• Recent global economic data and less favourable supply fundamentals have put downward pressure on many commodity prices. China, Europe and Japan were softer, while the U.S recovery appears to be gaining traction (US GDP grew at its fastest pace since 2011), although the resulting USD strength is also weighing on most commodities. Tensions in the Middle East escalated, but this has had little impact on commodity prices.
• In China, slowing industrial trends and deteriorating property fundamentals are having an adverse impact on bulk commodity demand – prices of iron ore and thermal coal both hit five year lows, while metallurgical coal prices have been stable (albeit at very low levels). The growth in Australian bulk commodity exports has contributed to this weakness.
• In addition to USD strength, falling commodity prices have weighed on the AUD; the AUD fell more than 6% against the USD over September and is almost 10% lower than its 12 month high. This is helping to buffer the impact of lower commodity prices on Australian mining operations.
• In energy markets, global crude oil prices fell sharply amid ample supply and weak demand, combined with increasing confidence that turmoil in Iraq will not disrupt supplies. The U.S government approved a project that will export LNG to Japan and neighbouring countries. Our medium term forecasts are broadly unchanged.
• Softening data on the Chinese economy added to headwinds from the USD on base metal prices. Nickel prices were further impacted by signs of better than expected physical supply. Gold prices were also heavily affected by the USD and waning investor interest.

For further analysis download the full report.

• Commodity Update: Minerals and Energy – September 2014 (PDF, 388KB )