Commodities Outlook

The Commodities Outlook has been questioned again amid a spike in global uncertainty. Some country indicators were slashed in our macro surveys for July, notably for 2017, as economists grappled with the implications of Brexit and concerns about the security environment. Analysis is available in our regional macro publications, each of which allows users to track changes in Individual and Consensus Forecasts. Volatile financial conditions do not bode well for investor confidence, but most panellists have retained a bullish stance with regards to Energy and Metals Commodities. From a structural perspective, positive sentiment stems mainly from production cutbacks and earlier steep price declines, which have reduced stockpiles. A pause or slowdown for some commodities may, nonetheless, occur in response to global uncertainty and upward price corrections that have already taken place. Crude Oil is sharply above its January 2016 low, but may remain just below US$50 per barrel during the next two quarters. In addition, Consensus Forecasts for 2017 to 2020 suggest that the steep trajectory of Brent and WTI will begin to flatten. Zinc has led the revival in base metals, followed closely by Tin, amid mine closures and structural supply deficits. Nickel performed well in June, as the election of a new government in the Philippines – a major exporter – raised supply concerns.

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