Overview

• Trends across commodity markets were mixed in May – with iron ore, base metals and oil markets tracking higher, while hard coking coal was notably weaker. In the case of iron ore, supply side fears (due to the COVID-19 outbreak in Brazil) could keep prices elevated in the near term. Most other prices are below pre-COVID-19 levels.
• The global economic environment remains weak – although a broad range of countries have started to ease restrictions, with activity indicators starting to recover. Global growth is expected to contract sharply in 2020, resulting in the largest downturn on record since the early 1950s (and likely since the Great Depression).
• In annual average terms, US dollar denominated commodity prices are forecast to fall by 13.8% in 2020 – driven largely by falls in Liquefied Natural Gas (LNG) and hard coking coal prices. We forecast a modest increase in prices in 2021 – up by 1.1%.

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