• Global economic data sent divergent signals to commodity markets in August. China’s outlook gave less comfort in comparison to the better US data. There was more movement in financial markets during the month. Meanwhile further sanctions on Russia were put on hold.
• Bulk commodities were a mixed bag – iron ore continued its downward trend as mining giants ramped up production in an oversupplied market. Chinese industrial indicators were weaker, signalling potential for weaker steel demand. The outlook for iron ore remains subdued and our forecasts revised downward. The spot prices for metallurgical and thermal coal were relatively stable.
• Month on month base metals prices were mixed in August, but the aggregated price index fell modestly. Copper and nickel were lower, while zinc, lead and aluminium were up – the last performing best as tight physical demand drove up premiums. Prices dropped in early September in response to USD strength, while recent Chinese economic data hinted at slowing demand. Nickel prices fluctuated in response to reports of a potential export ban in the Philippines (subsequently watered down).
• Investors continue to reduce their appetite for gold on the back of USD strength against major currencies and an apparent easing in the risk premium as geopolitical tensions ease.
• Ongoing geopolitical tensions flared in Ukraine, creating concern over natural gas supplies to Europe, although if the fragile ceasefire holds these concerns should be allayed.

For further analysis download the full report.

• Commodity Update: Minerals and Energy – August 2014 (PDF, 490KB)