Commodities Comment:June rebound, but disappointing 1H 2015 for global car sales

Global car sales returned to year-on-year growth in June, thanks to a strongperformance from Western Europe. But over 1H15 the pace of expansion hasbeen disappointingly slow, something that is negative for many commodities,especially the PGMs. We think car sales should accelerate in 2H, but full-yeargrowth is likely to be the slowest since 2009.

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    While much of the recent sell-off in commodities has been led by financialmarkets, those which are set by the physical market have also been dropping;showing underlying fundamentals are currently weak. Perhaps most notablehas been ferrous scrap, for which the CFR Turkey price for heavy meltinggrade material has dropped from $270/t in late-June to $220/t currently. At thesame time, Turkish steel rebar prices have dropped $30/t. Scrap and rebarare two areas the LME is looking to launch financially settled contracts in thecoming months. Despite scrap’s price fall, it has outperformed iron ore