• Commodity prices have generally fallen in recent weeks, as global containment measures intended to limit the spread of Covid-19 have weakened demand prospects, while the resumption of some activity in China has increased supply of some commodities (most notably coal).
• Overall, the global economic outlook has deteriorated since last month, with the downturn expected to far exceed the Global Financial Crisis. This presents a very negative picture for commodity demand in the near term. However, the scale and duration of the downturn is also highly uncertain – our expectation is that a global recovery commences in Q3 2020, however there is downside risk to this outlook.
• In annual average terms, US dollar denominated commodity prices are forecast to fall by 16.2% in 2020, driven by a drop in liquefied natural gas (LNG) along with iron ore and metallurgical coal.
• A modest recovery is expected in 2021, with commodity prices forecast to increase by 0.5%.

Find out more in NAB’s Minerals & Energy Outlook – April 2020