After a strong rise in prices, the world’s commodities markets seem to be losing steam. There are exceptions though. This 10-point guide gives to our outlook for a range of resources, from metals and fossil-fuels to farm produce.

  • Commodity prices have doubled since the trough in April 2020, but the momentum has slowed in recent months. This doesn’t look like a repeat of the 2002-08 ‘super-cycle’ when prices soared by 320 per cent: our central case is that global commodity prices edge lower in 2022.
  • The Delta variant of COVID-19 has hit global growth and mainland China’s curbs on infrastructure investment and property development have dampened demand for metals. Increasing vaccination will pivot spending from goods back to services, reducing manufacturers’ demand for metals.
  • Western economies’ infrastructure programmes are unlikely to offset slowing Chinese commodity demand – as developed nations typically use more recycled materials. The key exception is electric vehicles, and their networks, which support demand for copper and battery commodities, including lithium.
  • High commodity prices have boosted mining firms’ profits and national income growth in commodity-driven economies, particularly in Latin America, including Brazil – but less so than in the 2000s super-cycle. However, investment in liquid natural gas and higher expected spending on renewables will support demand for materials such as copper, lithium and cobalt.
  • Climate-change policies and changing preferences by corporations and investors are impacting some commodity markets significantly. Many countries are considering carbon border taxes that we think would raise prices of carbon-intensive commodities.
  • Fossil-fuels: rapidly shifting climate-change policies are discouraging investment in large-scale fossil-fuel extractive capacity, pushing up these fuels’ prices.
  • Oil prices reflect slowing global growth and have been suppressed by OPEC producers increasing supply and the possible return of Iranian oil to the world market. Our central case is that Brent oil edges lower, from an average of USD68 a barrel this year to USD65 in 2022.
  • Electric vehicles, supported by government climate goals, are strengthening demand for battery-related commodities. Demand for lithium is expected to triple by 2025 from 2019 levels but increasing supply will limit the price rise. The market for cobalt is likely to remain tight until the world’s largest cobalt mine, in the Congo, returns to production, which is set for 2022.
  • Agricultural prices increased strongly as the global economy recovered from the initial pandemic shock. They’ve now fallen back, but weather-related challenges and further swine-flu outbreaks remain a risk.
  • Gold has fallen in price this year and the outlook remains particularly sensitive to the US Federal Reserve’s plans for tapering monetary policy. Silver prices have been undercut by gold, but industrial demand is expected to be supportive. And lower demand has hit platinum group metals as supply-chain disruptions for semiconductors weakened car production.


First published 15 September 2021.

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