This year, the global commodity market is going through hard times weighed down by concerns over the outlook for energy demand amid the rapidly spreading coronavirus outbreak in China. Taking into account the negative background, analysts at Citigroup have cut its price forecast for different types of commodities. Experts warn that the impact of coronavirus on the global economy looks much worse than it was initially predicted. Therefore, the analytic group has downgraded its outlook for commodity prices. According to Citigroup, Brent crude price will slide to $54 a barrel from previously estimated $69. Citi lowered its second-quarter crude forecast for Brent to $50, and to $53 per barrel for the third quarter. Experts do not rule out the scenario when the global crude benchmark could fall to as low as $47 a barrel which would be its worst settlement in two and a half years. Citigroup outlook for the American crude WTI was rather optimistic at the beginning of the year. It was estimated to reach $58 a barrel in the fourth quarter of 2020. However, in Q1 WTI crude is expected to average at $50 a barrel, down from a previous forecast of $65 a barrel. Other commodities, including copper, are also likely to fall in 2020. Analysts at Citigroup reduced its first-quarter copper forecast to $5,000 a ton from previously estimated $6,000. The forecast for coking coal was also downgraded to $150 a ton from $170, for iron ore - to $75 per ton from $80 per ton, and for aluminum - to $1,710 per ton, which is down from early estimates of $1,775 per ton. The bank specialists are sure that the sharp decline in global energy demand will drastically affect commodity quotes. The negative impact of the demand shock on commodity prices should peak in the first quarter, the analysts sum up. In the short term, the uncertainty in the global markets will prevail. The situation will mostly depend on the duration of the coronavirus epidemic.
