Topic 2: END OF COMMODITY SUPER CYCLE?

Despite the recent correction, commodities have had a massive outperformance over the past two years. The prospect of Fed rate hikes, fears of a global economic slowdown, and a strong US dollar have put brakes on the surge in commodity prices. However, we believe we are still in the commodity super-cycle given the demand-supply equation. On the demand side, decarbonization movements and economic restart post the pandemic shutdown have kept the demand for most commodities high. However, on the supply side, years of underinvestment have resulted in woefully inadequate supply for pretty much every kind of commodity. Typically, it takes 5-7+ years to add any new capacity in the commodity space, and we cannot expect an

investment spree today to fix the structural supply deficit in the immediate future. Thereby, we believe tight supply and demand conditions for most commodities should limit the downside from here. As global growth prospects improve, we expect commodity prices to rebound. In the near term, the main risk to commodity prices would be a more profound deterioration of macroeconomic conditions.



Top | Back
The information contained herein (the “Information”) may not be reproduced or disseminated in whole or in part without prior written permission from the Company. The information herein is meant only for general reading purposes and the views being expressed only constitute opinions and therefore cannot be considered as guidelines, recommendations or as a professional guide for the readers. The document has been prepared based on publicly available information, internally developed data and other sources believed to be reliable. The directors, employees, affiliates or representatives (“Entities & their affiliates”) do not assume any responsibility for, or warrant the accuracy, completeness, adequacy, reliability and is not responsible for any errors or omissions or for the results obtained from the use of such information. Readers are advised to rely on their own analysis, interpretations & investigations. Certain statements made in this presentation may not be based on historical information or facts and may be forward looking statements including those relating to general business plans and strategy, future financial condition and growth prospects, and future developments in industries and competitive and regulatory environments. Although the Company believes that the expectations reflected in such forward looking statements are reasonable, they do involve several assumptions, risks, and uncertainties. Readers are also advised to seek independent professional advice to arrive at an informed investment decision. Entities & their affiliates including persons involved in the preparation or issuance of this document shall not be liable in any way for direct, indirect, special, incidental, consequential, punitive or exemplary damages, including on account of the lost profits arising from the information contained in this material. Readers alone shall be fully responsible for any decision taken based on this document.
Copyright © 2022 Fintso