Global growth may be tepid, but commodity prices are on the rise, according to experts Carlos Arteta, Philip Kenworthy, and Ayhan Kose from the World Bank. Energy, food, and base metals prices are expected to remain about 40% higher than they were during the 2015-2019 period in the upcoming year.
Several factors contribute to this price surge. Firstly, OPEC+ members have been withholding over six million barrels of oil per day, accounting for nearly 7% of global demand. Additionally, geopolitical tensions, stemming from Russia’s invasion of Ukraine in 2022, have further strained energy and grain markets.
Despite challenges in the local property market, China’s robust demand for metals and energy has exceeded expectations. The country, being the largest consumer of these resources, has seen increased infrastructure investment and the expansion of factory capacity for electronics and electric vehicles.
Moreover, climate change has also played a role in boosting prices. Disrupted harvests, specifically in cocoa and coffee crops, have contributed to inflation, along with the growing demand for metals in the energy transition.
Commodity prices have seen a significant uptick, with the S&P GSCI index climbing more than 10% in the first half of 2024. Copper, gold, and Brent crude oil have all experienced notable increases in value. Although there may be some consolidation in industrial metals markets, the long-term outlook for commodities, especially energy and grains, remains positive.
With the anticipation of US rate cuts and increased demand for green technology, the commodities market is poised for further growth, making it an attractive investment option for traders and investors alike.
