As the global economy continues to recover from the impact of the Covid-19 pandemic, many investors are looking to the commodities market for opportunities. The commodities market has been experiencing significant volatility over the past few years, with prices of many commodities surging to record highs in 2021, which then continued in 2022.
But what can we expect from the commodities market heading towards 2024?
One of the key drivers of the commodities market in recent years has been the ongoing supply chain disruptions caused by the pandemic. The pandemic has led to a significant increase in demand for commodities such as copper, iron ore, and lumber, which are essential for building and infrastructure projects. However, the supply of these commodities has been limited due to disruptions in production and shipping, leading to price increases.
2024 onwards
Looking towards 2024, it is expected that the global supply chain disruptions will continue to ease as more countries get vaccinated and economies recover. This could lead to a decrease in demand for commodities and a subsequent decrease in prices. Additionally, as economies recover, governments may reduce their stimulus spending, which could also lead to a decrease in demand for commodities.
However, there are still many factors that could support the commodities market heading towards 2024. One of these factors is the ongoing transition towards a low-carbon economy. As more countries aim to reduce their carbon footprint, there is likely to be increased demand for commodities such as copper, nickel, and cobalt, which are essential for the production of electric vehicles and renewable energy infrastructure. This could drive up prices for these commodities in the long term.
Another factor that could support the commodities market is the ongoing geopolitical tensions between major global powers. As tensions continue to rise between the US and China, there is a risk that global trade could be disrupted, leading to a potential increase in demand for domestically produced commodities in some countries. This could lead to an increase in prices for some commodities in the short term.
Difficult to predict among geopolitical tensions
It is worth noting that the commodities market is notoriously difficult to predict, and prices can be affected by a wide range of factors, including weather events, natural disasters, and geopolitical tensions. However, it is likely that the commodities market will continue to experience significant volatility heading towards 2024.
In conclusion, the outlook for the commodities market heading towards 2024 is mixed. While the ongoing supply chain disruptions caused by the pandemic are likely to ease, there are still many factors that could support the commodities market, including the ongoing transition towards a low-carbon economy and geopolitical tensions. Investors should remain vigilant and keep a close eye on market developments to identify opportunities and mitigate risks.
Sources:
Invezz, “Commodities Trading Platforms & Apps”, https://invezz.com/commodities/brokers/
CNBC, “Commodities outlook: Gold, oil, iron ore, copper and more prices,” https://www.cnbc.com/commodities/
Reuters, “Factbox: What’s driving commodities prices higher and what’s next,” https://www.reuters.com/business/energy/whats-driving-commodities-prices-higher-whats-next-2021-05-04/
