The rising demand and the supply demand mismatch turn copper into a top contender for leading the commodities pack up in the coming years. The red metal already faces a market deficit and it is expected to widen further when economies emerge out of their protective cocoons as recovery gathers momentum.
Iron ore also has claimed a position among the favourites following the rising demand for steel and the new pricing structure the market has now adopted. The benefit to the energy sector is obvious enough to be over looked, and coal is a major source of it. Countries like China, which relies on coal for more than 70 percent of its energy needs, are sure to bolster prices of coal in the coming days.
Standard Chartered Plc predicts gold, copper, coal and iron ore to be in the forefront of the commodities price rally in the few years to come.
Goldman Sachs also sees raw materials price to climb in the coming days, along with Deutsche Bank and Barclay’s capital, all of which advocate the strength in commodities to stick.
However, rising commodities prices punt up global food prices adding to the inflationary situation, which lead countries such as China, Brazil and India etc to hike interest rates.
The Standard & Poor’s GSCI 24 commodities index beat stocks, bonds and currencies in the last five months, which is the longest winning streak in last 14 years, reports showed. But the index has been on the downside of the late due to the subsequent fall back of commodities market.
The development expectations from India and China are sure to dominate the future path for commodities. India is expected raise the demand for metals by 80 percent in the coming years to complement her investments in infrastructure. Coal demand, on the other hand, is seen at 2 billion tonnes in the coming years, reports showed.
Nevertheless, more immediate concerns dog the commodities markets currently. Slowing growth in the US, debt troubles in the European Union and rising inflation and the apparent real estate bubble in China, all of which present the market with enough and more hurdles.