• In Q1 2020, NAB’s Non-Rural Commodity Price Index is forecast to fall by around 3.9% qoq in US dollar terms, following on from a 8.4% qoq decline in Q4 2019. Falling prices for iron ore across both quarters is the key driver of this trend.
• Economic conditions in 2020 are expected to remain unfavourable for commodity markets – with global growth at sub-trend rates and uncertainty around the global trading environment persisting. At the time of writing, the “Phase One” trade deal between the US and China has not been concluded, and the US has introduced new trade measures against other countries.
• That said, Chinese infrastructure investment could provide some support to commodity markets next year – albeit not enough (in our view) to drive prices higher.
• In annual average terms, US dollar commodity prices are forecast to fall by 11.7% in 2020 – with lower iron ore, metallurgical coal and liquefied natural gas (LNG) prices the key drivers. In 2021, prices are forecast to fall by a further 0.7%.

Find out more in the Minerals & Energy Outlook – December 2019