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Commodity prices generally rose this week, helped by the US senate approving a deal to increase the federal debt ceiling . After a rollercoaster of a week, European natural gas prices ended the week lower following comments from President Putin that …
8th October 2021
We think that weaker physical demand, higher real US Treasury yields and a stronger dollar will mean that the recent poor performance of the silver price is set to continue over the next couple of years . After a brief spell of volatility in the price of …
7th October 2021
The price of European natural gas (TTF) surged by around 35% this morning, before crashing back down on Putin’s reassuring comments about Russian supply. The latest price moves appear speculative, and we retain our view that it is just a matter of time …
6th October 2021
Overview – 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 …
5th October 2021
We expect a gradual normalisation in demand growth and a rebound in supply will start to weigh on oil prices from the fourth quarter. So far this year, growth in demand has outpaced supply, helping prices to hit multi-year highs, but we expect this …
4th October 2021
Commodity prices generally rose this week , but especially energy prices, which continued to surge on constrained supply, unseasonably high demand and low stocks. That said, we think the supply shortfalls will prove temporary and expect energy prices to …
1st October 2021
Natural gas prices have soared and are likely to remain historically high for some time But there has not been an underlying structural shift up in demand And high prices will incentivise supply At the time of writing, global natural gas prices are …
China’s manufacturing PMIs for September diverged, but both still point to subdued commodities demand. What’s more, the surveys were conducted before power shortages started to constrain activity. Weaker industrial activity should put downward pressure on …
30th September 2021
Crude stocks set to remain depressed, despite surprise increase A jump in crude oil production led to the first stock build in eight weeks. However, with output still constrained and demand set to remain strong, stocks are likely to remain low for some …
29th September 2021
We believe that current high nickel prices will prove short lived, and expect weaker economic growth in China and the tapering of US monetary policy support to depress demand for nickel and pull down its price by the end of the year . The price of LME …
28th September 2021
Commodity prices held up well this week , despite the hawkish tone of the Federal Reserve and continued worries over a messy default by Evergrande, the Chinese property developer. Notably, European natural gas and Asian LNG prices continued to climb , …
24th September 2021
A mild winter in the Northern Hemisphere, a substitution of gas for other fuels in electricity generation, and/or a rise in supply via Nord Stream 2 could all send European gas prices lower in the months ahead. But even if prices start to fall back soon, …
Although a messy collapse of Evergrande is a downside risk to our near-term price forecasts, it adds weight to our view that China’s construction sector is in structural decline. In turn, this underpins our view that industrial metals prices will be on …
23rd September 2021
High prices failing to boost steel supply, at least so far Despite high prices, global steel output contracted in August. And given that the authorities in China are proactively encouraging lower output there, further falls in the coming months appear …
Declines in crude stocks seem unlikely to reverse any time soon US crude stocks have continued to fall as refinery activity has so far recovered faster than crude output following Hurricane Ida. And with demand already broadly back to pre-pandemic levels, …
22nd September 2021
Aluminium output still growing despite China fears August’s IAI data suggest that fears that power rationing in Chinese smelting hubs would negatively impact supply, which have boosted aluminium prices to decade highs, are overdone. Instead, we think that …
20th September 2021
Most commodity prices ground higher this week. And, stepping back, we think events this week highlight three key themes to watch in the months ahead . First, natural gas prices show no sign of easing back, and are likely to remain high until early next …
17th September 2021
Hurricane Ida continues to distort the data There were hefty falls in both crude and petroleum product stocks, reflecting closed production capacity due to damage caused by Hurricane Ida. Implied gasoline demand also dropped back but it is impossible to …
15th September 2021
Mounting pressure on OPEC may prompt faster unwinding of output cuts The rise in OPEC’s oil output fell well short of its target in August. And given a higher oil demand forecast for 2022, alongside growing external pressure, we think that the risks are …
13th September 2021
Commodity markets have been relatively quiet over the last few weeks , with many prices trading in a narrow range. There are a few exceptions, most notably the prices of natural gas and coal , which have soared on the back of surging power demand and …
10th September 2021
Coal and natural gas prices have soared around the world on the back of unseasonable weather and disruptions to supply. And even if the weather normalises and supply rebounds soon, we expect prices to remain high at least into the start of 2022 as stocks …
Hurricane Ida to blur the stocks picture for a few weeks yet There was a small draw in crude stocks last week, despite a dramatic drop in refinery utilisation as many refineries closed ahead of the Hurricane Ida. Notwithstanding, US gasoline demand …
9th September 2021
Although world trade volumes are likely to hold up for a while yet, a reversal of some of the shift in spending patterns caused by the pandemic is likely to weigh on commodity demand. This is another reason to expect most commodity prices to end the year …
8th September 2021
China’s imports of key commodities rose almost across the board in August, but we doubt that this is the start of a new upwards trend. Instead, with many of the factors that had boosted demand now fading, we expect China’s commodity imports to resume …
7th September 2021
After climbing to multi-year highs in May , the zinc price has stayed strong, with much less volatility than its counterparts. However, we feel weaker economic growth in China and US tapering of monetary policy will work in tandem with the ongoing …
