Commodities: Signs of a maturing cycle, prices to correct lower through 2022

There are signs in commodity markets consistent with nearing a top of the cycle. While there remains some near-term upside risks, overall economists at Westpac expect prices to find a peak in 2021 and to then start correcting through 2022.

See – US infrastructure package to boost commodity demand – ANZ

Demand growth to decelerate in 2022

“Westpac is looking for demand growth to decelerate in 2022. Some of the signs that suggest this will be so are: 1. In regards to China, credit growth is levelling out, policy around property is tightening, while infrastructure FAI is slowing. June data supports this view. 2. Outside China, support from restocking will come to an end and pent-up demand will fade as consumer spending shifts away from goods and towards services. On current projections the supply of most commodities is set to increase in 2022, just as demand growth moderates, pushing markets back to balance.”

“For crude oil, the agreement OPEC+ reached in July went a long way towards removing supply uncertainty from oil markets. For demand, covid is again in focus, although not to the degree that we have seen previously. It would appear that as long as the UK mortality rate remains close to zero the markets will consider the possibility of large-scale global lockdowns as being negligible.”

Share: Feed news

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.