The gains add to a more than year-long surge in raw-materials prices that’s shifted into overdrive in recent weeks,with the Bloomberg Commodity Spot Index rising for 14 of the past 15 days to the highest level in almost a decade.
A “Goldilocks scenario” may be forming as strengthening global growth combines with restrained wage pressures and a dovish Federal Reserve,Goldman Sachs Group commodities analysts said in a May 7 report,the same day weak US jobs figures added to the case for more stimulus. The risk for bulls - and anyone betting on buoyant returns from stocks and bonds - is that the surge in raw materials feeds through to broader measures of inflation and eventually forces central banks to tighten.
For copper,the long-term outlook is also being bolstered by a likely surge in demand as governments target huge investments in renewables and electric-vehicle infrastructure. While copper’s last march to record highs in 2011 was driven by China’s economic boom,analysts expect this rally to be supported by a much broader rise in metals usage.
Loading
“We’re in a new world,” Jeffrey Currie,global head of commodities research at Goldman Sachs,said in a Bloomberg TV interview. “We’re seeing a much more balanced growth between the US,Europe and China.”
The iron ore sector “is very,very hot,” Vivek Dhar,commodities analyst at Commonwealth Bank of Australia,said in A Bloomberg Television interview. “Supply is still not able to meet that strong demand.”
Iron ore with 62 per cent grade out of Qingdao rose $US18.31 or 8.6 per cent to $US230.56 a tonne,according to Fastmarkets. Iron ore futures in Singapore jumped more than 10 per cent to a record above $US226 a tonne. Contracts in Dalian soared 10 per cent.