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Commodities

Råvaruplanket — Kinafrossa inför 2018

Kina och OPEC-feber 2017
Råvarupriser har stigit markant under 2017, främst är det basmetallkomplexet som handlas omkring 20% högre sedan Kinas ekonomi utvecklats starkt i bakvattnet av 2015 och 16 års stimulanser. Oljepriset har också stigit, dock bara 8% över året men 35% sedan årets botten i juni. För olja har de fallande globala la-gernivåerna varit avgörande, marknadens betydande överskott ser ut att var under avveckling och balans närmar sig. OPEC har fått hela äran och förlängningen av OPEC-avtalet hyllades av marknaden.

Kinafrossa 2018
Vi tror att Kinas pågående produktionsreform kommer vara en mer långsiktig, strukturell förändring i råvarumarknaden än vad som initialt annonserats. Genom att minska på överproduktionen av vissa råvaror kan Kina slå två flugor i en smäll: lönsamheten stiger för de producenter som får vara kvar och luften blir bättre vilket gynnar alla.

Trots det ser första halvåret 2018 kritiskt ut för Kina. Stimulansinjektionen har slutat verka, uppgången i bostadspriserna har stannat av i de stora städerna, inve-steringarna har minskat både från statliga och privata bolag. Mer stimulanser kommer säkert men först måste det blir sämre, vilket betyder att nästa stimulansvåg är att vänta tidigast andra halvåret 2018. Fram till dess ser vi risk för tillfällig dipp i basmetaller.

Motvind i öknen
Även oljepriset står inför en nedgång när säsongs-mönstret för den påbörjade lagernedgången byter rikting och börjar stiga under första kvartalet. Skifferoljan står också inför ökad aktivitet när höstens högre oljepris slår igenom med början i fler riggar till fälten. Vi har ett oljepris på USD 51 för 2018.

Martin Jansson, Strategist | nija03@handelsbanken.se

Commodity Bulletin — Turbulence in China as 2018 approaches

China and OPEC fever were the stories in 2017
Commodity prices have increased significantly in 2017. It is mainly the base metal complex that is trading around 20% higher as a result of China's economy having performed strongly in the wake of stimulus from 2015 and 2016. The price of oil has also risen, and while it has only increased 8% over the year as a whole, it has jumped 35% since its low in June. Falling global inventories have been decisive for oil; the market's huge surplus is gradually declining and equilibrium is approaching. OPEC has been given all of the credit, and the extension of the OPEC agreement was hailed by the market.

Turbulence in China during 2018
We believe that China's ongoing production reform will be a more long-term, structural change in the commodities market than was originally announced. By reducing overproduction of some commodities, China can kill two birds with one stone: profitability will increase for producers who remain, and air quality will improve to the benefit of everyone.

Despite this, the first half of 2018 looks critical for China. Stimulus measures have stopped working, the rise in housing prices has levelled off in major cities and both state-owned and private company investments are lower. More stimulus measures will surely follow, but we expect that things will need to get worse first. This means that the next wave of stimulus measures is not expected until the second half of the year. Until then, we see a risk of a temporary dip in base metal prices.

Setback in the desert
We argue that the oil price is also set to drop when the seasonal pattern of decreasing inventories changes direction and starts to rise during the first quarter. Shale oil also faces increased activity after a period of escalated oil prices, starting with more rigs in the fields. We forecast an oil price of USD 51/bbl for 2018.

Martin Jansson, Strategist | nija03@handelsbanken.se

Commodity Strategy Comment — OPEC and non-OPEC extended the deal

OPEC and non-OPEC agreed to extend production cuts to the end of next year, as the target to bring global stocks down to their five-year average has not yet been achieved. However OPEC plans to revaluate the accord at the OPEC meeting in June; it is not simply a clean nine-month extension. Russia finally agreed to continue to work with OPEC and won the battle of being the most influential participant in the deal by refusing to announce its intensions ahead of the meeting. An exit strategy seems to be less of a problem, as Novak and Al-Falih say they have come to the joint conclusion that they are far away from reaching the final goal.

Martin Jansson, Strategist | nija03@handelsbanken.se

Commodity Strategy Comment — The show must go on in Vienna

Along with the market, we expect an extension of oil production cuts from OPEC and Russia at the upcoming OPEC meeting in Vienna on November 30. OPEC is sailing with a strong tailwind, as a draw on global stocks has started, and compliance reached more than 100% in both OPEC and non-OPEC in October for the first time. For H1 2018, we see compliance with proposed cuts as less of a problem; instead, market focus will move to global stocks, which will likely start to flatten as the seasonal tailwind has swept through and there is higher activity in US shale after oil traded above USD 60.

Martin Jansson, Strategist | nija03@handelsbanken.se