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2020 contraction now firmly on the cards Global steel output declined in March in year-on-year terms. And all the signs suggest that worse is yet to come. As we had previously argued, the first global contraction in steel production for five years is now …
22nd April 2020
Vale, the world’s second largest iron ore producer, has cut its iron ore output guidance for 2020 by nearly 30m tonnes. Although significant, we don’t think it will be enough to push the market into a deficit. Therefore, we are sticking with our forecast …
20th April 2020
Output growth slows, but not by enough Aluminium output growth slowed last month. But with demand for aluminium collapsing, nothing short of a huge contraction in output will do enough to prevent stocks from piling up. Such a fall in supply still seems a …
The gold price has benefitted lately from demand for “safe” assets and an apparent easing of deflationary fears. While we also doubt that an extended period of de flation is on the cards, runaway in flation seems just as unlikely. And unless news on the …
17th April 2020
It is now crystal clear that virus containment measures will deal an unrivalled blow to metals demand. But the extent to which these same measures may also hit supply is up for debate. Despite all the headlines, there is currently little evidence of a …
16th April 2020
The latest trade data show sharp contractions in gold imports by major consumers China and India, suggesting that gold jewellery demand has taken a battering. Until signs emerge that the spread of COVID-19 is easing, we expect jewellery demand for gold to …
9th April 2020
Iron ore prices have been supported so far this year by China’s steel mills, which have continued to churn out metal. But with demand in China still subdued, and the virus-related disruption yet to peak elsewhere, much of this steel is being stockpiled. …
8th April 2020
As growing numbers of car companies idle production in response to COVID-19, we suspect that platinum group metals (PGM) demand will slow to a crawl. What’s more, job losses and income cuts due to lockdowns will curb car sales long after containment …
6th April 2020
Industrial metals prices plummeted in March. (See Chart 1.) And with the virus-related disruption outside of China yet to peak, we suspect that prices will fall further over the coming months. Even if containment measures are eased from the second half of …
2nd April 2020
We have developed a new in-house measure of the “fundamental” copper price It suggests that copper was trading at a premium relative to its fundamentals in January And despite the plunge in its price, the premium is likely to have risen since then In this …
30th March 2020
Several producers outside China have reduced operations in the past week, most notably in Latin America. But much like policy support, lower supply will do little to boost prices so long as measures to contain the coronavirus keep demand comatose. In any …
25th March 2020
Fire sales of gold have seemingly given way to safe-haven buying following yesterday’s unprecedented intervention by the Federal Reserve. Providing the Fed has injected sufficient liquidity to defend against a further collapse in equity prices, we expect …
24th March 2020
2020 contraction still looks likely Global steel output was reasonably resilient in February. But that follows substantial downward revisions to the January figures. And while policy support – particularly in China – may boost steel production later this …
23rd March 2020
Over the last month, industrial metals prices had been holding up on hopes that China’s economy was edging closer to a post-virus recovery. But that all changed this week. With what were once downside risks now morphing into our central scenario, we have …
20th March 2020
Rising supply to exacerbate stocks glut Despite alarm bells ringing for global aluminium demand, output growth continued to gather pace in February. This will only have added to the piles of unwanted inventory and is another reason to expect that, once …
As commodity prices continue to flash red, this Update summarises how we think things will play out from here. In the near term, we suspect that further price falls are in store, regardless of policy support. Instead, it will be signs that the virus is …
18th March 2020
In the last few weeks, we have revised down our forecast for global economic growth this year owing to the hit to activity from the coronavirus. At the same time, we now expect looser global monetary conditions. As a result, we have revised up our …
13th March 2020
Downward revisions to our demand forecasts mean that we now expect all base metal markets to be oversupplied in H1 2020. Lower output should, at best, prevent these surpluses from growing too large. Therefore, inventories built up over the next few months …
February was another poor month for industrial metals. (See Chart 1.) However, prices fell by less than in January and policy loosening seems to have stabilised prices more recently. That said, the outbreak of COVID-19 is quickly becoming a global issue, …
6th March 2020
The prospect of stronger demand stemming from stimulus in China, alongside recent supply disruptions, means that we now expect the deficit in the iron ore market to deepen this year, rather than shrink. As a result, we have revised up our year-end …
4th March 2020
In light of the accelerating spread of the coronavirus – and the economic disruption that is likely to follow – we are pulling down our GDP growth forecasts for Q1 and Q2 of this year. Growth is likely to rebound over the second half of the year, but most …
2nd March 2020
We had previously assumed that any coronavirus-related hit to metals demand in Q1 would be made up in subsequent quarters. But that now seems unlikely. As a result, we are lowering our year-end price forecasts for most base metals. However, and perhaps …
27th February 2020
China production strength is old news China continued to prop up global steel production growth in January, though output growth in the US and Japan also improved. However, January’s data fail to fully reflect the impact of measures to contain the …
25th February 2020
The price of platinum has risen by nearly 5% since the start of February, buoyed by heightened uncertainty prompted by the outbreak of COVID-19. Later this year, and assuming the virus is successfully contained, we anticipate that a gradual turnaround in …
20th February 2020
A better start to the year, all things considered After falling for the first time in a decade in 2019, global aluminium production started 2020 on a better footing. In contrast to other metals, we don’t think coronavirus containment measures will hamper …
