Greenfields Research Commodity Price Barometer: In the eye of the storm
- By: John P Sykes
Posted in: Blog, Commodities, Mineral Economics
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The new year gives us the chance to review commodity price performance over the last year, and a bit longer. It doesn’t take much insight to realise the industry is in somewhat of a malaise; however, it is always useful to understand the data and check our perceptions match reality. For this we’ll use the Greenfields Research Commodity Price Barometer©.
The Greenfields Research Commodity Price Barometer© ranks commodity prices in a barometer style of stormy (low), through rain, changeable (medium), fair and up to dry (high). In this article we’ll look at three barometers. The first will look at the last year comparing spot prices on the final trading day of 2016 to the 2016 average price. The second will look at the last five years, again, comparing current spot prices to the 5-year average (2011 to 2015 inclusive). The third and final will look at the 10-year average (2006 to 2015) compared to current spot prices. In each instance, like a barometer, the commodity prices are further divided by those where the needle (or price) is either rising or falling, as determined in the 1-year analysis by comparing the last month’s average price (December 2015) to the penultimate month’s average price (November 2015); in the 5-year and 10-year analysis by comparing the 2015 average price to 2014.
Looking over the last year, unsurprisingly most current commodity prices in the stormy (25% below the yearly average) or rainy (25% below the yearly average) categories, substantially below the 2016 average. No commodity prices are above the yearly average suggesting a generally tough end to the year. Only a few commodities such as aluminium, gold, lead, tin and uranium are currently around their yearly averages. Of these however, gold, tin and uranium ended the year falling in price though. Molybdenum, tungsten, dysprosium and neodymium, though currently suppressed, did end the year rising.
1-year Greenfields Research Commodity Price Barometer©
Dry (and rising) +25% above 1 year average with month-on-month increase
- None
Dry (but falling) +25% above 1 year average with month-on-month decrease
- None
Fair (and rising) +10% above 1 year average with month-on-month increase
- None
Fair (but falling) +10% above 1 year average with month-on-month decrease
- None
Changeable (but rising) between -10% to +10% of the 1 year average with month-on-month increase
- Aluminium
- Lead
Changeable (and falling) between -10% to +10% of the 1 year average with month-on-month decrease
- Gold
- Tin
- Uranium
Rainy (but rising) -10% below 1 year average with month-on-month increase
- Molybdenum
- Tungsten
- Dysprosium
- Neodymium
Rainy (and falling) -10% below 1 year average with month-on-month decrease
- Cobalt
- Copper
- Palladium
- Platinum
- Silver
- Tantalum
- Zinc
- Terbium
Stormy (but rising) -25% below 1 year average with month-on-month increase
- None
Stormy (and falling) -25% below 1 year average with month-on-month decrease
- Antimony
- Bismuth
- Gallium
- Indium
- Iron ore
- Nickel
- Rhodium
- Cerium
- Europium
- Lanthanum
- Praseodymium
- Samarium
- Yttrium
Over a longer timeframe of 5 years, it is clear all the commodity prices followed have come off their peaks around 2011-12, with all residing in the stormy (25% below the 5-year average) or rainy (25% below the 5-year average) categories, substantially below the 5-year (2011-15) average. The only vague bright spot is uranium, which although below 5-year averages is the only tracked commodity price that rose in 2015 compared to 2014.
5-year Greenfields Research Commodity Price Barometer©
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
- None
Fair (but falling) +10% above 5 year average with year-on-year decrease
- None
Changeable (but rising) between -10% to +10% of the 5yr average with year-on-year increase
- None
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
- Uranium
Rainy (and falling) -10% below 5 year average with year-on-year decrease
- Aluminium
- Gold
- Lead
- Palladium
- Zinc
Stormy (but rising) -25% below 5 year average with month-on-month increase
- None
Stormy (and falling) -25% below 5 year average with month-on-month decrease
- Antimony
- Bismuth
- Cobalt
- Copper
- Gallium
- Indium
- Iron ore
- Molybdenum
- Nickel
- Platinum
- Rhodium
- Silver
- Tantalum
- Tin
- Tungsten
- Cerium
- Dysprosium
- Europium
- Lanthanum
- Neodymium
- Praseodymium
- Samarium
- Terbium
- Yttrium
Looking over 10 years allows us to assess the China-induced ‘super-cycle’ and whether it is over. In this case the news for miners is not good. With the exception of gold and palladium (in the changeable category), all the commodity prices followed are in the stormy (25% below the 10-year average) or rainy (25% below the 10-year average) categories. As noted previously, uranium is the only tracked commodity price that rose in 2015 compared to 2014.
This would suggest the supercycle is over and we are somewhat in the eye of the storm. Though how big the storm is remains unclear.
10-year Greenfields Research Commodity Price Barometer©
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
- None
Fair (but falling) +10% above 5 year average with year-on-year decrease
- None
Changeable (but rising) between -10% to +10% of the 5yr average with year-on-year increase
- None
Changeable (and falling) between -10% to +10% of the 5yr average with year-on-year decrease
- Gold
- Palladium
Rainy (but rising) -10% below 5 year average with year-on-year increase
- None
Rainy (and falling) -10% below 5 year average with year-on-year decrease
- Lead
- Tantalum
- Tin
Stormy (but rising) -25% below 5 year average with month-on-month increase
- Uranium
Stormy (and falling) -25% below 5 year average with month-on-month decrease
- Aluminium
- Antimony
- Bismuth
- Cobalt
- Copper
- Gallium
- Indium
- Iron ore
- Molybdenum
- Nickel
- Platinum
- Rhodium
- Silver
- Tungsten
- Zinc
- Cerium
- Dysprosium
- Europium
- Lanthanum
- Neodymium
- Praseodymium
- Samarium
- Terbium
- Yttrium
Technical notes
All commodity prices are from our friends at Argus Media-Metal Pages, except gold and silver which come from the Perth Mint; and iron ore and uranium, which come from Index Mundi (monthly prices only).
Product specifications are LME 3-month Aluminium; Antimony Regulus min 99.65% Grade II (EU); Bismuth min 99.99% (EU); Cobalt min 99.3% Russian (EU); LME 3-month 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 3-month Lead; Molybdenum Roasted Concentrates (Oxide) Mo 57% (EU) Mo; LME 3-month Nickel; 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 3-month Tin; Tungsten APT (EU); Index Mundi UxC Uranium U3O8 Swap Futures End of Day Settlement Price; LME 3-month Zinc; Ce Oxide 99% min FOB China (CN); Dy Oxide 99% min FOB China (CN); Eu Oxide 99.9% 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).