- Macquarie Bank has released its updated estimates for where individual commodities sit in their price cycle.
- It likes the look of gold and uranium this year, but says commodities linked to batteries and steel should be avoided.
- Longer-term, it says lithium, cobalt, nickel and copper will likely outperform over a five-year time horizon.
If you like to dabble in commodity markets, here’s a treat for you.
It’s a great chart from Macquarie Bank that shows where individual commodities sit in their price cycle – at least based on Macquarie’s opinion – providing investors a guide as to what commodities are likely to be hot, and not, over the next two years.
We’ve featured it several times before, but for those who haven’t seen it previously, the arrows indicate where Macquarie sees prices moving over the next two years based on supply and demand dynamics.
In 2018, Macquarie likes the look of precious metals given the likelihood of US dollar weakness, higher inflation and ongoing anxiety surrounding global trade.
It also likes the look of uranium, suggesting that upside risks are building as low prices have crippled new projects leading to a draw in existing mine supply.
At the other end of the spectrum, its least preferred commodities in 2018 include lithium and cobalt along with steel, manganese ore, iron ore and metallurgical coal, the latter three all linked to slower global demand growth for steel.
With Macquarie also downbeat on the prospects for thermal coal and LNG, its view doesn’t bode well on the outlook for Australia’s major commodity exports this year.
For those more interested in the medium to longer term trends, this list shows the individual commodities Macquarie expects to be the standouts and sliders over a two- and five-year period.