Overview

• A number of commodity markets saw stronger prices in June –particularly base metals, gold and oil.
• Although global PMI surveys suggest something of a recovery in global manufacturing conditions in June –providing support for commodity demand –price pressures appear to largely be on the supply side. Relative strength in iron ore and base metals markets appear partly due to supply fears related to COVID-19 outbreaks, mostly in Latin America. A modest recovery in oil prices has been driven by supply cuts from OPEC+.
• In annual average terms, US dollar denominated commodity prices (as measured by our non-rural commodity price index) are forecast to fall by 13.7% in 2020. This fall is largely driven by Liquefied Natural Gas (LNG) and hard coking coal. We forecast a modest increase in prices in 2021 –increasing by just 0.8%.

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