If you’re wondering what the future holds for commodity prices, do we have a treat for you.
Courtesy of HSBC’s equity metals and mining team, the chart below reveals where it sees individual commodity markets sitting in the current price cycle.
It’s another beauty, providing a comparison to the equally excellent chart supplied by commodity analysts at Macquarie Bank earlier this week.
Known as a “Commodity Scanner”, HSBC says that it gives a snapshot of current supply and demand dynamics for each commodity it tracks, along with how it expects those balances to evolve in the years ahead.
“We note the spectrum of dynamics impacting our commodity universe, which we believe will result in a range of price performances over the coming years,” the bank says. “In our view, it will not be appropriate to assume all commodities are tied to the same fate.”
Using a clockwise motion, any commodity on the left-hand side of the scanner is deemed to be in a tightening phase, providing upward pressure on prices in HSBC’s opinion. For those commodities located on the right-hand side, market conditions are deemed to be loosening, providing downward pressure on prices.
HSBC even provides a ranking to make things easier for assessment, revealing which commodities it likes, which it is neutral upon, and those it says should be avoided.
In terms of those commodities it likes, HSBC expects palladium and zinc to outperform in the years ahead, while it says iron ore and manganese should be avoided.
This table from HSBC provides a simple assessment on the factors underpinning its views.
And, for those looking for price forecasts, HSBC has that covered too.