Commodity prices to fall 34% in 2009 - institute
18 November 2008 15:14 [Source: ICIS news]
TORONTO (ICIS news)--Global commodity prices are expected to fall 34% in 2009 after a 35% increase in 2008, Germany’s Kiel Institute for the World Economy said on Tuesday.
The forecast for next year, based on research by the Association of European Conjuncture Institutes, assumed that most of the negative news from the financial crisis and weak economic environment was now priced in.
Prices were in broad retreat after reaching extreme heights in the first half of 2008, the institute said.
Commodity prices would bottom out during 2009 and prices could start rising again once economic recovery was established, the institute said.
Real commodity prices had shifted upwards as the global supply/demand balance for most commodities had structurally tightened as a consequence of the economic rise of
This trend would not stop despite a temporary moderation of growth that was expected, the institute said.
Oil prices were expected to stay at around $60/bbl next year. This compares with the peak price of $147/bbl reached in July.
But oil was not expected to drop substantially below the levels seen in 2006, the institute said.
The institute said prices of non-energy commodities were forecast to drop by around 30%.
“The financial market crisis and the associated economic slowdown is leading to an easier market situation in industrial raw materials, where most markets are characterised by sluggish demand and accumulating inventories,” the institute said.
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