Bulk commodity markets recorded another relatively weak month –with iron ore prices continuing to ease (falling below US$100 a tonne), thermal coal prices remaining weak, while metallurgical coal eased higher –away from particularly low levels. These markets appear to be well supplied, with metallurgical coal producers responding with production cuts.

Oil prices continue to garner support from the ongoing tensions between Ukraine and Russia, which persisted ahead of the Ukrainian presidential election on 26 May, from which billionaire Petro Poroshenko emerged as a clear winner with a decisive majority. Meanwhile, escalating violence in Libya following a coup attempt by a military general also drove oil prices higher, particularly for Brent.

Prices for the base metals complex generally rose in the month, but nickel continued to outperform (followed by copper). Supply factors are largely driving nickel markets, but better economic data and expectations for Chinese stimulus is helping to support the rest of the complex. Aluminium was the main exception recording a dip in average prices, although prices lifted in line with the complex during the course of the month.

Gold prices were relatively range-bound for much of the past month, but have come under pressure more recently as strong performing equity markets weigh on investor demand for the shinny metal. Asian demand has also been notably absent. Markets have shifted attention away from geopolitical tensions, refocussing on macroeconomic factors, reducing gold’s risk premium, while benign inflation pressures are detracting from gold’s appeal as an inflation hedge.

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• Commodity Update: Minerals and Energy – May 2014 (PDF, 418KB)