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While commodities and US equities often move in the same direction, this is not always the case. We expect poor returns from commodities over the next few years, but reasonable returns from US equities. The correlation between the annual returns from the …
29th April 2021
Overview – Although we anticipate a strong global economic recovery in 2021, our forecast of a slowdown in China’s economy means that we still expect industrial metals prices to end the year lower. At the same time, a stronger US dollar and rising US …
28th April 2021
Decline in stocks should resume before long US crude commercial stocks stabilised last week, but we think they will resume their decline before long as product demand benefits from the easing of virus-related restrictions. The EIA’s weekly US Petroleum …
Download the PDF for the full report. Overview – Following a spectacular rebound from pandemic-induced lows, we continue to expect that most commodity prices will be falling again by end-2021. Although growth in demand should be strong as the global …
27th April 2021
Most commodity prices increased this week, with the prices of agricultural commodities rising particularly strongly . The prices of corn, soybeans and wheat surged, reaching new multi-year highs on the back of adverse weather in the US and Brazil. In …
23rd April 2021
Nearing the peak in China’s production Global steel production continued to rise in March, no doubt incentivised by high prices. Growth in demand in some key markets, such as the US and China, has been strong, but we suspect that production in China will …
22nd April 2021
Gasoline demand to continue to rise US crude commercial stocks rose a touch last week, but we expect them to fall in the coming weeks as product demand picks up in tandem with the progressive easing of lockdowns . The EIA’s weekly US Petroleum Report, …
21st April 2021
Even though we expect lumber demand to hold up well for some time, we still think that a rebound in supply will lead to a sharp fall in the price of US lumber over the next eighteen months . The price of US lumber (CME random lengths) has skyrocketed from …
20th April 2021
Global aluminium production likely to push higher before long Daily aluminium production dropped back a bit in March. But with prices currently at multi-year highs, and only very piecemeal restrictions on output in China, we doubt it will be long before …
Most commodity prices rose this week following a batch of positive economic data releases . Oil prices were up particularly strongly on the back of a larger-than-expected weekly decline in US crude stocks and an upward revision to the International Energy …
16th April 2021
The latest China trade data show that ore imports are rebounding, though scrap imports remain subdued. Meanwhile, imports of refined copper have seen a renewed surge. Nevertheless, we continue to expect China’s imports of ore and scrap to rise while …
15th April 2021
The ongoing revival in global demand growth together with constrained global supply means that the price of corn is likely to hold onto most of its recent gains for some time. That said, we think that the corn price will fall in 2022 as demand growth in …
US oil demand on the road to recovery Last week’s fall in crude stocks in the US was the result of higher demand rather than lower supply. This bodes well for our view that a relatively strong economic recovery in the US will boost oil demand there, …
14th April 2021
OPEC oil production to increase in earnest from May OPEC oil production rose a touch in March. We expect that the group’s production will hold steady throughout April, as existing quotas remain in place, but that it will increase thereafter as quotas are …
13th April 2021
China’s imports of key industrial commodities point to ongoing strength in domestic demand. But the bigger picture is that import volumes remain well below last year’s peaks, and we expect growth in China’s commodity demand to slow further this year as …
Overview – Strong growth in industrial demand helped push up the prices of energy commodities used primarily in power generation last month, but oil prices slipped back. We continue to expect average energy prices to be higher this year than last, …
12th April 2021
Overview – 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 …
9th April 2021
It was a relatively quiet week in commodities markets, with weakness in the US dollar giving agricultural commodities, in particular, a bit of a lift. We think markets could struggle to find a clear direction in the coming weeks given the mixed messages …
While we have revised down our oil price forecast for Q2 and Q3 this year in response to the OPEC+ decision to ease production cuts, we still think a rebound in global demand will help push oil prices back above $70 per barrel. We expect weaker oil demand …
8th April 2021
Despite a slow start, product demand should pick up this quarter Commercial crude stocks continued to fall in the latest weekly data, but this was a reflection of lower supply and higher exports than a recovery in consumer demand . However, all the signs …
7th April 2021
Overview – A rise in new coronavirus infections in many parts of the world, including Europe and India, weighed on investor sentiment in commodity markets in March. However, all the signs point to a rapid recovery in US activity and, as vaccines are …
The recent decision by OPEC+ to increase its oil production quotas and the prospect of higher Iranian output point to a smaller global oil market deficit this year than we had previously envisaged. Nevertheless, the persistent deficit means that we still …
The decision earlier today by OPEC+ to ease its oil production cuts from May means that production from the group will be slightly higher than we had previously anticipated in Q2 . However, the rise in OPEC+ production will only be gradual, and with the …
1st April 2021
Despite some conflicting messages from the official and unofficial PMI data out of China, both surveys continue to point to lower industrial metals prices. A pick-up in manufacturing activity and exports elsewhere in Asia should ensure that prices hold up …
Stronger demand to weigh on crude stocks The increase in refinery throughput and decline in net imports meant that US crude stocks fell last week for the first time in around two months. We expect that stocks will fall further in the coming weeks as …
