The “greening” of the global economy is a medium-term positive for metals – CE
|The latest rally in many commodity prices has prompted some commentators to herald the arrival of a new commodity supercycle but history suggests that prices will fall back as stimulus is withdrawn. In the view of strategists at Capital Economics, a prolonged surge in metals prices is likely as efforts to decarbonise the world economy take effect, but they are sceptical that it is already underway.
Key quotes
“We do not think we are at the beginning of a new commodity price supercycle. The latest rally in commodity prices is reminiscent of 2009-10 in that it has been fuelled by strong Chinese demand. We expect that this is likely to run out of steam later this year, as stimulus is withdrawn, and that prices will fall back.”
“We do see a more sustained pick-up in industrial metals demand and prices starting later this decade as green economy initiatives gain critical mass. But given that such initiatives will have long-run negative implications for oil and agricultural commodities’ demand, we don’t think a commodities-wide supercycle is on the cards.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.