Expectations of a soft landing in China are providing some hope for commodity markets. This should boost sentiment and lead to stronger demand that will extend the recent rally into year-end.

However, there are some upside limits. China’s structural issues – worsening demographics, lack of productivity improvement and trade tension – remain. Nevertheless, a stabilisation in its economic activity should be a welcome relief for commodity markets, and we expect them to track higher in Q4. 

Ultimately, the strength of the rally will be determined by the broader macro backdrop.