• NAB’s Non-Rural Commodity Price Index has been on the up in recent quarters, in large part due to iron ore prices, which have rallied on supply disruptions amid ongoing Chinese demand. Other commodities have been more mixed, with thermal coal and base metals lower, but gold rallying and oil facing competing forces.
• We see our Non-Rural Commodity Price Index contracting a little (0.7% q/q) in Q3 2019. Again, iron ore is a major driver of this change, reflecting expectations of a gradual recovery in Brazilian exports and an easing in Chinese demand. We also see thermal and coking coal prices falling somewhat.
• Global economic growth remains under pressure, with the latest manufacturing surveys weakening. While we expect growth to ease further this year – and remain below average. This is likely to impact demand for commodities, although stimulus measures may in some cases support commodity demand (for example in China).

Find out more in the NAB Minerals & Energy Outlook – July 2019