Heightened global uncertainty related to the outbreak of the coronavirus will support gold and silver’s investment appeal in the near term. Later this year, however, and assuming the disease is brought under control, we anticipate that a gradual pick-up …
19th February 2020
There is potential for cobalt’s end-use in electric vehicle batteries to grow rapidly. However, concerns over the concentration of cobalt supply in the DRC have held back demand so far. Several auto manufacturers are already switching to less …
18th February 2020
Measures to contain the spread of coronavirus in China have already dealt a heavy blow to metals demand. But the longer China’s economy remains part-suspended, the greater the chance that supply is also curtailed substantially. The scale of any supply …
13th February 2020
Chinese imports of gold surged in December, while India’s foreign purchases remained in the doldrums. Looking ahead, we expect high local-currency prices in India coupled with a slowdown in Chinese economic growth to curb physical demand for gold in 2020. …
11th February 2020
Signs of a recovery in industrial commodity demand were emerging at the beginning of 2020. Indeed, the economic data have improved and investor concern surrounding the US-China trade war has eased. But the recent coronavirus outbreak in China quickly put …
6th February 2020
Overview – A sharp decline in China’s economic growth in Q1 as a result of the coronavirus outbreak now seems certain. This will be a significant negative for metals demand, as China is the world’s single largest consumer of most metals, accounting for …
5th February 2020
If the coronavirus is eventually brought under control, we think that 2020 will mark a turnaround for gold demand. ETF inflows are likely to shrink as a more benign macroeconomic backdrop stunts safe-haven demand. Meanwhile, high local-currency prices in …
4th February 2020
The outbreak of coronavirus in China threatens to derail the recovery we were expecting in the price of copper this year. In fact, when our estimate for the potential loss of copper demand is plugged into our forecast for the market balance, a surplus …
31st January 2020
Palladium’s blistering price rally has probably run its course, but we expect prices to remain close to historic highs in 2020. The market is mired in a deficit and demand growth looks set to remain solid, even if it softens from last year. Admittedly, …
30th January 2020
Little joy in store for steel production in 2020 China continued to diverge from the rest of the world in December, with steel output rising sharply. In contrast, other major producers continue to feel the pain of weak demand and oversupply. However, we …
27th January 2020
Weakness in economic growth and unfavourable demographics mean that we expect most of the developed world, and China, to experience ‘Japanification’. One of the commodities most affected would be steel, which is why we are bearish on the long-term outlook …
24th January 2020
Signs of hope heading into 2020 Global aluminium production for December rounded off a dismal 2019, but we think the prospects for output in 2020 are a bit brighter. The main positive contributions are likely to come from China, the GCC and Russia, which …
20th January 2020
While the price of gold remains elevated at present, we think it’s only a matter of time before it begins to ease back. Subdued gold imports in China and India and softer safe-haven demand should depress the price. Meanwhile, we expect that some US dollar …
14th January 2020
December was a relatively strong month for both precious and industrial metals, with prices rising almost across the board. A weaker US dollar and safe-haven buying buoyed gold prices, while base metals prices benefitted from signs that industrial …
9th January 2020
We forecast that the prices of base metals will fare better than precious metals in 2020. This view hinges on a modest recovery in the global economy, which should give a lift to metals demand at a time of already strained supply. That said, we think that …
7th January 2020
We forecast that the price of aluminium will rise this year even if, as we expect, the market flips from a deficit to a surplus. This is due to our expectation that investors will focus on a more positive backdrop for aluminium demand, amid low inventory …
3rd January 2020
Weaker demand and output cuts to further weigh on production Global steel output dropped in m/m terms in November, led by China. We think that global production will remain weak in the coming months due to softer demand growth and pre-announced output …
20th December 2019
Global output to bounce back in 2020 Global aluminium production continued to falter in November, largely due to another sharp fall in Chinese output. But additions to China’s capacity coupled with a resumption of shuttered smelters should lay the …
The muted market reaction to news of a provisional trade deal between the US and China lends weight to our view that the trade war’s grip on metals markets will ease over the coming year. While we are bearish on the outlook for iron ore and Chinese steel, …
17th December 2019
After scaling a multi-year high in 2019, we forecast that iron ore prices will fall back over the coming years. This is premised on the continued return of supply from Brazil and Australia following major disruptions earlier this year, as well as a marked …
13th December 2019
In our view, the outlook for copper prices over the next twelve months is positive. Supply is unlikely to recover nearly as quickly as many assume following major disruptions this year, and demand should at least stabilise. In addition, exchange stocks of …
9th December 2019
Despite somewhat more encouraging economic data releases, industrial metals prices struggled to find direction in November mainly owing to the ongoing uncertainty surrounding US-China trade negotiations. We think most base metal prices will rise next year …
5th December 2019
President Trump’s decision to impose tariffs on imports of steel and aluminium from Brazil and Argentina is likely to have little impact on prices. And while this could be interpreted as a sign that tariffs on the remaining “List 4” imports from China …
4th December 2019
Following the recent correction in the nickel price, we now think there is room for it to rise next year. We expect a large loss of supply and a recovery in demand to yield a deeper market deficit, forcing drawdowns in both reported and unreported …
28th November 2019