Elevated energy prices
The Consensus among our analysts is for energy prices to remain above their pre-Ukraine war levels until Q4 2024. A drop in Russia’s output and production cuts from OPEC, coupled with a recovering Chinese economy, will sustain prices. But Russia’s energy production is likely to fall by less than initially feared following the imposition of Western sanctions; other buyers—such as Turkey, India and China—are stepping in to fill the gap. Russian diesel exports to Turkey were at the highest in at least seven years in March for instance.
Agricultural prices on a downward trend
Prices for key agricultural commodities are forecast to decline steadily through to the end of next year, thanks to downward pressure from growth in grains production outpacing consumption. Much will depend on weather events—South America, a major agricultural producer, has been hampered by drought in recent years. The conflict in Ukraine is another source of uncertainty; the collapse of the Black Sea grain deal, currently due to expire in May, would hamper Ukrainian grain exports and push up prices.
Base metals going steady
Base metal prices are expected to dip only slightly in the coming quarters. Stronger demand from China should largely offset weaker GDP growth in developed economies, soft global goods demand and deflating housing markets as interest rates rise in most countries. Much depends on the pace of recovery in China’s housing market and announcements of further stimulus by Beijing, given that China is by far the world’s top consumer of base metals. Plus, strikes in key producers such as Chile, Peru and South Africa pose a risk to supply.
Precious metals sitting pretty
Our panelists expect precious metal prices to stay high compared to their historical average this year and next. For example, gold is seen trading at slightly under USD 2,000 per troy ounce, compared to a little over USD 1,000 for much of the 2010s and below USD 400 during most of the noughties. Elevated global uncertainty will continue to fuel safe-haven demand, and recovering global car production as semiconductor shortages fade will boost platinum and palladium demand.
Insights From Our Analyst Network
On natural gas prices, analysts at ING said:
On metals and energy, the EIU said:
In this special report, we examine recent banking turmoil and its implications. We polled 21 of our analysts to get their insight on the following key questions: