In August, commodity prices fell off a cliff, but later in the month recovered remarkably. Between the end of July and the 26th of August, the CRB index lost more than 8%. It moved lower in tandem with Chinese equity markets and emerging market currencies. This was mainly a reflection of global growth worries and fears of a sharper slowdown in China. However, since then commodity prices have recovered sharply. The considerable surge in the WTI oil price was the main contributors to this recovery. In addition, the stabilisation in Chinese equity markets has also played an important role. Although China faces several downside risks, it has large buffers and the authorities have many tools at their disposal. Therefore, the slowdown will remain gradual in our view. We expect that we have seen most of the downward correction and expect commodity prices to recover further. In particular we see upside for base metal prices and oil prices.
Monthly Commodity Update-Sept 15.pdf (322 KB)