Grain W. P. Malunga opined in a 2016 White Paper that commodity price volatility has mainly been associated with the effect of economic growth in China. Industrialization, infrastructure development, monetary policy and the rapid economic growth of emerging markets will influence the growth of commodity prices. The world needs to look beyond China in order to create advancement in technological development and creation of new markets.
Prices of commodities such as copper, coal and iron ore have gained this year. Precious metals will continue to depend on physical demand and monetary policies and inflation will shape the price of these metals. India’s withdrawal of INR 500 and 1,000 may affect the physical demand for silver and gold in the short to medium period.
Base metal prices will be influenced by the rise in industrial projects in China, India and the US.
Resource Capital Fund will go to financing industrial minerals projects that are exposed to high-tech mineral markets such as graphite, lithium and rare earths. Uranium prices will be influenced by demand in production and closure or putting into care and maintenance of non-profitable mines in anticipation of recommissioning of Japanese nuclear power plants and commissioning of new nuclear power plants in China, India and the UK. The demand may begin to rise around 2019.
Niobium usage may increase in large infrastructure projects requiring steel. America’s switch to local infrastructure development and growth of infrastructure in emerging
markets brings hope for increase in use of niobium. The usage of graphite is increasing thanks to lithium-ion batteries, which can be used in laptops, electronic devices and electric cars among many other things.
Oil and gas demand will be influenced by increase in car sales and revival of weak economies and growth in emerging markets. Geopolitical events and shale cracking
may continue to influence periodic price fluctuations. In 2017, metals prices are projected to increase by 4 percent as most markets continue to rebalance.
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