According to analysts and traders, global demand for commodities is expected to remain robust in 2022 and underpin prices as the world economy continues to recover, although similar price jumps are unlikely.
Commodity prices from energy and metals to agricultural products rebounded sharply in 2021, with power fuels leading the rally, driven by tight supplies and a strong economic recovery as COVID-19 vaccinations staved off widespread lockdowns.
“2021 has been characterized by a huge broad-based rally. Although I believe commodity prices will remain robust, I believe the rebound in 2020 and the rally of 2021 will be exceptional years, and as such, I am not anticipating the same level of gains in the year ahead,” said Mr. Jeffrey Halley, a senior analyst at brokerage Oanda.
High prices are pushing producers to increase output, but some analysts believe that supplies of products like oil and liquefied natural gas will remain limited as these projects require years for production to come on line.
“Global LNG demand grew by 20 million tons in 2021, with Asia accounting for virtually all of this growth,” said Mr. Valery Chow, head of Asia gas and LNG research at Wood Mackenzie, noting that more than 20 percent growth in demand from China has made it the world’s top importer, overtaking Japan.
“However, persistently high LNG spot prices are likely to start dampening overall demand growth, especially in the more price-sensitive markets of South Asia and South-East Asia,” he added.
Global oil prices also rose 50 percent to 60 percent in 2021, and are expected to climb much more in 2022 when demand for jet fuel catches up.
Analysts predict that base metals are expected to outperform as the energy transition drives demand, although supply chain bottlenecks are likely to continue.
“Copper demand is expected to enter its second year of expansion, especially after the recently concluded Cop26 demonstrated an increasing willingness by governments to prioritize clean energy,” OCBC economist Mr. Howie Lee noted.
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