汇丰银行-全球-投资策略-全球商品：过山车过后-2019.3-62页.pdf

Disclosures&Disclaimer:This report must be read with the disclosures and the analyst certifications inthe Disclosure appendix,and with the Disclaimer,which forms part of it.Play video withPaul Bloxham and Gordon GrayBy:Paul Bloxham and teamMarch 2019GlobalEconomics/EquitiesGlobal CommoditiesAfter a roller coaster rideMuch like other asset classes,commodity prices rode a roller coaster over the past six monthsPrices have steadied recently,and despite slower global growth,we expect them to trend higher in 2019 and 2020Tight supply and environmental policy are still key themes underpinning the global commodity prices outlook 1 Economics/Equities Global March 2019 1)Just like a roller coaster ride Commodity prices have ridden a roller coaster,much as has been the case for other asset classes,including equities,bonds and credit in the past six months.Slowing global growth,tighter financial conditions and trade policy uncertainty all played a role.But supply side developments were important too,particularly for oil.Commodity prices have risen modestly this year to date,as the Federal Reserve has been more dovish,Chinese authorities are providing more stimulus,trade policy tensions have eased and OPEC is constraining its oil supply.2)We expect prices to trend higher,despite slower global growth For many commodities the key supply side themes remain the same.For metals,years of low investment,following a super-cycle earlier in the century,means that supply is tight.For oil,OPEC producers are seeking oil prices of around USD70 a barrel to meet their fiscal break-evens,but nimble US shale producers can deliver new supply when prices climb.Overall,the key difference is that global growth has weakened,and trade tensions remain a threat to demand.We expect global commodity prices to be 9%lower in 2019(on average)than the previous year,reflecting the drop seen in late 2018,and for them to rise by 9%in 2020.3)Chinas growth is expected to be supported by policy stimulus At the same time,our outlook for Chinas growth,which matters the most for the bulk of commodities,is quite positive.Chinese policymakers have been pulling forward infrastructure projects,particularly subway systems,loosening monetary policy and delivering tax cuts.HSBCs China economists expect policy stimulus to lift growth in the second half of 2019.On the supply side,Chinas environmental policy has continued to constrain domestic production of lower-grade materials,particularly coal and iron ore.4)Oil is edging higher,with US shale and OPEC in a tug-o-war Oil prices rode the roller coaster most aggressively.Brent oil peaked at US85 a barrel in October 2018,fell to US50 a barrel by late December 2018,and has climbed to US65 a barrel recently.This partly reflected global growth uncertainties,but the perfect storm of supply side developments played a larger role.US shale producers,OPEC and Iran delivered more supply than expected.More recently,supply from OPEC has been falling,and some of the global growth concerns have faded,which has lifted oil prices,despite strong US supply.We see Brent averaging USD64 a barrel in 2019e and USD70 a barrel in 2020 and 2021.5)Limited spare capacity should see mining investment rise Metals prices also fell last year on global growth concerns,and have risen more recently.However,most metals prices have been fairly resilient,reflecting limited spare capacity,following the mining investment super-cycle earlier in the century.Although miners remain cautious,we expect investment to pick up modestly in 2019 and 2020,supported by strong profitability and high capacity utilisation.However,given only a modest expected pick-up in investment we also see metals prices rising.In the short run,we favour bulks over base metals prices,but in the longer run we see the base metals outperforming the bulks.Ten themes in focus Up,down and up again We expect global commodity prices to trend higher through 2019 and in 2020 A pick-up in Chinas growth and more supply-side reform should support metals prices Brent oil is forecast by HSBC to average USD64 and USD70 a barrel in 2019 and 2020 Limited spare capacity is supporting metals prices Economics/Equities Global March 2019 2 6)Environmental policy is playing a bigger role Environmental policy is playing an increasing role in commodity markets.Chinas recent National Peoples Congress saw the announcement of a further strengthening of environmental controls.Amongst other things,this is constraining onshore production of low-grade iron ore and coal,and driving a stricter focus on the quality of imports.Globally,environmental concerns are discouraging investment in coal mines,further constraining supply.Global policy shifts are also driving a strong rise in demand for liquefied natural gas and electric vehicles,particularly from China.Calls in the US from prominent economists to price carbon as well as the Green New Deal policy platform are also important