Commodities set to start a new super-cycle bull market

Vrasidas Neofytou
Head of Investment Research

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Commodities prices have extended their bull run into 2021 as optimism over the global economic recovery would increase the industrial and consumer demand for energy and raw materials.

Institutional investors see the beginning of a new super-cycle bull market in the commodities complex after a 10-year bear market, driven by the massive fiscal and monetary stimulus, the weaker US dollar, and the high demand for renewable energy.

The aggressive environmental policies have increased the demand for industrial metals needed to build green energy technologies, sending the prices of Copper, Aluminium, Lithium, and Rare Earth materials to multi-year highs.

Looking at the energy sector, the crude oil prices rallied to pre-pandemic levels of 60 dollars per barrel, driven by a tight supply from OPEC members, falling inventories, Middle East tensions, and the growing optimism over recovered fuel demand in 2021.

Growth-related precious metals such as Silver, Palladium, and Platinum have rallied to multi-year highs on supply disruption in Africa together with strong demand from automakers and green energy.

The robust Chinese demand for Iron Ore and Base metals coupled with the vaccination progress has brightened the global trade outlook for 2021, lifting commodity and trade-sensitive currencies such as Russian Rouble, Canadian, and Australian dollars to 2-year highs against safe-haven US dollar.

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