Metals Chart Book

Metals Chart Book

The net effect of Omicron on commodities is not clear

Most commodity prices have fallen in the last week or so following the identification of Omicron – a new, and potentially more transmissible, strain of COVID-19. However, while commentary has generally focused on the effects that the new strain and associated lockdown measures may have on commodity demand, less attention has been paid to the implications for supply. After all, OPEC+ has left the door open to a change in output quotas before the group’s next meeting in early January. And, at a time of already declining stocks of industrial metals, there is a risk that the new variant prompts closures of major smelters and mines. As a result, we are leaving our price forecasts broadly unchanged for now. In view of the wider interest, we are also sending this Commodities Overview Chart Book to clients of our Energy and Metals Service.

7 December 2021

Metals Chart Book

Gas & coal surge to support other commodity prices

Natural gas and coal prices soared in September. In turn, this has raised the output costs of industrial metals, most notably those which are especially energy intensive such as aluminium and steel. At the same time, reports suggest that some electricity providers are starting to substitute natural gas and coal for oil. While we expect natural gas and coal prices to ease back from here, they are likely to remain high by past standards well into next year. Nevertheless, we doubt this will be enough to prevent industrial metals prices from edging lower in tandem with weaker economic growth in China.

5 October 2021

Metals Chart Book

Commodity prices on increasingly shaky ground

After sharp falls in the middle of the month, most commodity prices ended August broadly flat. However, we doubt it will be long before the downward pressure on prices intensifies again. After all, economic growth in most major economies now looks to be normalising following its surge from pandemic-induced lows, while growth in key commodity consumer China is entering into an outright decline. As a result, we continue to expect most commodity prices to fall in the remainder of this year.

3 September 2021
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Metals Chart Book

An emboldened UAE scuppers the OPEC+ united front

Oil prices were rising in June even before the July OPEC+ meeting ended in disarray, without agreement. Strong growth in demand as economies lift virus-related restrictions is expected to continue to support the prices of all energy commodities in the coming months. However, we expect the prices of metals and agricultural commodities to ease back as supply gradually picks up.

6 July 2021

Metals Chart Book

Strong month for metals not a sign of things to come

May was a strong month for the prices of most metals, but we suspect that this may be as good as it gets. After all, if we’re right in expecting economic growth in China to slow in the second half of this year, the prices of most industrial metals are likely to end the year lower. Meanwhile, the recent rise in the gold price has been far larger than is implied by the fall in real yields, and we think that the gold price will come under renewed downward pressure in the months ahead as real yields start to creep higher.

Metals Chart Book

The outlook for metals darkens

Aside from the temporary blockade of the Suez Canal, March was a relatively uneventful month for industrial metals prices. Nevertheless, we still expect prices to fall this year as mine supply rebounds, particularly in Latin America, at a time of slower growth in demand in China. Meanwhile, we have revised down our end-2021 gold price forecast to $1,600 per ounce as we now expect US real yields to rise further.

Metals Chart Book

Rally in industrial metals unlikely to last

Most metals prices advanced in February, with the exception of gold and silver. However, we suspect that the current prices of industrial metals look overextended, especially given the recent run of China PMIs. Accordingly, we think that downside risks to prices are mounting.

Metals Chart Book

Risk appetite to support base metals prices for now

The prices of industrial metals continued to surge in December, capping off a strong 2020. However, we expect that prices will fall this year as growth in China’s demand slows on the back of the gradual withdrawal of fiscal stimulus and tighter lending restrictions on construction firms. Meanwhile, precious metals prices rose last month as the US dollar depreciated.

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