Commodity Report – March 2018

Top Trending Commodities


Commodity Overview – Wood Pulp
Description – Overview

3 Year Pulp & Kraft Trend

  • Prices for unbleached semi-extensible sack kraft paper have increased across Europe due to continued tight markets.4
  • Container Board supplier SCA has increased all of its brown and white Kraftliner grades by €60 per Ton since February, due to tight supplies of all Kraftliner grades.5
  • The corrugated board market is still showing strong demand for paper despite the market for recycled corrugated case material no longer being as overheated as it had been in the previous months. 6
  • In Germany, additional volumes of Kraftliner have become more plentiful however, holding current prices, however the kraftliner market may become tighter once more on the back of the spring maintenance season at producer plants.

 

Commodity Overview – Construction
Description – EU

3 Year EU Construction Trend
  • The February Ulster Bank construction purchasing managers’ index (PMI) survey has indicated 4.5 years of continuous growth in the Irish construction industry with strong short term prospects.2
  • The Ulster Bank Construction Purchasing Managers’ Index (PMI) dropped to 59.2 in February of 2018 from 61.4 in January.
  • Demand for workers in the construction industry is set to increase. There were just to 1,735 construction apprentices employed last year in Ireland, down from 3,808 apprentices in 2010. In the UK, recruiters have recorded a marked decline in the availability of Eastern European workers since Brexit was announced.3

Commodity Overview – Dairy
Description – Milk

Dairy 3 Year Milk Trend
  • Liquid Milk production in 2017 was 4% higher than 2016 reaching a record volume of 2.284 billion litres.8
  • The expectation is that butter prices to June 2018 will continue to trade in the region of €4,800/t.9
  • Irish Processors are paying 30-34.5c/L including VAT for base milk prices, up to 3c lower than their January prices.10
  • Butter price in the latest Global Dairy Trade auction saw butter prices drop by 3.2%.11

Commodity Overview – Crude Oil
Description – Brent

3 Year Crude Oil Trend

 

  • U.S. shale oil production of shale oil in 2018 is expected to reach the highest annual average production in U.S. history and some predict that the U.S. will surpass Russia to become the world’s largest oil producer. 12
  • Following $70/barrel prices reached in January 2018, oil prices stand at the highest monthly average since 2014.
  • Expectations are for Crude oil prices to average $62/barrel in 2018 and in 2019 and to rise to $85.70/barrel in the longer term to 2025. 13


Commodity Overview – Currency
Description – EUR – GBP

3 Year EUR – GBP Trend
  • Sterling reached its highest level since June at 86.90, following the news that a Brexit agreement with Ireland had been reached.16
  • The Euro Zone Purchasing Manager’s Index for February showed a slight dip as it fell to 57.1 from January’s 58.8
  • The pound has remained relatively stable in recent weeks as Brexit talks have continued without a UK compromise with the EU on a soft border option.16
  • The latest UK Purchasing Manager Index figures exceeded forecasts at 53.3 with strong job creation figures following a rebound in business activity growth in February.​15

Commodity Overview – Currency
Description – USD – EUR

3 Year USD – EUR Trend
  • The IMF has predicted a 2.7% growth for the US economy in 2018. 17
  • US interest rates are expected to rise in 2018 and concerns are mounting on the affect to the economy of interest repayments on the US National Debt, which now stands close to $20 Trillion.
  • Eurozone growth of 2.2% has been forecasted for 2018 and 2% in 2019.
  • Predictions are that EUR/USD will continue to trade at between 1.24 and 1.28 to the end of 2018.

Commodity Overview – Currency
Description – GBP – USD

3 Year GBP – USD Trend
  • Expectations are that pound will exchange at 1.41 against the dollar in March, at 1.45 at June end and at 1.44 by the end of 2018.16
  • The US unemployment rate remains stable and new job number increases were recorded in February.20
  • The US announcement that it would impose tariffs of 25% on Steel imports has sparked a trade war reaction from China, Europe and the UK.

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