SM Commodities Index - July 2020

12 August 2020

The latest prices and key trends from the SM Commodities Index.

Copper

Copper prices are up 40% since April and up more than 10% in July because of mine supply disruptions, primarily in South America, according to IHS Markit. While global consumption is lower and is expected to stay lower than where we were at the beginning of the year, lower mine production more than offsets the weaker demand in our market balance calculations. We now see a surplus of less than 100,000  tonnes in 2020. It is this tighter market outlook along with Chinese demand optimism and the weaker US dollar that has driven copper prices higher over the past three months.

Palm oil

Pent-up palm oil demand has driven exports from Malaysia and Indonesia higher in July. AmSpec Agri Malaysia reported that over July exports were up 6.8% from the previous month with private sources indicating that Indonesian palm oil exports also improved after a weaker export path through May. Indonesia has also been reported to have weaker production in the first half of the year, limiting supplies. China demand is expected to continue to expand as it has recently made efforts to rebuild reserves of key agricultural commodities and even domestic demand ramps up as their economy recovers. The combination of stronger demand and reduced supply has driven up the July average price.

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