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All Commodities Publications

Commodity Strategy — From monopoly to duopoly

OPEC and non-OPEC agreed to start a new production cut to balance the market in H1 2019. The next OPEC meeting will be as soon as April, which further emphasises the high level of uncertainty around the new accord. The decision came after two days of marathon talks in Vienna and a long press conference to further convince the market of the strong alliance between Saudi and Russia. The meeting was all about Saudi and Russia, with OPEC clearly developing from a monopoly to a duopoly that cannot stand without support from Putin.

Martin Jansson, Strategist |

LME Week 2018: — The metal traders’ forum in London

LME Week, the annual gathering of the global metal community in London, is steeped in tradition. Traders meet to exchange experiences, insights and opinions on the state of the market and future metal prices. The event traditionally represents the starting gun for price negotiations for physical supply contracts between industry producers and consumers. Quite simply, a huge amount of metal expertise is gathered under one roof. Global macroeconomic conditions face headwinds in the form of a trade war, an emerging markets crisis and USD strength hurting sentiment. Ferrous metals have outperformed base metals all year, as pricing is driven more by physical fundamentals than by macroeconomics.

Martin Jansson, Strategist |

Trump holds the key for commodities —

In a summer when investors have been caught off guard by everything from emerging market woes and the dollar's tailwind to a brewing trade war, commodity markets have once again appeared in the crosshairs in terms of market turbulence. This time, it is not China, OPEC or oil which are central to crisis, but rather it is the USD-financed emerging markets and their mined metal and soft commodity production. We do not think the emerging markets crisis will be a China crisis and we believe that copper and zinc are set to rebound.

Martin Jansson, Strategist |

Commodity Bulletin — Trump against the world

Trump against Europe undermines diplomacy
President Trump’s negotiating strategy (pursuing many high-stakes negotiations with little possibility of winning them all) may have been a recipe for success in business, but running US foreign policy with the same methods has disrupted the world order as we have known it since WWII. Europe’s leaders appear to have decided they can no longer rely on the US for a helping hand and are now trying to fight fire with fire.

Trump against China fuels commodities inflation
The trade war with China has shifted back and forth but has now entered a phase with a clear strategy. The “shot in Sarajevo” will be fired on July 6 when tariffs are imposed, which does not leave much time for a breakthrough. The US has its sights on China’s ambitions of climbing the value chain, while China is aiming at US commodities exports. With tariffs on everything from soybeans and beef to cars, there will be inflation on both commodities and consumer goods.

Trump against Iran fuels the price of oil
After 18 months of production cuts, OPEC changed tack during the year’s first meeting in Vienna. The expanded group, OPEC+, is returning to its target of 1.8 Mbpd. In practice, this means that the strong countries will have to increase production and compensate for the weak countries involuntarily having to cut more than the agreed production. Saudi Arabia has therefore prepared
the way for it to be able to capture Iran’s market share when US sanctions are re-imposed in November. The oil price rose on the details of when OPEC’s reserve capacity will decline further.

Trump against NAFTA fuels agricultural goods
Trump’s tough rhetoric against the US’s neighbours and his scorn for Canada after the G7 meeting have the potential to lead to NAFTA’s demise, and countermoves from Mexico and Canada in the form of soy and corn tariffs, would lay the foundation for food price inflation.

Martin Jansson, Strategist |

Råvaruplanket — Trump mot världen

Trump mot Europa underminerar diplomatin
President Trumps förhandlingsstrategi har blivit vida känd. Att driva många förhandlingar med höga insatser parallellt med liten sannolikhet att vinna dem alla må varit ett framgångskoncept som privat affärsman. Att driva USA:s utrikespolitik med samma metodik har rubbat världsordningen såsom vi känt den sedan andra världskriget. Europa har försökt sätta hårt mot hårt och värna sin suveränitet och fått lära sig att om man söker en hjälpande hand, får man börja leta i änden på sin egen arm.

Trump mot Kina driver bred råvaruinflation
Handelskriget mot Kina har växlat fram och tillbaka men nu nått en fas där strategin ligger klar och ”skottet i Sarajevo” avfyras den 6e juli då tullarna ska införas, en kort frist för att hoppas på genombrott i skyttegravarna. USA skjuter in sig på Kinas ambitioner att lättra i värdekedjan medan Kina skjuter in sig på USA:s export av råvaror. Med tullar på allt från sojabönor och kött till bilar kommer inflation både från råvaror och konsumtionsvaror.

Trump mot Iran driver oljepriset
Efter 18 månaders produktionssänkning bytte OPEC fot under årets första möte i Wien. Den utökade gruppen OPEC+ återgår till målet på 1,8 Mbpd. Det betyder i praktiken att de starka länderna får öka produktionen och kompensera för att de svaga länderna ofrivilligt sänkt produktionen mer än avtalat. Saudi har därmed bäddat för att kunna vara med och ta Irans marknadsandel
när sanktionerna slår till från USA i november. Oljepriset steg på beskedet när reservkapaciteten hos OPEC minskar ytterligare.

Trump mot NAFTA driver jordbruksråvaror
Trumps hårdnackade retorik mot grannländerna och hånfullheten mot Kanada efter G7-mötet har potential att leda till Naftas sammanbrott och motaktioner i form av tullar från Mexiko och Kanada på USA:s export av soja och majs, vilket bäddar för matprisinflation.

Martin Jansson, Strategist |

Commodity strategy — Rising oil price forecast

We have been expecting lower oil prices for some time. However, we now see a steady line of price-supporting factors playing out. We therefore increase our oil price forecast from USD 55 to USD 70 at the end of 2018. We continue to believe USD 50-55 is a reasonable range for supply and demand to grow in tandem in the longer term.

Martin Jansson, Strategist |