SM Commodities Index - December 2020

21 January 2021

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


Oil prices climbed higher over November and early December due to upbeat expectations following the announcement of vaccine approvals and strong economic data from mainland China. We are still months away from widespread vaccine availability, limiting the demand recovery as much of Europe and North America face containment measures. With a large amount of production capacity sitting idle, current Brent prices near $50 per barrel look higher than fundamentals suggest.


The recent surge in copper prices (recent January prices are over $8,000 per metric ton) reflect a combination of factors: the good performance of the Chinese economy, a weaker US dollar, generous monetary and fiscal stimulus, vaccine optimism, and continuing disruptions to mine production in South America. Fundamentally, copper is in deficit with inventory falling, providing real support for prices. Heavy investor buying, which can be seen in trader position reports, is also adding upward momentum. The market will likely remain strong until mine production improves later in 2021.

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