The surge in commodity prices has been impressive since mid-2020, predictably resulting in calls that a new “supercycle” is underway. We have questioned that narrative, given the apparent supply-demand imbalances plaguing the globe and boosting prices in the process.
But one theme we do agree with is the long-term secular tailwinds behind a number of commodities required in the transition to a green economy in order to address climate change.
The aggregate annual global exploration budget is expected to increase between 5% and 15% year over year for 2022, according to a new report by S&P Global Market Intelligence.
The market researcher’s prediction is based on its own data that show that in 2021, the aggregate annual global nonferrous exploration budget has increased by 35% year over year to $11.2 billion from $8.3 billion in 2020, signalling that the sector has emerged from the downturn caused by the covid-19 pandemic.
Base metals surged, led by zinc which spiked to the highest since 2007 after European smelters became the latest casualties in a global energy crisis that’s knocking supply offline and heaping pressure on manufacturers.
Zinc rose as much as 6.9 per cent on the London Metal Exchange, and a gauge of six industrial metals rapidly closed in on an all-time high. Aluminum, one of the most energy-intensive commodities, is at the highest since 2008.
This year’s London Metal Exchange (LME) Week was a subdued affair by comparison with past excess. Put on ice last year due to covid-19, the annual metals party returned in slimmed-down form with many opting for virtual over physical drinks. Analysts were in equally sober mood. Everyone’s still positive on the longer-term energy transition story but more immediately worried about China.
The debt problem faced by real estate developer China Evergrande Group is no Lehman Moment, to quote Bank of China’s head of commodity strategy Amelia Fu, speaking at the LME Seminar. But weakening Chinese property sales spell trouble for what is a big metallic demand driver.
Find your favourite indicator of fossil fuel prices. Let’s begin with the price of coal in China, where futures have surged to US$212 a metric tonne, up 20 per cent through September and 300 per cent over the past year.
Natural gas futures approached US$6 per British thermal unit. A litre of gasoline at some Toronto stations hit $1.40, a new high in nominal dollars as the price of crude oil hit US$80 a barrel. So what’s going on and what does it mean?
LONDON (Reuters) – The world will need a lot more of metals such as copper, nickel and aluminium if it is going to decarbonise. The potential “green” demand boom from more renewable energy, more power infrastructure and more electric vehicles is tomorrow’s promise for such “energy transition” metals.
Yet, as first China and now Europe is discovering, power is a double-edged sword for metals producers and manufacturers. A power crunch in China has idled over two million tonnes of the country’s aluminum production capacity.
For months, economists have debated why the price of so many commodities — from aluminum, iron ore and copper to natural gas and lumber — have been so volatile: Are these the first signs of structural shifts in supply chains related to the energy transition, or just temporary blips?
There’s consensus on a few points: The pandemic, by halting and then restarting supply chains, threw supply and demand fundamentals out of whack, and pushed many commodity prices up.
Iron ore extended its slump below $100 a tonne and copper prices dropped in New York on Monday as China stepped up restrictions on industrial activity and fears about the collapse of the country’s largest property developer intensified.
According to Fastmarkets MB, benchmark 62% Fe fines imported into Northern China were changing hands for $92.98 a tonne, down 8.7% from Friday’s closing. Prices have collapsed about 60% since hitting a record in May, and are below three figures for the first time in more than a year.
Published on Thursday, a new Wood Mackenzie forecast for the green energy transition, or GET™ (a new MINING.COM trademark we’re making freely available) is, for good reason, already in wide circulation.
Written by global metals expert Simon Morris, VP for Research, Metals & Mining Global Metals, at the Scotland-based analytics firm, the whitepaper is titled: Champagne supercycle: Taking the fizz out of the commodities price boom
Scots may be known for their frugality, but at this website we don’t believe in taking the fizz out of anything so we decided to get on the wagon and take another look at Woodmac’s GET and planet decarbonisation predictions.
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Commodity prices have been struggling in recent weeks, pausing this year’s remarkable run on materials stocks and raising the question of whether the opportunity for investors has ended.
But some observers remain convinced that a commodities “supercycle” – an extended period of strong demand for raw materials – is continuing, offering a buying opportunity for anyone who missed the first stage of the rally.
“Although most of the world continues to battle the COVID-19 pandemic, rapidly increasing vaccination rates combined with revved-up economic stimulus has significantly improved the outlook (and sentiment) for commodities,” Orest Wowkodaw, an analyst at Bank of Nova Scotia, said in a report this week.
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.
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The blistering run in resource prices has fizzled out over the past couple of weeks, raising doubts over whether a commodities supercycle is in the works.
What has been one of the hottest asset classes in the world coming out of the pandemic has run into a number of obstacles, including efforts by Chinese regulators to cool down commodity speculation, as well as a spike in the U.S. dollar.
The downturn has been widespread across precious metals, industrial metals, agricultural commodities and lumber, which has been an unlikely poster child of the commodity boom.
(Bloomberg) — China has stepped up its campaign to rein in commodity prices and reduce speculation in a bid to ease the threat to its pandemic rebound from soaring raw material costs.
State-owned enterprises were ordered to control risks and limit their exposure to overseas commodities markets by the State-owned Assets Supervision and Administration Commission, according to people with knowledge of the matter.
The companies have been asked to report their futures positions for Sasac to review, said the people, who asked not to be identified because the information is confidential.
HONG KONG—A yearlong steep climb in commodity prices is testing an economics maxim: High prices cure themselves by spurring supply and quenching demand.
Languishing commodity prices led producers to slash capital spending on major resources by nearly half over the last decade, shrinking stocks of industrial metals to two-decade lows and reducing supplies across commodities. The crunch is now converging with a buying spree in key markets to supercharge prices—and there is no quick fix.
Since 2011, investments to develop the energy and mining sectors have fallen 40%, according to asset manager Schroders, leaving many producers unprepared for a recent boom in manufacturing and spending in the world’s two largest economies.
The broad rally in raw materials that’s lifted prices for crops, energy and metals is a bonanza for Canada’s economy and a major challenge for the nation’s policy makers, who are under pressure to ensure that everybody benefits.
Should the commodities boom hold, it would represent a windfall for the resource-rich nation endowed with oil, natural gas and vast lands to mine and farm. Export receipts are already at near a record and poised to go higher. The value of lumber shipments alone nearly doubled in the first quarter.
But Canada’s economy is already brimming with stimulus and may hit full capacity as early as this year, according to some economists.
