Commodity prices up 32% over 2016, but uranium at 13-year low: HSBC

HONG KONG – Global- commodity prices rose further in December, closing out 2016 32% higher over the year, the biggest increase since 2011, according to HSBC.  The increase was broad-based, with 23 of the 32 commodities in the HSBC index rising over the year.  A retrenchment of supply and pull-back in investment, along with solid growth in demand, had lifted most resource prices, the bank said.

In early 2016, commodity prices fell to the lowest level in more than a decade. But HSBC’s proxy for the IMF commodity price index rose by 9% in December, taking the y-o-y gain to 32% (a rebound of 42% from the January trough).
Energy commodities led the December gains. Oil prices were on average 16% higher than in the previous month and natural gas prices were up 25% (to the highest level in two years).
Metals prices mostly continued to post solid gains in December. For the second month in a row the standout performer was iron ore, up 10% m-o-m, while copper and zinc were both up 4%.
 The only metal included in the HSBC indicator which finished 2016 with its price lower than at the start of the year was uranium. The price of uranium fell by 42% over the year, hitting a 13-year low.
HSBC said: “For many metals and energy products, the rally in prices has been particularly supported by a pull-back in supply. Decisions by OPEC, a pull-back in investment by major energy and mining companies plus ongoing reform in China to reduce excess capacity have all contributed to the commodity price rally.
“Among agricultural commodities, there was a big rebound in pork prices in December (up 22% m-o-m) following five months of steep declines. There were weaker prices for sugar (down 10% m-o-m) and coffee (down 14%), although both remain comfortably higher than a year ago.
One of the best performers of 2016, palm oil, saw a further 9% gain in December, taking prices to a 4.5-year high. Dry El Niño-related conditions in South-East Asia dented palm oil production during the year.””  www.hsbc.com (ATI).