Despite global commodity prices falling slightly in May, outlook for second quarter of the year remain stable within range of quarter one levels, according to an estimate compiled by FocusEconomics, a leading provider of economic analysis and forecasts for about 33 key commodities worldwide.
According to the firm, its global commodity price index slid 1.7 percent from April’s result, chiefly driven down by lower energy prices. In addition, base and precious metal prices lost ground, while agricultural prices rose slightly from the previous month.
“Despite prices edging down in May, our analysts expect prices remained broadly stable around Q1’s level in Q2 as a whole and project the FocusEconomics global commodity price index to come in at 74.0, marginally down from Q1’s result,” they maintained.
The analysts specifically see a mixed performance across commodity groups, which would hold prices relatively steady, as falls in base metal prices and energy prices are balanced out by rising precious metals and to a lesser extent, agricultural prices.
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The company maintained that plunging iron ore prices, which have fallen around 30 percent year-to-date, are driving the decline in base metal market.
“Concerns over China, the world’s largest importer of the metal, have dampened prices largely due to uncertainty over the economy’s trajectory and reports of high inventories at Chinese ports,” it stated.
In the energy market, it stated that despite a deal between OPEC and non-OPEC nations to extend production cuts for nine additional months, oil prices fell slightly in Q2 and may remain flat in Q3
“However, the price of coking coal jumped to a multi-year high in April, in part due to supply disruptions, providing some positive impetus in energy prices.”
Overall, the global commodity price index is still significantly above 2015 and 2016’s lows. Despite a projected fall in quarter-on-quarter terms, the price index for Q2 is still expected to be 14.0 percent above Q2 2016’s figure.