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  • Commodities Buzz: Market Dynamics Were Broadly Positive For Most Commodities In 2021
  • January 19,2022  17:55
  • Global mining major Rio Tinto stated in its latest earnings update yesterday that market dynamics were broadly positive throughout 2021 for most commodities, lifting a number of prices to cyclical highs. Fiscal and monetary support and successful vaccine campaigns were key contributors to strong demand growth that ultimately stretched global supply chains to their limits and created challenging conditions for many of the world’s producers.

    China is transitioning from tightening to easing policies following a slowdown in the last quarter of 2021, with mild pro-growth measures in place to support property, infrastructure and consumption. China is likely to continue to fine-tune its policies to balance multiple priorities. In the United States, activity momentum eased toward year end amid concerns over the latest COVID-19 variant and persistent supply chain constraints. Peak recovery has likely passed implying GDP growth will slow, but solid fundamentals remain in place. Household debt has fallen to the lowest since 2000, supply shortages are expected to ease and inventory restocking should support growth. Economic activity in the eurozone weakened significantly in late 2021, and the current level of restrictions suggest a slower than expected start to 2022, especially for the service-based economies.

    Aluminium prices experienced volatility during the last quarter but recovered to just over US$2,800 per tonne at the end of 2021, driven by extensive power-related smelting curtailments in Europe. Physical markets remained tight amid firm demand and lower inventory levels, resulting in regional market premia recovering by the end of the year in both the United States and Europe. Copper prices ended the year at 4.40 per pound, down from record levels reached in May 2021.Demand remained sound throughout 2021, whilst supply faced multiple headwinds including COVID-19, shipping disruptions and other factors. Exchange inventories declined over the course of 2021 and ended the year at less than 200kt.

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