The second half will hinge on whether the post-lockdown revival in fuel consumption persists or gets derailed by a resurgence in Covid-19 infections
A clump of iron ore from a mine. Picture: REUTERSWith the second half starting this week, investors are weighing up the outlook for commodities over the balance of 2020 and trying to sift winners and losers as the coronavirus pandemic rips through the global economy.
As the coronavirus case count now tops 10-million, the deadliest pandemic of the modern era is stronger than ever. The half to come will be marked by the battle for the White House between Donald Trump and Joe Biden, as well as central bank action. China’s trajectory will be critical, with the International Monetary Fund now seeing 1% growth over 2020. As trade got under way on Monday, iron ore slumped with crude, while gold and copper pushed higher.
The second half will hinge on whether the post-lockdown revival in fuel consumption persists or gets derailed by a resurgence in infections. It will also be dominated by supply: to clear the billion-barrel glut of inventories that coalesced during the slump, Opec and its partners will need to show enough discipline in keeping output restrained.
Many mines are still operating with reduced staff amid the pandemic, inventories are falling and scrap is scarce. The tight supplies are coming alongside stimulus measures globally and improving demand in top consumer China. That’s all helping make the industrial metal used in everything from cars to electronics, a favourite among analysts including those at Goldman, Bank of America and Morgan Stanley.
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