SINGAPORE- Global commodity markets ended 2020 on a strong note, with recovering demand and widespread stimulus packages buoying prices after a roller coaster ride caused by the global coronavirus pandemic.
Rollouts of vaccines to combat the virus and trillions of dollars’ in fiscal support are expected to boost investment and spending in 2021, spurring demand for raw materials from oil to copper.
“It’s been a tumultuous year for the commodity market, as the oil meltdown in March changed how we measure and gauge risk in the entire commodity sphere,” Stephen Innes, chief global market strategist at brokerage Axi, told Reuters.
“But thanks to the Fed’s unwavering support to dig the US and global economy out of a hole,” commodity markets have flourished, he added.
Dalian iron ore futures and silver are up around 50 percent in 2020, leading the gains in commodity futures.
Overall, spot Asian LNG led the energy complex, gaining more than 140 percent this year on booming demand and outages in key suppliers.
Global oil futures notched an annual decline of more than 20 percent but more than doubled from their decade lows hit in April, closing a historic year that marked the first-ever negative prices for US crude benchmark WTI.
“The recovery from the pandemic will accelerate once a vaccine is widely available, further supported by ongoing fiscal and monetary stimulus from governments around the world,” ANZ said in a note. “A strong global growth pulse will likely see the US dollar weaken, which is normally a prerequisite for a rally in commodity markets.”
Oil prices plunged in March and April when China and other countries went under lockdown to curb the spread of COVID-19, choking off global fuel demand.
Vaccine rollouts have raised hopes for stronger fuel demand in 2021, with Goldman Sachs forecasting Brent to hit $65 per barrel in the next 12 months. It closed Thursday at $51.80 per barrel in New York trading.
Dalian iron ore and Comex silver were the top performing major metals futures in 2020.
Iron ore prices surged, driven by a combination of booming demand in China and a drop in supplies from key producer Brazil.
In precious metals, Comex silver gained 47.9 percent and Comex gold 25 percent on the back of a rush of buying by investors seeking a store of value in a year of heavy government stimulus and global central bank spending
In industrial metals, benchmark three-month copper on the London Metal Exchange rose 27 percent this year, becoming the sector’s best performer.
More gains in copper and other base metals are expected in 2021 as the China-led economic revival expands to other regions.
“We will see an overall price surge across metals at least in the first half of the year (of 2021). Money is still trickling through the global economy,” said commodities broker Anna Stablum of Marex Spectron.