developments.7)Battery commodity super-cycle is a long game Environmental policy changes have driven a massive ramp-up in projections of medium-term demand for electric vehicles and battery storage devices in recent years.This has driven a super-cycle in the battery-related commodities,with prices of lithium and cobalt having risen to high levels.However,as supply projections for lithium have ramped up,prices have declined somewhat,although they are still at high levels.For cobalt,prices have fallen more sharply as China has built up large stockpiles due to concerns about reliability of supply.Strong demand for batteries is also supporting the prices of high grade nickel.We see much of the positive news as already in the price of lithium,but expect it to remain high in coming years.8)India is set to play a bigger role in commodity markets Indias economy is reaching the stage of its development when its growth might be expected to become more commodity-intensive.With a capital stock that,on a per capita basis,is half the size of Chinas and one-eighth that of the US,there is considerable scope for greater investment in housing and infrastructure.As HSBC is forecasting India to continue to be the fastest growing large economy,demand for commodities is expected to rise.However,given Indias large services sector and less manufacturing-oriented growth path,we see a strong rise in demand for energy as more assured than for metals.9)Drought and tariffs are driving agricultural markets A number of agricultural commodity markets have been heavily affected by changes in trade policy and erratic weather.Droughts in a number of important regions during 2018 have meant poor growing conditions and global grain production is set to have fallen for two years in a row.Trade policy has also caused some disruptions.The US is a significant exporter of certain agricultural commodities.However,for most grains,stocks are at high levels,limiting the upside for prices.Finally,a key theme for agricultural markets remains the ongoing rise in demand for the finer foods,such as dairy,fish,meat and sugar,as middle class incomes rise in Asia.10)Gold is back on the radar After a generally sluggish performance through much of 2018,gold prices have risen this year,moving to an eight-month high of USD1346 an ounce by mid-February before falling back to USD1300 an ounce more recently.Our precious metals analyst,Jim Steel,sees gold continuing to benefit from high financial market volatility,trade and geopolitical risk but thinks that a firm USD is a potential obstacle to gains.He has the gold price averaging USD1314 an ounce in 2019 and climbing to USD1345 an ounce in 2020.Palladium has also been in focus recently,with strong price gains driven by constrained mine supply out of Russia and South Africa.Environmental policies are increasingly affecting commodity markets Lithium prices are past the peak,but expected to stay high Indias more assuredly set to support energy demand,than metals demand High stocks of grains have muted the effects of droughts and trade policy changes Gold prices are expected to average USD1314 an ounce in 2019 and USD1345 in 2020 3 Economics/Equities Global March 2019 Ten themes in focus 1 1.After a roller coaster ride the relief of rising prices 4 2.Oil and gas:A roller coaster and now a tug-o-war 16 3.Metals:Keep calm and carry on 25 4.Battery commodities:The super-cycle is a long game 37 5.Agriculture:Trade policy&the weather drive volatility 42 6.Precious metals:Gold is back on the radar 52 Disclosure appendix 58 Disclaimer 60 Contents Economics/Equities Global March 2019 4 A reset after a roller coaster ride The past six months or so has been a roller coaster ride for global commodity prices.After rising strongly in the first half 2018,global commodity prices fell sharply in the second half of 2018 before,more recently,starting to rise(Chart 1.1).The fall in commodity prices in the second half of 2018 reflected a range of factors.On the demand side,the outlook weakened as tightening financial conditions,particularly as the US Federal Reserve lifted its policy rate,and rising trade policy tensions weighed on global growth.On the supply side,developments in oil markets,particularly a strong boost to US shale output and an OPEC boost,played a key role.Since the beginning of this year,commodity prices have gradually risen,as the Federal Reserve has become more dovish,Chinese authorities are delivering policy stimulus and global trade policy negotiations between the US and China have had some more positive results.For oil,supply has become more constrained by OPEC.For the metals,supply remains tight due to a lack of new investment in recent years.For a number of agricultural commodities,including soybeans,an easing in trade tensions has seen markets move back to being driven by supply and demand fundamentals.1.After a roller coaster ride the relief of rising prices Concerns about a sharp global slowdown and