Commodities were on fire in 2021 and there is no let-up this year amid low inventory levels, an investment squeeze hindering supply and soaring demand in emerging markets, according to a new report.
“We anticipate this demand leadership trend to continue over the next several years,” wrote Orest Wowkodaw, analyst at Scotiabank Global Equity Research, in a report titled ‘Tight commodity markets ahead of impending super cycle.’
S&P GSCI, the benchmark global commodity index, leapt 47.6 per cent last year, its best return in at least a decade, and analysts believe conditions are ripe for a number of commodities to move higher in 2022 despite Omicron clouding the outlook. The index is up 6.3 per cent in the first three weeks of the year.
The focus on a “green recovery” and decarbonization are also positive tailwinds for most commodities, as investors pile into copper, nickel, lithium and other commodities vital for mass development of electric vehicles and other clean-energy technologies.