31st March 2021
The recent drop in the price of gold below $1,700/oz. has illustrated its greater sensitivity to US long- than short-dated real yields. Although the price has nudged back up above this level at the time of writing, we expect it to fall back to an even …
Commodities markets were something of a mixed bag this week . The grounding of a container ship in the Suez Canal helped to prop up the prices of some commodities despite growing worries over the potential hit to demand in Europe from the slow vaccine …
26th March 2021
Later this year, the European Commission is expected to provide draft details on how the EU will introduce and implement a carbon border adjustment mechanism (CBAM, often dubbed a ‘carbon border tax’) as part of its plan to tackle carbon leakage and …
US commercial crude stocks to fall soon The pace of builds in US crude stocks continued to slow last week as refinery activity surged. However, we expect stocks to ease back in the coming weeks as refinery capacity utilisation steadily bounces back . The …
24th March 2021
The cut to Nornickel’s production guidance will support a higher price for palladium But ultimately, demand-side factors are why we think it will outperform platinum We expect the palladium price to rise a touch, but the platinum price to drop back In …
Despite the ongoing rise in the number of rigs actively drilling for oil, we continue to expect a lacklustre recovery in US oil production over the next couple of years . An often-overlooked aspect of the rise in the number of rigs drilling for oil in the …
Headwinds to China’s steel output growth on the rise Growth in global steel production declined in February y/y. And though base effects will distort growth rates for a while yet, we reckon that China’s steel output growth will start to slow before long . …
23rd March 2021
Global aluminium output growth shows no signs of slowing Average daily global aluminium production inched up in February. And with ShFE and LME prices at multi-year highs, we expect production to continue growing in 2021 . According to the International …
22nd March 2021
Commodities markets experienced a bit of a reality check this week, with prices falling despite little material change in the underlying demand and supply fundamentals . In the same way that optimism about demand pushed up oil prices in recent months, …
19th March 2021
Rising refinery output to weigh on commercial crude stocks Even with the continued recovery in refinery activity, US crude stocks rose last week. However, we suspect that stocks will fall soon as refinery activity rises further and crude production holds …
17th March 2021
History shows that supercycles are usually demand-driven, and that the performance of individual commodity prices has varied hugely both within and between past supercycles. In addition, supercycles can temporarily give way to shorter-run boom/bust …
News on a potential breakthrough in the supply of nickel matte from Tsingshan has dampened nickel prices. Rather than a step-change in nickel market supply, we reckon that this development will simply act as a structural drag on the nickel price . After …
Agricultural prices are currently trading near multi-year highs, but we doubt that a supercycle is underway or will occur anytime soon. Instead, we think that agricultural prices will fall over both the short and longer term as demand growth wanes and …
16th March 2021
Despite big moves in bond and equity markets, commodity markets were fairly subdued this week . Nevertheless, we expect oil prices to break higher again before long, and our new forecasts show them peaking in Q3 (compared to Q4 previously) . Meanwhile, we …
12th March 2021
The deeper-than-expected production cuts by most OPEC+ member states and a revival in global demand means that the oil market is now likely to be in a bigger deficit than we had previously envisaged for much of this year. We now expect the price of Brent …
Saudi Arabia’s voluntary cut to keep OPEC production constrained Saudi Arabia’s 1m bpd voluntary production cut meant that OPEC oil production plummeted in February. We expect OPEC production to remain low in March and April as Saudi Arabia continues its …
11th March 2021
Refinery throughput to revive further in coming weeks US commercial crude stocks soared again last week as refinery throughput remained well below normal levels. Given that production has almost entirely recovered, stocks will probably rise further next …
10th March 2021
While we are revising down our forecast, we don’t expect the price of gold to fall that much further this year. In our view, the recent decline in investment demand is unlikely to continue for long. What’s more, we think the ongoing recovery in physical …
Industrial metals prices have soared recently to multi-year highs. But we think the rally is unsustainable. In fact, it cements our view that slowing growth in China will drag prices lower by end-2021 . After rebounding from their virus-induced lows early …
China’s trade data for January-February show a clear deceleration in the growth of commodity imports. We expect this trend to persist over the course of this year as policy support is gradually withdrawn . China’s export growth surged to a 26-year high of …
8th March 2021
It was a relatively two-sided affair in commodities markets this week. On the one hand, oil prices rose on the back of greater-than-expected output restraint announced by OPEC+. And on the other hand, a partial unwinding of investor optimism weighed on …
5th March 2021
Slower demand growth and an abundance of supply will limit gains in oil prices over the long term, which we think will ultimately prevent oil from featuring in the next commodity supercycle . As we recently outlined in a Commodities Watch , commodity …
4th March 2021
Our in-house demand proxies offer further evidence that industrial metals prices are running ahead of the underlying fundamentals. This helps to explain the sharp drop in industrial metals prices since the end of February and supports our view that they …
Overview – 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 …
3rd March 2021
Crude stocks to march higher as refinery activity remains in the doldrums US commercial crude stocks skyrocketed last week as refinery activity plunged and net imports surged. We expect stocks to a rise a bit further in the coming weeks as refinery …
