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.
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More from Metals

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.

3 June 2021

Industrial Metals Update

Calling time on the rally in US steel prices

Limited domestic supply, expensive imports and strong growth in demand have fuelled the rally in US steel prices. But with supply set to improve, at a time of softer growth in demand, prices should fall.

26 May 2021

Industrial Metals Update

Fundamentals, not regulation, to drive iron ore lower

While China’s announcement that it will crack down on speculation and market irregularities has taken some of the froth out of the iron ore market in recent weeks, we think the price of iron ore will ultimately be driven even lower by less favourable fundamentals over the rest of the year.

26 May 2021

More from Commodities Team

Commodities Weekly Wrap

Oil prices to rise a little further as OPEC+ hold the line

In what proved to be one of the shortest OPEC+ meetings ever, the group agreed this week to stick to its previously planned increase in output in July. Oil prices rose sharply on the back of the announcement, with Brent now trading above $70 per barrel. However, OPEC+ members seemingly didn’t discuss how to deal with the prospect of additional supply from Iran, which we suspect will be a contentious topic at future meetings. Nevertheless, our central forecast is that OPEC+ maintains a gradual approach to relaxing output cuts, which should keep the oil market in a deficit in the near term and push prices a little higher. Turning to next week, we expect China’s May trade data (Monday) to show a further decline in import volumes of industrial commodities, albeit from historically high levels. This would add to concerns around the strength of China’s metals demand which contributed to a fall in the prices of most industrial metals this week, with copper slipping back below $10,000 per tonne.

4 June 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.

3 June 2021

Energy Chart Book

Prices to be falling by end-year

Cold weather in parts of the northern hemisphere helped push up the prices of coal and natural gas last month, while oil prices also rose. We still think that average energy prices will be higher this year than last but expect the prices of coal and oil to start to decline towards the end of this year.

2 June 2021
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