Commodity Price Barometer 2014: A Stormy Year (Ahead?)
- By: John P Sykes
Posted in: Blog, Commodities
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A belated happy 2015 to you all!
As with many over the new year period, Greenfields has been taking stock of the last year and pondering over the coming year. As part of this exercise it was time to update the Greenfields Research Commodity Price Barometer for 2014 and see if the commodities weather was really as bad as it felt in 2014. Alas it was.
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) comparing current spot prices (last trading day of 2014) to five-year prevailing averages (2010-2014). Again, like a barometer, commodity prices are further divided into those for which the 2014 average price has risen and fallen from the 2013 average price. 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.
The Greenfields Research Commodity Price Barometer shows a rather wet view of commodity prices over the last year. Of the 30 commodities covered, most (24) are now classified in the under performing ‘rainy’ or ‘stormy’ categories. Similarly, over the last year, most (22) have also fallen in price.
No commodities sit in the ‘Dry’ categories anymore, representing commodity prices 25% or more, above the five year average, suggesting that commodity prices as a whole have perhaps ended a boom cycle, that rebounded from the financial crises in 2008-9. Only two relatively minor commodities are in the ‘Fair’ categories, indicating prices are 10 to 25% above five year averages. Of these palladium is the stand out performer, also continuing to rise in price over 2014, whilst although indium prices are high they do seem to be chasing most of commodity prices down.
Most commodities sit in the ‘Rainy’ or ‘Stormy’ categories, most have also fallen in price over the last year. The very worse performers, with average prices 25% or more, below five year averages (‘Stormy’) and falling over 2014 include the enormous iron ore market and not insignificant silver market, as well as gallium and the majority of the rare earths (all except praseodymium, whilst technically gadolinium hasn’t seen any price movement over the last year from 2013 lows, suggesting either a thin, frozen market or problems collating data in this opaque market by Metal Pages).
A number of commodities are currently in the ‘Rainy’ category, but have also fallen over 2014 and may soon be joining iron ore, silver, gallium and rare earths in the very stormiest category. The commodities with prices that are 10% to 25% below five year averages and which fell in 2014 include a number of important base metals (copper, lead and tin) and precious metals (gold and platinum), as well as a range of minor metals: antimony, tantalum, tin, tungsten and uranium.
A few commodities in the ‘Rainy’ and ‘Stormy’ categories do however show signs of turnaround, rising over 2014, albeit from relatively lowly prices. Molybdenum is currently in the ‘Stormy’ category (more than 25% below five year averages) but has risen over 2014, whilst nickel (which has been fairly noisy in Australia this year) and rhodium are in the ‘Rainy’ category (10% to 25% below five year averages), but nonetheless rising in price.
The only other positive news comes from the handful of commodities in the ‘Changeable’ category (between +10% and -10% around the five average), which are also rising in price, including bismuth, cobalt, zinc, and the rare earth, praseodymium.
As for looking forward to 2015, the past is of course no indicator of the future, and commodity prices trends are notoriously bad indicators of the long term future. The year has however started badly with further large falls in oil price, following on from the dramatic movements in late 2014, with key commodities such as copper also following. From an economic and financial perspective (i.e. ignoring the various geopolitical conspiracy theories) the end of quantitative easing in the USA, which may have supported asset prices of all sorts (including commodities), as well as a slow down in commodity consuming China both may both have a role in the recent commodity price weakness. Financial and economic experts will no doubt have a close eye on both in 2015.
Dry (and rising) +25% above 5 year average with year-on-year increase
- None
Dry (but falling) +25% above 5 year average with year-on-year decrease
- None
Fair (and rising) +10% above 5 year average with year-on-year increase
- Palladium
Fair (but falling) +10% above 5 year average with year-on-year decrease
- Indium
Changeable (but rising) between -10% to +10% of the 5yr average with year-on-year increase
- Bismuth
- Cobalt
- Zinc
- Praseodymium
Changeable (and falling) between -10% to +10% of the 5yr average with year-on-year decrease
- None
Rainy (but rising) -10% below 5 year average with year-on-year increase
- Nickel
- Rhodium
Rainy (and falling) -10% below 5 year average with year-on-year decrease
- Antimony
- Copper
- Gold
- Lead
- Platinum
- Tantalum
- Tin
- Tungsten
- Uranium
Stormy (but rising) -25% below 5 year average with month-on-month increase
- Molybdenum
Stormy (and falling) -25% below 5 year average with month-on-month decrease
- Gallium
- Iron Ore
- Silver
- Cerium
- Dysprosium
- Europium
- Gadolinium (no change on 2013)
- Lanthanum
- Neodymium
- Samarium
- Terbium
- Yttrium
Technical notes
Prices are 2014 yearly averages compared to the five-year average (2010-2014).
All commodity prices are from our friends at Metal Pages, except gold and silver which come from the Perth Mint; 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).