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.
Samuel Burman Assistant Commodities Economist
Continue reading

More from Commodities

Commodities Weekly Wrap

A good start to a bad year for commodity prices

Most commodity prices increased this week, with coal prices leading the pack on the back of Indonesia’s ban on coal exports this month. That said, we don’t see commodity prices rising for much longer. Indeed, Chinese imports of most raw materials fell back in December, with an especially sharp decline in imports of industrial metals. We think this is a sign of things to come in 2022. Weaker Chinese growth is one of the main reasons why we expect most prices to fall this year. Looking ahead, prices of energy and energy-intensive commodities could well be swayed by tensions between Russia and Ukraine and its allies. If tensions continue to build, this could lead to sharp swings in the price of European natural gas in particular. High gas prices in Europe have already led to the curbing of some energy-intensive metals production, including aluminium and zinc. On the data front, China will release Q4 GDP figures on Monday, which we expect to show weaker y/y growth. OPEC will also publish its December oil supply numbers on Tuesday. We expect another month of below-target output.

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 Economics Chart Book

Omicron risks receding; energy still in short supply

Two themes have dominated commodity markets at the turn of the year: the ongoing shortage of energy commodities and the global rise in cases of COVID-19. On the former, we think that shortages will start to ease meaningfully later this year, which will weigh on the prices of both energy commodities and other commodities with energy-intensive production processes. However, we think the oil market may be dismissing the Omicron-related hit to demand a little too readily. After all, demand in the US has already softened significantly, and China has imposed new restrictions as part of its ‘zero-COVID’ strategy. As a result, the hit to oil demand may be larger and longer-lived than is currently priced into markets, which could lead to a sharp reversal in oil prices in the near term.

7 January 2022

More from Samuel Burman

Energy Update

OPEC impasse: what next?

The failure of OPEC+ to agree to new production quotas has created considerable uncertainty about the group’s oil production going forward. In this Update, we lay out three possible scenarios for OPEC+ output in the coming months and what they would mean for oil prices.

6 July 2021

Energy Update

Rising production to take the sizzle out of Henry Hub

Strong industrial demand and constrained domestic supply will support US natural gas prices throughout the remainder of this year. However, we expect that the average price will fall in 2022 in large part because of higher production.

28 June 2021

Commodities Update

Timberrrrrrrr...

Although we remain optimistic about the near-term demand outlook, we think that the price of US lumber will fall further in the coming months as domestic supply continues to revive.

23 June 2021
↑ Back to top