Worrying times for commodities
Commodity prices seem to be declining on all fronts triggering some disconcerting times for local producers, states the latets Economy Watch by the Institute for Public Policy Research (IPPR).
The report has shows that the price of copper, zinc, uranium and gold are on a downward trend. According to the report, the high prices previously experienced resulted mainly from the strong demand over the past decade, particularly from China. This reversed the trend of declining real prices (prices adjusted for inflation) during the last century. But a consistent slow-down in the industrial output of China lead to the declining mineral prices exacerbated by the declining global economic performance. According to the report copper and zinc prices have dropped by 12.1% and 9.7% respectively since the beginning of 2013. While zinc prices are 2% higher than a year ago, copper prices have declined by about 6%. Zinc was selling at US$1,837 per ton and copper at US$6,960 per ton on 23 July 2013. Uranium prices have further fallen and are currently trading below US$40 per pound resulting in a drop of 16% and 27% compared to January 2013 and July 2012 respectively. Towards the end of July, the uranium price plummeted to US$36.50 per pound; a level last seen in January 2006. Reportedly, the price is below production costs of the operating Namibian uranium mines and has already affected development of new mines.
Gold prices have followed the same trend as other commodity prices and have weakened by 21.8% and 18.2% compared to the beginning of 2013 and the same period last year. The gold price dropped below US$1,200 per ounce at the end of June caused by speculation that the US Federal Reserve Bank could cease its quantitative easing policy. It has recovered slightly after assurance that the policy will not change in the immediate future and was trading at US$1,296 per ounce on 19 July 2013.
The Economy Watch also covered analysis done on recent inflation figures, global and local economic performance and a section on fuel prices.