Edward Morse, world head of commodities analysis at Citi Group, in an interview with CNBC-TV18, stated Thursday that he sees a interval of growth for commodities.
“Undoubtedly a growth time for commodities,” Morse stated. “It’s deceptive to name it a supercycle or something between a growth and a supercycle,” he added.
“You’ll be able to’t have a commodity supercycle with out the power sector collaborating in that supercycle. The rationale for the supercycle is principally that every one uncooked supplies are power intensive and power uncooked supplies are essentially the most liquid, essentially the most traded of all of the uncooked supplies. “
“So the power sector has to have a supercycle in order that the remainder of the commodities sector has a supercycle, however the remainder of the commodities sector – the entire commodities sector can’t have one in any respect. until power is concerned in that, ”Morse stated.
“Metals are in demand as a part of the power transition. Metals are a crucial factor within the swap to battery energy and copper and aluminum particularly are important in constructing the community. There may be due to this fact little doubt in our thoughts that the power transition is sort of grasping in metals.
Morse believes there’s a short-term bubble within the value of iron ore. “The prices of iron ore are fairly low given the present value of iron ore. The marginal value of iron ore is US $ 28-25 per tonne, and the typical value of mining iron ore is round US $ 80 per tonne. So reaching 120-140 USD per tonne would by no means be viable, ”he stated.
For gold, he stated, “We expect it’ll settle between $ 1,700 an oz and $ 1,800 an oz within the vary the place it traded lately. It may possibly go down a bit. We imagine central banks, significantly in rising markets (EM), will improve their holdings of gold simply as they elevated them within the decade main as much as the pandemic, which made them a bit too costly for them. central banks of EM.
For a full interview, watch the video …