This week was fairly quiet for commodities, with most prices rising slightly. In particular, energy prices in the US and Europe were boosted by the partial (albeit uneven) paring back of virus-containment measures. Meanwhile, the latest batch of PMIs showed that economic activity is, in general, rebounding more quickly than anticipated around the world. That said, the survey data in most countries are still significantly below pre-virus levels, suggesting there is some way still to go. Accordingly, we suspect that the demand outlook for most commodities will recover only gradually in the coming months.
Next week, virus infection numbers will again be the biggest driver of prices. Market participants will be watching closely to see whether the relaxing of restrictions can be done without a resurgence in infection rates and the resulting re-imposition of lockdowns, as has already been the experience in parts of the US. Elsewhere, the EU’s hydrogen strategy is scheduled to be announced on 8th July. The ramp-up in hydrogen production in Europe is set to be an important facet of the region’s ongoing efforts towards decarbonisation.
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