Virus challenges commodity markets

by: Casper Burgering , Georgette Boele , Hans van Cleef

The coronavirus had a downward effect on most commodity prices. Since 20 January – the date of confirmation of human-to-human transmission – prices of energy and industrial metals have fallen significantly. The outbreak has grown exponentially since, and is expected to impact the global economy dramatically during Q1. Data coming out over the next few weeks on the state of the Chinese economy will turn out to be decisive for  commodity price trends. Most output ‘lost’ in Q1 will be made up later. In addition, likely stimulus measures will support a recovery in growth. The macro climate will eventually turn for the better again. A rebound in confidence and modest dollar weakness by the end of 2020 will be supportive for cyclical commodity prices. Nevertheless, downside risks will remain high, including from a further spreading of the coronavirus, re-escalation of the trade war and a weakening in corporate investments.

Monthly-Commodity-Insights-Feb-2020-1.pdf (871 KB)