The commodity market is booming. The price of iron ore hit a nine-year high on Friday (18th). As the global economic climate indicator, “Dr. Copper” hit the highest price in seven years. Grain prices rebounded, and the cycle stocks climbed. Investment banks are optimistic about the raw materials to meet the bull market for many years, but the European and American epidemic counterattack has caused these bets on “reflation” (reflation) transactions to face hidden concerns.
Strong demand from China comes as Brazilian miner Vale lowered its 2020 production forecast. The imbalance in supply and demand has driven up the price of iron ore. According to Fastmarkets MB, the iron content of 62% imported into Qingdao Port. The iron ore index rose nearly 4% to 164.39 per ton on Friday. USD, The highest price since October 2011, the increase has expanded to 78% this year.
Dalian iron ore futures rewritten a record high in intraday trading on Friday, rising more than 6% toRMB 1076 yuan, which is unprecedented since the futures was launched in 2013. Thermal coal, coke and coking media are also approaching a nine-year high.
Commodity analysts predict that China’s steel demand will remain strong in the future, but the shrinking period of raw material supply will not be resolved, and the shortage of iron ore will continue until 2021.
Coincidentally, the price of copper exceeded 8,000 per ton on Friday (18th) USDPrice, the London Metal Exchange (LME) futures price rose 1.1% to 8007 per ton USD, The highest since 2013, other basic metals including aluminum and zinc generally rose.
Copper prices have risen by 80% from low points, while production costs have fallen. Copper miners include Freeport-McMoRan (FCX-US), Antofagasta’s share price has been rising.
The common factor behind the raw material market is that vaccine research and development finally allowed the epidemic to see the light at the end of the tunnel. The United States stimulated consultations and China’s economic recovery boosted demand prospects.
In addition,USDStumbles endlessly, it helps to liftUSDPrices of priced bulk commodities are rising.Under the bet of the Fed’s ultra-loose monetary policy, bearish in 2021USDIt has almost become a market consensus, which means that the commodity market is supported.
Goldman Sachs: Commodities show signs of “super cycle”
Commodity prices are likely to continue to rise. Jeff Currie, head of commodities at Goldman Sachs, said that commodities have “all signs” of a super cycle and are entering a structural bull market similar to the 1970s or early 2000s. Among metals, he is most optimistic about the performance of copper in 2021.
Goldman Sachs predicts that the return of the S&P GSCI Commodity Index (S&P GSCI) in the next 12 months is expected to approach 30%. It is recommended to go long in silver, copper, gold, US natural gas, and Brent crude oil.
Bank of America also believes that as the global economy gradually moves out of the severe period, almost all raw materials will “moderately rise” in 2021.
However, Nikolaos Panigirtzoglou, an analyst at JPMorgan Chase, warned that the expectation that life will return to normal has caused the “reinflation” transaction to flourish. The city locks the country and the performance of related assets in the next few months may disappoint investors.
Saxo Bank analyst Ole Hansen said that copper, like almost all other commodities, is rising in price, but as investors rush in, it is bound to see corrections, and the problem will only appear when.
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