Prices of political commodities drift

by: Casper Burgering , Hans van Cleef , Georgette Boele

Prices of oil and metals were under pressure in the past three months, with a steep drop in nickel and oil.
Political sensitive commodities – especially those related to the US-China trade tensions – react swiftly on trade war news. Especially prices for industrial metals (aluminium, copper, steel), precious metals (gold, silver, platinum, palladium) and agricultural commodities (wheat, corn, soybean) tend to respond strongly on trade news with increased price volatility. We think that as soon as the trade war turmoil eases, positive fundamental drivers in most commodity markets will dominate price trends again.

The potential of a trade deal on the short term between the US and China are, however, slim. This means that the US will continue its anti-dumping trade policies and implement stricter trade related rules going forward. By this, imposed tariffs could jump to 25% on 1 January 2019, affecting global supply chains significantly. To counter negative impact on its economy, China is expected to introduce more economic stimulus. In the mean time, hopes are pinned on the G20 summit in November, where Trump and Xi Jinping are expected to hold talks. Until that time, uncertainty will dictate commodity price trends.

Monthly-Commodity-Insights-November-2018.pdf (1 MB)