Commodities Outlook. Glass Half Full


Industrial commodity prices have whipsawed since we published the November edition of the Commodities Outlook. Brent crude oil prices fell 42% between early October and late December but have since staged an impressive 33% rally. Similarly, base metal prices fell some 11% between October and December but have since recovered nearly 10%. If anything, the price action in commodity markets shows that investor sentiment has been erratic and fluctuating, first conceding to unrestrained pessimism in the final quarter of 2018 and now embracing what could appear to some as a form of complacency and a denial of the changing nature of macroeconomic conditions.

As we detail in greater length below, and in stark contrast to the last two years, the leading indicators increasingly point to a period of slower global output growth, trade and inflation. And yet, after much heated debate about the state of the global economy – and the allegedly controlled, albeit inevitable slowdown in China’s growth trajectory – we are increasingly of the feeling that commodity markets are well positioned to weather the passing storm. Fundamentals in many markets remain sound, supply is disciplined, and the global monetary U-turn is likely to appease concerns that central banks were inevitably driving the global economy into a recession. In other words, while the macroeconomic horizon remains overcast with uncertainty, for commodity markets as an asset class, and for the next few months, we say it is time to see the glass half full rather than half empty.

For this quarterly interim Commodities Outlook, Glass half full, our analysts provide a succinct overview of the demand and supply fundamentals for each of the 28 commodity markets we cover, and further explore seven key themes in dedicated Spotlight pages.



Societe Generale Cross-Asset Research is composed of more than 200 Analysts, Strategists, Economists and Quant, combining their expertise into ‘Research-based’ and innovative solutions suited to client’ needs: fundamental studies and expert views, investment ideas and long-term strategies, trade ideas and tactical baskets, thematic and systematic indices, quant solutions. On top of its established UK and Western European base, Societe Generale Cross-Asset Research benefits from a global coverage thanks to its presence in the US and in Asia (Hong Kong, Singapore, Tokyo and Bangalore) and Societe Generale local networks in Eastern Europe.


This editorial contains financial analysis which reflects the opinion of the Cross-Asset Research department of Societe Generale at the date of its publication. It does not necessarily reflect the views of the other departments of Societe Generale nor the official opinion of Societe Generale. This interview is dedicated to institutional and professional investors and is not deemed to be seen and used by retail investors for investment purpose. The viewers shall consult their own financial advisers to make their own appraisal.