Commodity Price Barometer: 2013 Annual Indicator
- By: John P Sykes
Posted in: Blog, Commodities
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Like many others over the new-year period, Greenfields took time to reflect on what has past and what may be forthcoming. As a mineral economist, this of course involves thinking about commodity prices, with an annual compilation of the Greenfields Research Commodity Price Barometer. This New Year 2014 edition steps out from the usual monthly and quarterly reviews to do an annual review and see how 2013 compared to recent years.
The Greenfields Research Commodity Price Barometer ranks commodity prices on a barometer style rating of stormy (low) through rain, change (medium) and fair to dry (high). For this annual edition the current spot price is compared to five-year prevailing average spot prices. Again, like a barometer, commodity prices are further divided into those rising and falling from their previous year’s average.
It comes as no surprise to anyone who has worked in this industry over the last year that the majority of the tracked commodity prices fell. Only six of the twenty (non-rare earth) commodities rose against 2012 average over the last year. The entire rare earths suite fell in comparison to their 2012 prices, as the spectacular 2010-11 bubble continued to unwind.
With so many fallers, few commodities remain in the hot weather zones with only one rare earth, praseodymium in the “dry” category (despite a sharp fall in prices, again emphasising the size of the spike the rare earths are unwinding from) and indium, palladium and tungsten in the “fair” category. Indium and palladium were however, risers, so maybe they are heading towards hot and dry times. Tungsten is however going the other way.
At the opposite end of the barometer, the large number of fallers means the commodities are piling up in the rainy and stormy categories. Tantalum, nickel, platinum and silver are all in the “rainy” section, with cobalt, gallium, molybdenum, rhodium, uranium and all of the rare earths, except praseodymium, experiencing “stormy” weather. Only tantalum looks like it may be riding out of the storms.
A large clutch of commodities is now stuck in the “changeable” category, which seems to suggest further that the recent Chinese demand driven boom has mostly unwound. The question is, are we now in a “new normal” and this is the low of permanently higher commodity prices created by the entry of China into the global industrial economy? Or are we heading back to the lows more typically seen at the bottom of the commodity cycle (see 1990s), and Chinese demand was just responsible for the size of the boom, rather than any long term structural change to the global economy?
If the likes of antimony, bismuth, zinc, and recent market darlings copper and gold continue their descent out of the “changeable” categories into the poorer weather, then this would lend support to the former hypothesis (it was no different this time). If, however, more commodities follow the likes of iron ore, lead and tin, which seem to be again rising out of the “changeable” weather, back into “fairer” times, then this lends weight to the former hypothesis (it really was different this time).
Dry (and rising) +25% above 5 year average with year-on-year increase
- n/a
Dry (but falling) +25% above 5 year average with year-on-year decrease
- Praseodymium
Fair (and rising) +10% above 5 year average with year-on-year increase
- Indium
- Palladium
Fair (but falling) +10% above 5 year average with year-on-year decrease
- Tungsten
Changeable (but rising) between -10% to +10% of the 5yr average with year-on-year increase
- Iron Ore
- Lead
- Tin
Changeable (and falling) between -10% to +10% of the 5yr average with year-on-year decrease
- Antimony
- Bismuth
- Copper
- Gold
- Zinc
Rainy (but rising) -10% below 5 year average with year-on-year increase
- Tantalum
Rainy (and falling) -10% below 5 year average with year-on-year decrease
- Nickel
- Platinum
- Silver
Stormy (but rising) -25% below 5 year average with year-on-year increase
- n/a
Stormy (and falling) -25% below 5 year average with year-on-year decrease
- Cobalt
- Gallium
- Molybdenum
- Rhodium
- Uranium
- Cerium
- Dysprosium
- Europium
- Gadolinium
- Lanthanum
- Neodymium
- Samarium
- Terbium
- Yttrium
As ever if you feel there are any interesting “mineable” commodities missing from the barometer, please let us know and we’ll see if they can be added.
Technical notes
Prices are the 31st December 2013 spot price compared to the five-year average (January 2009-December 2013), except for uranium and iron ore where November 2013 monthly average prices are compared to the five-year average (December 2008-November 2013).
All commodity prices are from our friends at Metal Pages, except gold and silver which come from the London Bullion Market Association; and iron ore and uranium, which come from Index Mundi.
Product specifications are Antimony Regulus min 99.65% Grade II (EU); Bismuth min 99.99% (EU); Cobalt min 99.3% Russian (EU); LME Cash Copper; Gallium 99.99% CIF Main Airport (EU); LMBA Gold morning fixing; Indium min 99.99% (EU); China import Iron Ore Fines 62% FE spot (CFR Tianjin port); LME Cash Lead; Molybdenum Roasted Concentrates (Oxide) Mo 57% (EU) Mo; LME Cash Lead; Platinum 99.95% AM/PM fixes (EU); Palladium 99.95% AM/PM fixes (EU); Rhodium min 99.9% (EU); LMBA Silver Fixing; Tantalite basis 30% Ta2O5 (EU) Ta2O5; LME Cash Tin; Tungsten APT (EU); Index Mundi UxC Uranium U3O8 Swap Futures End of Day Settlement Price; LME cash zinc; Ce Oxide 99% min FOB China (CN); Dy Oxide 99% min FOB China (CN); Eu Oxide 99.9% min FOB China (CN); Gd Oxide 99% min FOB China (CN); La Oxide 99% min FOB China (CN); Nd Oxide 99% min FOB China (CN); Pr Oxide 99% min FOB China (CN); Sm Oxide 99% min FOB China (CN); Tb Oxide 99% min FOB China (CN); and Y Oxide 99.999% min FOB China (CN).