Back pedal 12 months and the commodities landscape looked rather different.
Prices had been falling since 2011 and the trend carried through into early 2016. Many worried that the declines were set to continue through this year. 10 months in, the picture looks brighter: Chinese demand for metals has picked up and cost-cutting by producers has boosted profitability.
Commodities Are Up… But Why?
The S&P GSCI Commodities Index has risen from a low of 271.8 in late January to 372.4 today, a rise of 37%, aided by a doubling in oil prices during the period. Mining stocks are among the better-performing asset classes of 2016 and were doing well even before Brexit boosted the fortunes of London-listed stocks. There is a sense of cautious optimism about a recovery in commodities much of which has to do with improved sentiment toward China. (more…)