2019 was a fascinating year for oil and metal traders. And this year, experts suggest it won’t be boring either.
Last year’s commodities markets were majorly influenced by the US-China trade war, Brexit uncertainty, UK’s premiership elections, and slower global economic growth.
President Trump seemed to have found a bargaining chip in his toolbox to bargain for whatever he wanted from the worldwide community.
Being one of the largest consumers of several commodities, the president used taxes on exports to the US as a bargaining chip. While Trump’s main focus might have been on Chinese good, other countries were not spared either; he also imposed higher import duties on cars and other products from the EU and Iran.
As the Chinese economy suffered following the trade war, commodities took a big hit leading to lesser infrastructural developments and thus lower demand for copper and related commodities.
Away from the demand for the metal, its supply was also affected for the better part of last year. Political instability in some parts of South America led to public demos, disrupting operations in Escondida, the world’s largest mining centre. Constant interruptions had also been reported in the city’s mining plants due to alleged deplorable working conditions.
According to the International Copper Study Group (ICSG), the events led to a 0.5% drop in last year’s copper mining activities. However, experts predict a steady rise in production this year as demand prospects remain uncertain.
The past year has seen sporadic movements in oil prices caused by the global growth story. An oversupply from the US shale revolution was also registered as a critical driver of drops in prices.
The US rose to become the largest producer of oil, and unlike the Middle Easterners and Russians, the state is not oil-reliant. That gives the US leeway for being stubborn about prices without hurting their economy as severely.
Trump, known for pushing for lower oil prices perhaps to boost his polls, this year tweeted about OPEC’s intention to promote the commodity’s price. He warned that their actions would hike the global prices of oil. But OPEC+ seemed to have ignored the warning and went ahead to cut supplies by about 500,000 barrels per day until the end of the first quarter of this year.