Commodities - Base metals and energy market lead price gains in Q1

Broad-based price gains were seen across commodity markets in Q1 2017, as prices continued to recover from 2015 and 2016’s lows. The FocusEconomics global commodity price index came in at 74.7 in Q1, above Q4 2016’s 71.6. According to FocusEconomics’ calculations, global commodity prices grew 4.4% at the start of the year from Q4 and were up 23.5% on an annual basis. As a result, prices are now resting at the highest level since Q2 2015.

Behind Q1’s result was strong impetus from energy prices, which are notably above last year’s levels. The deal between OPEC and non-OPEC producers has helped curb production and energy prices averaged a near two-year high in Q1. In addition, an improving global economy boosted base metal prices and moderate gains were also seen among precious metals and agricultural commodities.

Looking forward, FocusEconomics analysts expect momentum to recede throughout the second quarter and see prices growing a moderate 0.3% from Q1. While dynamics from the energy market should remain solid, a poorer performance from base and precious metals will limit gains. Tightening liquidity in China, as well as concerns over the country’s growth, is denting base metal prices, while an expected hike in U.S. interest rates is eroding the appeal of precious metals.    

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