Week-In-Review: Avoid Premature Price Surges, Wait For a Real Rally

This week, tin hit an 11-month high. The price of Brent crude oil jumped above $40 per barrel for the first time this year. Even copper has seen its price increase steadily.

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Is this rally really a sustainable for commodities? We operate on the principle of trust but verify here at MetalMiner. And, as my colleague Stuart Burns cautioned us about China’s copper imports, there’s still little to suggest that the purchasing spree there is really about new demand.

Do copper imports matter if they're not being used? Source: Adobe Stock/Hedgehog.
Do copper imports matter if they’re not being used? Source: Adobe Stock/Hedgehog.

We’re not the only price rally cynics out there, either. Goldman Sachs isn’t buying it. In a note to investors written by Global Head of Commodities Research Jeffrey Currie, the investment bank cautioned that current market views on “reflation, realignment and re-levering have driven a premature surge in commodity prices that we believe is not sustainable.”

Avoid those unsustainable surges. This week, we noted that the low-price environment has decimated resource-heavy economies such as Africa’s and Brazil. The European Central Bank threw its hands up and cut its principal interest rate to zero, too.

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The price increases in oil, iron ore, tin and copper are great news for struggling exporters, but, let’s keep our heads here. There’s still a lot of economic pain out there.

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