Commodity markets, already contending with excessive costs pushed by structural provide constraints, additionally face uncertainties from geopolitical tensions, stated Paul Bloxham, HSBC’s chief economist for Australia, New Zealand and international commodities.
“An increase in international commerce protectionism or a shift within the pathway of that development is a world macroeconomic threat we’re watching out for,” Bloxham advised the Reuters World Markets Discussion board (GMF).
“This may improve the danger of larger fragmentation of commodity markets and create a provide disruption supporting commodity costs.”
Geopolitics, local weather change, and the power transition are combining to drive a world commodity market “super-squeeze”, stated Bloxham, who beforehand labored with the Reserve Financial institution of Australia’s financial evaluation division.
HSBC’s statistical mannequin in Could indicated a shift to a ‘tremendous bull’ from a ‘weak bull’ part in commodities, regardless of already elevated costs. In keeping with HSBC, commodity costs are unlikely to return to their earlier development, and are set to remain “completely greater”.
Bloxham expects giant producers, significantly these concerned within the power transition supplies resembling copper, will profit. He additionally stated that Latin American economies, the US, Australia and Indonesia had been additionally potential winners.
(By Anisha Sircar and Divya Chowdhury; Modifying by Edwina Gibbs)