A tour of 2016-2020 mineral commodity markets
- By: John P Sykes
Posted in: Blog, Commodities, Conferences, Mineral Economics, Publications, Recommended
A few months ago my PhD supervisor, Allan Trench, presented a paper co-authored with myself and a colleague at CRU Group, Paul Robinson, to the AusIMM New Zealand Branch Annual Conference. Allan’s presentation focused on CRU commodity price forecasts, however, the paper we submitted alongside also looked at some of the problems of commodity price forecasting and ways it can be improved. The abstract is included below:
“Analysis of past and future commodity markets and prices is akin to having access to a form of time machine that works accurately when travelling backwards but which remains imperfect when set to analyse the future. Developments in mineral commodity markets in the 21st century have centred on the rapid demand-side emergence of China. Looking forward however, commodity markets will now be influenced by slower Chinese economic growth. Despite this, prices (in general) are still forecast to rise but will not revisit ‘China boom’ levels in the next five years. The possible exception is zinc which will experience tight supply as mature mines reduce output and in some cases are depleted. Some further commodities forecast to increase in price include alumina, aluminium, bauxite, coking coal, copper, nickel, platinum/palladium, potash, thermal coal, tin and uranium. Consumers of commodity price forecasts should not use forecasts passively, instead taking an active role in understanding how forecasts are generated, their vulnerabilities, and importantly what best practice in improved forecasting may look like in future. Rather than just providing commodity prices forecasts therefore, this paper concludes with a discussion on how to improve forecasting itself. More accurate price forecasting requires successful step-change improvements to both analysis and process.”
A copy of the paper can be found on my academia.edu account.