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The news today that Gazprom will further reduce its natural gas supply to Europe increases the likelihood of recessions in the euro-zone, UK and parts of Emerging Europe. It also supports our view that inflation pressures will be relatively persistent in …
26th July 2022
Although we doubt that they will fare quite as badly as they have in recent weeks, we still expect the energy and materials sectors of global stock markets to underperform over the next couple of years. Worries that high inflation, and the large interest …
19th July 2022
Commodity import volumes were generally weak in June . We think some of this reflects the lingering impact of lockdowns on demand, but it also points to subdued activity in heavy industry and construction. June may prove to be a low point for commodity …
13th July 2022
We think that the recovery in China’s PMIs in June was driven by the lifting of virus-related restrictions rather than an improvement in underlying economic conditions. Accordingly, we think that softer growth in China’s activity will continue to weigh on …
1st July 2022
We expect that the prices of agricultural commodities will fall back gradually over this year and next, but remain historically high. However, the volatility of prices in recent months and the uncertainty of the current environment mean there are major …
30th June 2022
The G7 proposal to impose a cap on the price of Russian oil and gas would introduce new supply-side risks by potentially disrupting Russian energy supplies. This could push global energy prices up further, but for now we still see Brent crude prices …
28th June 2022
We think the prices of agricultural commodities will fall back in the coming months, but most will remain historically high owing to tight supply, concerns about future supply and high energy prices. Consumer food price inflation has been soaring in …
24th June 2022
Commodity import volumes revived a little in May, perhaps as virus-related restrictions started to ease. Although demand should pick up in tandem with activity as major cities re-open, we think that high prices and slower export growth will mean that …
9th June 2022
Despite a rise in May, China’s PMIs still point to weak Chinese demand, which will continue to weigh on industrial metals prices. However, the war in Ukraine will remain the bigger driver of energy prices. China’s official and Caixin manufacturing PMIs …
1st June 2022
The EU’s sixth round of sanctions on Russia marks yet another defining moment in the West’s detachment from Russia’s energy trade. The sanctions were widely telegraphed in advance, though, so for now we still forecast that crude oil prices will remain …
31st May 2022
The recent tightening of export restrictions has been limiting the supply of staple agricultural commodities available to global markets and pushing up prices. In light of the ban on wheat exports from India, we’ve raised our forecast for the price of …
23rd May 2022
After a post-pandemic rebound in 2021, we expect growth in global demand for natural rubber (NR) to slow this year in tandem with a downturn in industrial activity, notably in the NR-intensive auto sector. That said, the market will remain in a deficit …
18th May 2022
Energy commodity imports held up relatively well in April given the widespread COVID-19 restrictions. But the trade data throw up some question marks about demand for industrial metals given the downturn in export volumes and somewhat lower metals imports …
9th May 2022
We expect Indonesia’s latest ban on palm oil exports to be short-lived, but constrained supply and the high prices of other edible oils, coupled with elevated oil prices, will support the price of palm oil. We’ve revised up our palm oil price forecast to …
5th May 2022
The global manufacturing PMI fell back in April. Admittedly, it was a sharp drop in China’s PMI that weighed on the global aggregate, but there are warning signs in the PMIs of most of the major advanced and emerging economies . While supply constraints …
3rd May 2022
Russia’s decision to suspend gas deliveries to Poland and Bulgaria from today because of a payments dispute will only strengthen the EU’s resolve to end its dependency on Russian gas, keeping gas prices historically high for months to come. The move also …
27th April 2022
A cooling US housing market will weigh on lumber prices, despite disruption to imports from Canada. We expect the lumber price to continue its downward trend, but to remain well above its 10-year average . US lumber prices have been particularly volatile …
21st April 2022
The latest trade data out of China suggest that recent restrictions imposed to contain the surge in new cases of COVID-19 are hitting commodity demand hard. And we think it will remain weak in the months ahead as activity in the commodity-intensive …
13th April 2022
The war in Ukraine and high energy prices will keep industrial metal prices elevated for now. But once supply fears ease, the weakness in China’s demand will be exposed and will weigh on prices . Admittedly, all the current focus is on metals supply, but …
1st April 2022
Commodity prices are as volatile as they’ve ever been. We don’t think volatility will ease until the war in Ukraine ends, because only then will we know the true extent of the Russia-related supply shock . Commodity prices are naturally volatile for many …
31st March 2022
The experience of the 1970s suggests that the ongoing war in Ukraine and its effects on commodity prices will reshape commodity markets for years to come. Most immediately, elevated prices are likely to lead to some degree of demand destruction. And …
29th March 2022
We think that a complete ban on Russian energy imports would cause the prices of Brent crude oil and European natural gas to surge to $160pb and €300/MWh in the near term and settle at still very high levels into next year. The Russian economy would …
7th March 2022
The latest trade data show that China’s energy imports contracted in the first two months of the year in y/y terms. And even if the West were to cut off Russian energy imports altogether, we doubt that China would ramp up its imports of energy from Russia …
China’s PMIs ticked up a little in February, but the big picture is that economic growth remains lacklustre in part owing to measures to contain COVID-19. The subdued demand picture confirms that the ongoing strength in commodity prices is all about …
1st March 2022
In this Update , we answer the key questions about what the exclusion of Russian banks for SWIFT means for Russia and the rest of the world. What is SWIFT? SWIFT (“The Society for Worldwide Interbank Financial Telecommunication”) provides payments …
28th February 2022
Our estimates suggest that risk premiums are currently adding around 40% to commodity prices. This suggests that commodity prices could fall a long way whenever concerns over the Russia-Ukraine conflict begin to ease, though clearly this is unlikely to …
25th February 2022
The latest twist in the Russia-Ukraine crisis is likely to keep commodity prices elevated over the coming weeks and months. And if the situation spirals into a more serious and wide-ranging conflict between Russia and the West, commodity prices could rise …
24th February 2022
In this Update , we discuss the possible ramifications for the global oil and natural gas markets of a Russian invasion of Ukraine. Much would depend on whether Western sanctions are placed on Russian energy companies and/or Russia decides to withhold …
16th February 2022
Our forecasts for commodity prices this year are subject to greater uncertainty than usual. While we expect growth in energy demand to slow, it may still be the case that supply remains constrained. As a result, energy prices may stay high for longer, …
11th February 2022
A Russian invasion of Ukraine or severe ratcheting up of sanctions would add as much as 2%-pts to inflation in DMs, particularly in Europe. Given the inflationary backdrop and hawkish signals from central banks, monetary policy could be tightened more …
4th February 2022
The latest PMI data out of China suggest that demand for commodities softened again in January. And with Chinese demand unlikely to bounce back meaningfully this year, we continue to expect sharp falls in industrial metals prices by year-end as …
31st January 2022
The deadlocked end to talks between Russia, the US and NATO and subsequent hawkish noises from Russian officials have caused a risk premium to emerge on Russian asset prices and will keep the prospect of tighter Western sanctions on the table. The …
14th January 2022
After a stellar run in 2020-21, we expect the prices of most commodities to ease back this year as economic activity slows, notably in China, and supply bottlenecks start to ease . The macro-economic backdrop for commodities will deteriorate in 2022 . As …
13th January 2022
The December PMI data for China point to a healthy pick-up in commodity demand. But this only partially reverses the declines from earlier in 2021, and the big picture remains that commodity demand in China is set to struggle this year as headwinds facing …
4th January 2022
The sharp rise in China’s commodity imports last month could be taken as a sign that underlying demand growth is undergoing a renewed acceleration. But given that this is just one month’s data, and that other indicators point to a further softening in …
7th December 2021
Taken together, China’s manufacturing PMIs point to somewhat stronger industrial activity in November, but this was almost entirely due to improved power supply last month rather than a pick-up in underlying demand. Accordingly, there was little to offer …
1st December 2021
We were already downbeat on the outlook for most commodity prices in 2022, not least because we thought that prices had lost touch with demand fundamentals. The risk of Omicron-related effects on demand just adds weight to our view . The prices of most …
29th November 2021
Some commentators have pointed to the slump in the Baltic Dry Index as a sign that shipping bottlenecks are easing. But we think it is more a symptom of lower Chinese steel output and plunging iron ore prices . The Baltic Dry Index (BDI) is a composite …
25th November 2021
Although the climate deal struck at COP26 appears to have fallen short on many counts, it does at least reaffirm our view that demand for traditional energy commodities will struggle in the long run . Following two weeks of negotiations, the ‘Glasgow …
16th November 2021
China’s imports of iron ore and copper rose in October compared to a month prior (in seasonally adjusted terms). But we doubt this is the start of a renewed upswing, not least as indicators of demand have deteriorated and volumes were still down sharply …
8th November 2021
Despite their recent positive correlation, we think that oil and the dollar will go in opposite directions before long: we continue to think that oil prices will fall back as the supply situation improves, while we expect the greenback to stay strong …
1st November 2021
Although the China PMI data were a mixed bag in October, the big picture is that they remain at odds with sky-high industrial metals prices. This adds to our view that prices have quite a long way to fall over the next year or so as constraints on supply …
China’s imports of key commodities slumped almost across the board in September. The main exception was imports of coal, which soared in response to recent power shortages. We expect coal imports to remain strong over the next few months, but they too …
13th October 2021
As energy prices hit multi-year highs, we look into the link between energy and non-energy commodity prices. It is clear that industrial metal prices track energy prices the most closely over time, which is mainly because the drivers of demand are …
11th 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
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
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
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
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 …
1st September 2021