Commodity metals have had a rough time over the past couple of years. A lengthy trade war between the United States and China during Donald Trump’s presidency, followed by a global pandemic that closed borders and shut down production in many countries did little to assuage the fears of worried economists.
In 2021, however, there has been cause for much more optimism. Prices for industrial metals such as copper and iron ore have set new all-time highs. Gold prices have continued to remain high.
Battery metals have seen increases in demand. Experts are theorizing as to whether the market has entered a new commodities supercycle. According to Marc Desormeaux, senior economist at Scotiabank, there are two main factors at play that have led to this rise in commodity prices.
“The main reason for [the price gains], at least at the start of this year, relates to the strengthening of the global economic backdrop,” Desormeaux said. “We’re seeing, in Canada for instance, more and more data coming out of the first quarter showing that we continue to expand economically even though lockdowns were in effect for the second and third waves.
Vaccination rates are picking up and we’ve got the U.S. fiscal stimulus package coming online, which is expected to contribute significantly to economic growth.