6th September 2021
Overview – 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 …
3rd September 2021
There wasn’t a clear direction in commodity markets this week, with most prices driven by commodity-specific factors . Natural gas and coal prices continued to surge, while the prices of some industrial metals struggled on the back of weaker China PMI …
Fallout from Hurricane Ida to lead to higher crude stocks Last week’s sharp fall in US commercial crude stocks is at odds with many of the underlying indicators. In any case, stocks seem likely to rise in the weeks ahead as reports suggest that refinery …
1st September 2021
Aluminium prices have recently been boosted by a series of supply outages in China. But unlike Chinese steel production, where declines have been driven largely by government policy which looks here to stay, we suspect that the falls in aluminium output …
The China PMI data for August continue to suggest that commodity demand in the world’s largest consumer is coming off the boil. As a result, the wedge between industrial metals prices and the China activity data has continued to grow, which underpins our …
There was a dramatic turnaround in the fortunes of commodities prices this week, with across-the-board gains as risk appetite picked up and the US dollar eased back . Fed Chair, Jerome Powell, was cautious about imminent Fed tapering at the Jackson Hole …
27th August 2021
We think that the adoption rate of renewable electricity will accelerate in the decades ahead, which should contribute to a near-continuous decline in demand for coal. Demand for natural gas should still eke out some growth over the next decade or so …
26th August 2021
US demand is solid, if not exciting Crude oil stocks fell again last week and implied gasoline demand rose, in broadly positive news for oil prices. For now, US consumers appear to be shrugging off the spread of the Delta variant of COVID-19. However, it …
25th August 2021
Global steel output to be weaker in the second half of 2021 A slump in China’s steel production in July led to a dramatic slowdown in growth in global steel output. While China’s production may stabilise or rebound a little in the coming months, it …
24th August 2021
Some of our forecasts for commodity prices this year have been blown off course by extreme weather events. As economists we cannot pretend to have insight into future weather patterns, but we can share some thoughts on what more frequent adverse weather …
23rd August 2021
Commodity prices mostly fell this week on the back of a stronger US dollar as well as mounting concerns over the demand outlook. China’s July activity and spending data, published on Monday, were weaker than consensus forecasts, and the ongoing spread of …
20th August 2021
Concerns over aluminium supply look misplaced Aluminium prices have recently been supported by reports that government-imposed power rationing has weighed on production in China, but there is little evidence of this in the latest data for July. This …
We think that a few countries will join OPEC, which would boost its market power However, we still expect oil prices to fall over the next few decades … … as countries rush to produce as much as possible against the bleak demand backdrop In this Energy …
19th August 2021
The government in China has stepped up measures to tackle pollution and excess capacity in the domestic steel sector over the past few months. This adds weight to our view that steel production, and consequently the price of iron ore, will fall back over …
US gasoline demand looks to have peaked While crude stocks fell again last week, gasoline inventories rose a little and there was a further pullback in implied gasoline demand . Given the ongoing rise in virus infections and some re-imposition of …
18th August 2021
China’s latest activity data are further evidence of a slowdown in its economy. This aligns with our view that industrial metals demand will soften in the year ahead, putting downward pressure on prices . China’s July industrial data were generally much …
The UN’s latest Intergovernmental Panel on Climate Change (IPCC) report warned that ever-increasing greenhouse gas emissions are a ‘code red for humanity’, which could give further momentum to the green energy transition . This transition primarily …
13th August 2021
OPEC may need to reconsider supply plans OPEC’s oil production soared in July as Saudi Arabia unwound the bulk of its voluntary output cut . Although OPEC left its demand forecast unchanged, we think that the near-term demand outlook has deteriorated, …
12th August 2021
Recovery in US oil demand topping out Last week’s fall in crude oil and gasoline stocks suggests that growth in demand in the US is continuing to outpace growth in supply. However, following a strong recovery from its pandemic-induced lows, we suspect …
11th August 2021
While we expect both drilling activity and oil production in the US to pick up slightly over the next year or so, we doubt it will return to pre-pandemic levels anytime soon. This should keep the Brent-WTI spread narrow but is unlikely to prevent oil …
The latest trade data out of China adds to the evidence that demand growth in the world’s key commodity consumer is slowing. This supports our view that the broad-based rally in commodity prices from their pandemic-induced lows has run its course, and …
9th August 2021
Concerns surrounding the spread of the Delta variant of COVID-19 were the main driver of prices this week, but the impact on prices was far from uniform. Not surprisingly, oil prices slumped as many countries in Asia, including China, tightened travel …
6th August 2021
A decision by the Biden administration to increase US biofuel mandates in 2021 and 2022 has the potential to be a gamechanger for corn demand. However, we think that this is unlikely, which is one reason why we think that corn prices will fall over the …
5th August 2021
Overview – Although the prices of industrial metals have picked up again recently, we still expect them to be falling over the next year or so. Underpinning this view are our forecasts for economic growth to slow in China, a continued rebound in supply …
4th August 2021
Gasoline demand to rise a bit further in the coming weeks US commercial crude stocks unexpectedly increased last week as net imports rose, but we suspect that inventories will fall back soon as demand for oil products, such as gasoline, continues to rise …
