The demand outlook remains uncertain

It was another good week for commodity prices, with the exception of precious metals. Somewhat better-than-expected Q1 GDP and survey data, particularly in the euro-zone, was one factor fuelling expectations of stronger demand. The pick-up in vaccination rates in many European countries was additional grounds for optimism. And while China’s April manufacturing PMIs suggest growth softened, most of the slowdown appeared to be the result of logistical constraints rather than a drop-off in demand. Turning to next week, many countries will have a holiday on Monday for Labour Day. China will publish its April trade data on Friday, which we will watch closely for signs that the drop in the metals-intensive construction PMI in that month may have led to lower commodity imports. April PMI data for the euro-zone and the US will also be released next week, which should throw some light on economic trends at the start of the second quarter, with implications for commodities demand.