Overview

• The recent divergence in commodity markets continued in May, with relatively subdued trends across the energy and steel materials sector in stark contrast to surging prices for base metals and gold. In the case of base metals, some of the recent surge has been driven by speculators – with the chart below highlighting a considerable increase in speculative net long positions to the LME and COMEX copper markets over recent months.
• The global economic environment remains relatively unfavourable for commodities. Consumption in advanced economies should remain subdued in the near term given still restrictive monetary policy, while trade tensions could start to impact commodity consumption in China (noting its own domestic demand is weak).
• We have modestly revised our forecasts for coal and the quarterly profile for LNG this month. NAB’s Non-rural Commodity Price Index is forecast to fall by 12.3% in 2024 and a further 12.6% in 2025 – led by softer prices for bulk commodities (iron ore and coal). While there is upside risk to our forecasts for base metals, they only have a low weight in our aggregate price measure.

Find out more in the Minerals & Energy Outlook (June 2024)