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Commodities on the move

15 October 2021
Rueben Hale

With the notable exception of iron ore, most commodity prices have performed well in 2021, and analysts widely expect those gains to hold in 2022, offering opportunities for explorers and investors.

Strong prices for oil and gas predicted to flow through to 2022

Crude oil and natural gas prices are at or close to five-year highs, and analysts anticipate further steady rises over the next 12 months. Managing director of Brookside Energy, David Prentice, agrees.

“We expect oil and gas prices to perform strongly over the coming 12 months with near term volatility to the upside as we enter the northern hemisphere winter,” he said.

“With oil demand approaching pre-COVID levels and concerns over natural gas supply coupled with low gas inventories, we see a strong finish for commodity pricing as we close out 2021, which will flow through into 2022.”

Some lustre returns to gold and silver in 2022

Gold and silver have had a mixed year, both falling from early 2021 peaks. But in line with other commodities, there is optimism surrounding both shiny metals going into 2022.

Trading Economics global macro models and analysts expect gold to fetch $US1843.80 per ounce in 12 months, up from today’s $US 1791. Silver, which had a significant fall from grace earlier this year, is enjoying a more recent spike. Analysts expect silver to fetch $US24.89 per troy ounce in 12 months, up from today’s $US23.46 price.

Demand for copper strong for another decade

Unlike gold and silver, the copper price has enjoyed a bumper year, up 51 per cent over the past 12 months, albeit with some recent volatility. The copper price is now just cents away from all-time highs.

Castillo Copper managing director Simon Paull sees that volatility in copper prices continuing in the short term. He attributes that to China’s economic growth, territorial disputes in the Indo Pacific region, and political/economic disquiet in Latin America. But beyond the short term, Paull is bullish on copper.

“Long term, copper sees demand increasing whilst the world economies pivot to clean energy,” he says, adding he sees the healthy demand lasting at least 10 – 15 years.

Predictions nickel will continue to rise in 2022

Nickel is another metal enjoying a great year. The silvery-white metal is closing in on 10-year highs and up 25.65 per cent in 12 months. A general slowdown in production sees global inventories depleted. Scarcity is fuelling the price rise.

Analysts predict the nickel price will continue to rise in 2022. The 12-month price estimate is $US21008.25 per tonne, a rise of approximately 8.5 per cent on today’s price.

Lithium remains metal’s golden child

The metal poster child in 2021 is lithium. The rare-earth is up 323 per cent in 12 months as carmakers and battery manufacturers scramble for supplies.

Lithium is currently trading around 165,000 points. Analysts expect the price to rise to approximately 183,200 points in 12-months’ time.

“The pivot toward net-zero carbon emissions has contributed to unprecedented growth and a big gap between upstream investment and forecast demand,” Forrestania Resources chief executive Melanie Sutterby said.

“Recent demand drivers and short supply have seen the quoted price of lithium jump from $40K/t in November 2020 to $165K/t today.

“This interest has forced up share prices of lithium players and heightened interest in the next generation of explorers, with investment booming in the battery metal/EV space.”Lithium is currently trading around 165,000 points. Analysts expect this to rise to about 183,200 points in 12-months’ time.

Fresh interest in uranium

Another metal having a stellar year is uranium. After hitting a five-year high of $US50 plus per pound recently, the metal is still trading above $US47 as nuclear energy’s environmental and economic advantages attract worldwide attention. Even nuclear resistant Australia is thawing towards yellowcake.

“The outlook for uranium power and uranium has improved rapidly over recent weeks,” GTI Resources executive director Bruce Lane says.

A combination of factors is driving investor interest in commodities. But high prices are also good news for mining explorers and their projects, as Forrestania’s Melanie Sutterby notes;

“Commodity cycles drive exploration and favour investment where genuine opportunities for discovery exist.”

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