Making sense of the rise in exchange stocks

Exchange stocks of base metals have risen this year, which usually suggests that markets are well supplied. But much of the recent build in stocks has been opportunistic and driven by financial considerations rather than a surplus in the market. Regardless, we think that supply of most metals will pick up in the coming months, which should boost stocks further and weigh on prices.
Caroline Bain Chief Commodities Economist
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Industrial Metals Update

Green transition to help charge cobalt prices

Cobalt prices have soared in 2021 to almost double the 2020 average price of $31,726 per tonne. We expect the growth in EV production and issues around supply to continue to push prices higher in 2022.

2 December 2021

Metals Data Response

Global Steel Production (Oct.)

Global steel production contracted again in y/y terms in October, mainly owing to lower Chinese production. China’s output may rebound a little in the coming months as power rationing has come to an end, but weaker domestic demand will act as a disincentive.

23 November 2021

Metals Data Response

Global Aluminium Production (Oct.)

October’s IAI data suggest the easing of power restrictions in China has enabled greater utilisation rates at smelters, driving the global increase in output this month. We think that aluminium output will remain high over the rest of this year, incentivised by the high price. However, we expect that the slowing of the Chinese construction sector will weigh on demand and prices in 2022.

22 November 2021

More from Caroline Bain

Commodities Update

China PMIs herald a period of slower growth

China’s June survey data show softer growth in activity and supports our forecast that economic growth will slow from here, which will weigh on the prices of most commodities, especially the metals.

1 July 2021

Energy Data Response

US Weekly Petroleum Status Report

US crude stocks fell for the sixth consecutive week amid the ongoing rebound in product demand as the virus-related restrictions continue to be lifted. That said, if OPEC+ decide to gradually raise output from August (as we expect) and US import volumes pick up, stocks may stabilise in the coming months.

30 June 2021

Commodities Weekly Wrap

Rebound in prices likely to be short-lived

Most commodity prices recouped some of their post-FOMC losses this week. Investor concerns surrounding Fed tightening have seemingly eased, which weighed on the dollar. At the same time, news that a bipartisan agreement has been reached over a US infrastructure deal looks to have also provided a boost to prices. However, we think that the rally in the greenback will resume soon, which should put renewed downward pressure on commodity prices before long. What’s more, given that we didn’t expect the initially-proposed $2 trillion infrastructure package to have too much of an effect on commodity markets over the next few years, the watered-down $1 trillion deal is likely to be even less significant for demand and prices in the near term. Turning to next week, all eyes will be on the July OPEC+ meeting on Thursday. We expect the group to raise production quotas in response to improving demand and high prevailing prices. At the same time, it will also be fairly busy on the economic data front. We think that China’s manufacturing PMIs (Wednesday/Thursday) will have ticked down in June, which could prompt a fall in industrial metals prices. And, in the US, the employment report on Friday is likely to be closely watched but, if we are right and  employment growth held steady this month, there will not be a major impact on commodity prices.

25 June 2021
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