[ad_1]
India will account for a considerably bigger share of world commodity demand by 2029, although Chinese demand will possible proceed to form commodity markets over the subsequent 5 years, the Australian Office of the Chief Economist (AOCE) has stated.
“… Indian financial progress is presently the strongest on the planet, and its rising manufacturing base, sturdy infrastructure spending and demographics, all counsel rising per capita consumption of useful resource and power commodities,” it stated in ‘Resources and Energy Quarterly’ launched on Thursday.
In China, sturdy funding in infrastructure and manufacturing capability has helped useful resource and power commodity demand within the face of weak demand from the residential property sector, the AOCE stated.
Global financial progress tender
“World financial progress stays tender, weighed down by comparatively tight monetary situations. However, key markets have continued to help commodity demand. US financial progress has been sturdy regardless of rate of interest hikes up to now 2 years,” the quarterly stated.
Global power transition will likely be a key consider useful resource and power commodities over the outlook interval to 2029. “While the transition will see elevated demand for commodities utilized in low emission applied sciences (for instance, iron ore, aluminium, copper, nickel and lithium), it would scale back demand for different commodities (reminiscent of some fossil fuels),” it stated.
The persevering with evolution of applied sciences throughout the power transition will increase the problem of forecasting future demand, provide and costs. “The decarbonisation of metal/aluminium manufacturing and provide chains will have an effect on progress and commerce patterns over the outlook interval to 2029,” the AOCE stated.
Weak outlook for nickel, lithium
Overcoming the substantial technological, power and feedstock challenges required to obtain this transformation will take each time and substantial capital funding. There are already many pilot metal crops underneath development world wide, particularly hydrogen-based DRI operations, most of that are anticipated to start over the subsequent two years, it stated.
Aluminium producers are more and more resorting to renewable energy to scale back their emissions, and this pattern will speed up over the outlook interval. “This will embody the use of inexperienced hydrogen,” the ‘Resources and Energy Quarterly’ (REQ) stated.
The AOCE stated a comparatively weak value outlook has contributed to introduced closures and manufacturing cuts by a quantity of key nickel and lithium producing nations (together with Australia). It has added to current provide chain uncertainties related to Western nations’ coverage measures to safe future provide.
Prices of lithium and nickel reached excessive ranges in 2022 and H1 2023. “Combined with sturdy provide progress since 2020, softer-than-expected (cyclical and structural) demand for each metals has since seen market surpluses develop. Since the final REQ, rising inventories have seen the costs of lithium and nickel hit 5-year lows,” it stated.
Aus export earnings to fall
Some high-cost nickel producers might exit the market completely. “However, nickel’s use in a widening array of supplies and applied sciences means a tightening global stability and improved costs within the latter half of the outlook interval,” stated the AOCE.
Lithium stays a central part of batteries utilized in quite a few applied sciences. Australian lithium exports are possible to stay substantial, with most lithium producers in Australia possible to stay globally aggressive, the REQ stated.
For the 2024-25 monetary 12 months (July-June), Australian useful resource and power export earnings are forecast to fall additional to round $369 billion, reflecting additional bulk commodity value declines and an increase within the AUD/USD.
Through the remainder of the outlook interval (to 2029), export values are anticipated to stage out as commodity value declines gradual and the AUD/USD lifts modestly, it stated.
[ad_2]
