodities Watch, we are initiating coverage of natural rubber. As it stands, supply is more than ample at a time of subdued demand. The vehicle and tyre sectors, the main end-users of natural rubber, have struggled over the past year but should start to revive from 2020. That said, it will take some time to draw down high prevailing stocks, which will constrain prices.

Commodities Watch

The rally in US lumber looks hollow

After falling sharply over the course of 2018, US lumber prices have rallied by roughly 20% since the start of June. In this Commodities Watch, we explain why we think prices will slide again by year end.

Commodities Watch

What our new view on trade means for commodities

We no longer expect the US and China to strike a deal on trade, and now forecast that the two countries’ dispute will escalate further. In this Commodities Watch, we lay out what our new view on trade means for our commodity price forecasts.

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