Despite generally bearish investor sentiment, the prices of a number of commodities rose this week. In particular, the price of aluminium jumped on plant closures in Australia and persistent concerns about the impact of US sanctions on Russia. At the same time, wheat continued its month-long rally on the back of drought-related damage to crops in northern Europe and the Black Sea region. Markets appeared to shrug off China’s July trade data on Wednesday which showed a modest revival in commodity import demand.
Turning to next week, we think the markets’ focus will remain on the impact of rising US trade tariffs. Just today, President Trump announced a doubling of tariffs on imports of aluminium and steel from Turkey. As a large exporter of steel, this may have implications for Turkey’s economy but the US should be able to source its steel elsewhere. On the data front, industrial metals prices may come under pressure early in the week if, as we expect, China’s activity and spending numbers for July are somewhat weaker.
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