LAUNCESTON, Australia, March 26 (Reuters) – It’s not quite time to run up the red flags, but some recent developments in commodity markets suggest it may be time to start looking for them in the locker.
The are two main factors that appear to be emerging that may threaten an end to the current quite rosy picture surrounding demand for commodities such as iron ore, steel and the metals most exposed to the battery boom, cobalt, lithium and nickel.
On the supply side, there is a renewed rush of optimism that may set off another round of mining companies over-paying for assets or sinking way too much capital into projects approved on the back of too bullish forecasts.
On the demand side, the drums of a U.S.-China trade war are starting to beat a little louder, with Beijing announcing duties on up to $3 billion of U.S. imports on March 23.
That came after the Trump administration announced plans for tariffs on $60 billion of Chinese goods, in addition to import taxes on steel and aluminium.
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