Summary of After the Freefall, What to Expect from Commodity Prices

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After the Freefall, What to Expect from Commodity Prices summary
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  • Visionary

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The drop in commodity prices in 2015, along with the prospect of rising interest rates in the United States and declining demand from China, clouds the outlook for raw materials in 2016. However, as this expert analysis from the Economist Intelligence Unit points out, 2016 could be the year in which commodity prices finally stabilize after four years of consistent declines. Although getAbstract never offers investment advice, it recommends this perceptive review and forecast to economists, investors and executives in commodity-related businesses.

About the Author

The Economist Intelligence Unit is an independent research and analysis organization.

 

Summary

The plunge in oil prices that began in 2014 is igniting renewed fears among commodity investors. Demand from China, which accounts for almost half the global consumption of aluminum, coal, and copper, has plummeted, while lower prices are hurting exporting nations. The strengthening of the US dollar, in which most commodities are denominated, is also draining demand. Yet the prices of industrial raw materials should rise by 3.3% in 2016 and 4.6% in 2017, as production tightens. After tumbling 15% in 2015, base metal prices could rebound by 4.2% in 2016 and 5.3% in 2017. While unrelated technical factors should help aluminum prices...


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