GRACELIN BASKARAN: Commodities no longer proving their mettle as global economy struggles
At the start of the year, JPMorgan analysts took a bullish stance, noting that “the world is likely to have entered its fifth commodity supercycle since the start of the 20th century”. By definition, a supercycle lasts for a minimum of 10 years. But this rise didn’t last long — prices for key industrial metals have already begun collapsing to 18-month lows — a trend that is likely to continue as we eye a looming recession.
The rise in commodity prices since the start of 2021 has been compelling. The London metals exchange (LME) index — comprising aluminium (42.8%), copper (31.2%), zinc (14.8%), lead (8.2%), nickel (2%) and tin (1%) — increased 50.4% between January 2021 and March 2022. During the same period, the S&P GSCI industrial metals index — which equally weights gold, silver, platinum and palladium — increased 62%. If starting from the lows of 2020, the price increases exceeded 80%...
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