The commodities outlook is strong, but not quite super – ANZ

Strategists at ANZ Bank believe the market is not entering another commodity ‘super-cycle’. The commodity sector has many positive drivers in the short to medium-term, some of these remain tenuous, though.

Key quotes

“The outlook for commodities remains strong. Policy responses from governments worldwide should see global growth push demand for most commodities above long-term levels. At the same time, we see increasing supply-side issues limiting production growth. Combined with relatively low inventories, prices should be well supported in the short-term.” 

“A long-term cyclical uptrend looks unlikely at this stage. There have been three major booms in commodity markets since WWII: 1950-55, 1972-80 and 2005-09. The current cycle has all the hallmarks of these previous cycles, in particular, synchronised growth in GDP and industrial production. However, it has some unique features, including climate change policies, which are threatening to push demand in certain commodities even higher.” 

“China has indicated it will ease stimulus measures later this year. As a consequence, we see growth in steel demand moderating. Climate change policies are also expected to weigh on gasoline and diesel fuel demand. Eventually, the performance of individual commodity markets will start to diverge, making it far from super.”