Bulk commodities recalibrate as demand flounders

Despite the positive impact of lock downs on new virus infections, the road to recovery outside of China still seems a long way off. The difficulty facing economies trying to emerge from lock down was laid bare by localised spikes in infections in Japan, Singapore, and also in northeast China. Bulk commodity buyers and sellers have their work cut out to repair supply chains fractured by the regional quarantines imposed over the last 4 weeks. Steep initial price falls were replaced by modest declines last week, with China providing some strength as many indicators there point to a near complete recovery in bulks demand. Quarantine extensions are inevitable and ex-China demand will stay very low in April, and probably May. Without additional supply cuts, we expect some downside to price in the coming weeks.