FlowanDebb

China consumes half of the world’s raw materials and is expected to remain one the world’s leading influencers in the industrial metals sector. 2017 saw Beijing impose a revolutionary crack down on excess steel-making capacity and inefficient mills in an effort to improve air pollution, which had plagued its industrial provinces for decades. The crackdown offset the drop in domestic demand which followed a tightening of monetary policy and slowdown in the residential property market, much to the relief of miners which feared a decline in demand from the world’s largest consumer would impact on global prices and eat into their margins. With the capacity cuts scheduled to continue into 2018, it is likely that industrial metal prices will be sustained. Steel prices will benefit from reduced production capacity, tightening supply and in turn supported prices, and high grade iron ore demand will be on the up thanks to the focus on moving production to mills with the greatest eff...

Part 1 - Tailwinds from 2017 2017 was a successful year for commodity investors and with the positive global growth prospects forecasted, 2018 has teed itself up for yet another year of commodity price gains. The World Bank has lifted its economic growth forecast to 3.1%. The IMF expects global GDP to rise 3.6% this year. A key indicator of global commodity performance is the US dollar (USD) - a strong USD tends to be bad news for commodity prices. The reason for this is that there is a strong inverse relationship between the USD and commodity prices and although the drivers behind this relationship are complex and the relationship is not necessarily one of cause-and-effect, the historical consistency of it indicates that it warrants a close watch. Following Trump’s successful presidential candidacy campaign in which he promised to prioritise tax cuts, increase infrastructure spending and make “America great again”, it was anticipated by many that the USD would have a...