supply-side factors,particularly for oil,have driven a recent cycle in commodity prices Prices have steadied recently,and despite slower global growth,we expect them to trend higher in 2019 and 2020 Tight supply and environmental policy are still key themes underpinning the global commodity prices outlook Paul Bloxham Chief Economist,Australia,NZ&Global Commodities HSBC Bank Australia Limited .au+61 2 9255 2635 After falling in H2 2018,commodity prices have risen since the turn of the year 1.1.After a roller coaster ride in 2018,we expect commodity prices to gradually rise Source:IMF;HSBC estimates 0501001502000501001502001992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020IndexIndexAggregate Commodity Prices*Nominal prices*IMF All commodity price index*Real base=June 2012,deflated by US CPIReal prices*HSBC resource analystsforecasts 5 Economics/Equities Global March 2019 Global growth is slowing,but not collapsing But we are not out of the woods yet.Global growth is slowing and is set to weigh on commodity demand to a degree.However,much of the weakness is likely to already be in many of the commodity prices,particularly as the forecasts from HSBC economics suggest that global growth is slowing,not collapsing(Chart 1.2).Much of the slowdown is also being driven by a downturn in the industrial cycle,and weaker growth in trade(Charts 1.3 and 1.4)(see How bad is it really?Deciphering the global industrial downturn,18 February 2019).However,for many commodities an economys domestic demand is a larger source of demand than the export industries.As policymakers seek to support domestic growth,particularly by delivering looser fiscal policy settings and by building more infrastructure,this should be supportive of demand for commodities.Trade policy is still a key risk Nonetheless,trade policy remains a risk to the outlook.Although recent trade negotiations between the US and China have been constructive,there remains a risk of further escalation of tensions(see China-US trade talk,25 February 2019).Tensions could also rise between the US and Chinas other trading partners as the negotiations lead those trading partners to take one side or the other in various disputes.The US administration is also still yet to announce its response to its national security investigation into US reliance on motor vehicle imports(section 232)which is particular risk for commodities used in car production,like aluminium and zinc.Global growth is slowing,but not sharply Domestic stimulus should support demand 1.2.Global growth is slowing and is expected to be a bit below average in 2019 and 2020 Source:IMF;HSBC forecasts 1.3.Manufacturing sentiment has fallen 1.4.Growth in global trade has slowed Source:Markit Source:CPB World Trade Monitor;HSBC The recent trade policy news has been positive,but there are still risks-3-2-101234-3-2-1012342000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020Global GDP GrowthAnnual%Average since 2000HSBC forecasts40424446485052545658404244464850525456582012 2013 2014 2015 2016 2017 2018 2019IndexIndexHeadlineNew OrdersNew Export OrdersManufacturing PMI:World Economics/Equities Global March 2019 6 Chinas growth has slowed Key to the outlook for most commodity prices is the outlook for growth in China.This reflects two factors.First,China has been the largest contributor to global growth in recent years(Chart 1.5).Although IMF forecasts suggest that the US could contribute more to overall global GDP growth(in USD terms)in 2019,they suggest a bounce back in 2020.It is also of interest that the expected slowdown in this contribution is much less severe in 2019 than it was in 2016,when commodity prices fell significantly.Second,China still dominates demand for most commodities,particularly the metals,and is a key driver of marginal demand for many others,like oil.but is expected to lift In response to rising global trade tensions and a slowdown in industrial production and exports,Chinese authorities have been delivering policy stimulus to support growth.This has included some pull-forward of infrastructure investment,including subway systems,cuts to the reserve requirement ratio for parts of the banking system and large tax cuts that were announced at the National Peoples Congress(see Hongbin,Qu(2019)China 2019 NPC:Premier Li announced a bigger-than-expected tax cut,5 March).The key story is that this should support domestic growth in China,which for most materials is more commodity-intensive than manufactured exports.This is particularly the case for steel,where its dominant use is in construction(Chart 1.6).Copper is also used intensively in construction,while some of the other base metals,such as aluminium,are more tied into the manufactured supply chain(Chart 1.7).Chinas growth is slowing,but not as much as in 2016 in USD terms HSBCs economists expect Chinas growth to pick up through 2019 1.6.Steel is largely a construction story 1.7.but base metals are less so Source:Australian governmen