Amid gloom, some commodities show mettle

The year 2014 has been a forgettable one for most commodities with many such as crude oil, copper, steel, rubber and cotton seeing their prices head relentlessly south.

China cutting back on commodity imports, Europe and Japan slipping again on growth, and the US Fed rolling back its easy money policy affected all commodities. But amidst all the gloom, a few bucked the trend.

From being among the worst performing metals last year, nickel, used mainly for making stainless steel, emerged as one of the top gainers of 2014. Following the Indonesian government’s ban in January on export of unprocessed nickel ore, supplies from the world’s largest producer shrank drastically.

The ban fuelled a surge in nickel prices. From around September, prices started to unravel after a financial scandal emerged at China’s Qingdao port. Nickel closed the year around 12 per cent (futures contract price) higher.

Reversing last year’s performance, zinc prices too rose 6 per cent in 2014. After having been in surplus position for six years, zinc started to show a deficit in 2013, which widened in 2014. Palladium perks up

The year has been better for the less-sought-after precious metal, palladium. While gold ended 2014 lower by 5 per cent, the silvery-white palladium dazzled investors with a 12 per cent gain.

Strikes at palladium mines in South Africa, which produces 35 per cent of the world’s supply, in the early months of the year, pushed up the metal’s price. Fears of supply disruptions from Russia, the world’s largest producer, on the back of sanctions imposed by the US and the EU, following the Ukrainian crisis, also aided the rally. Even as palladium supplies were affected, higher car sales in markets such as the US boosted demand for the metal, which is used in emission-control devices.

But if there’s one commodity that outperformed all, it was the cup that you wake up to — coffee. High quality Arabica prices surged 52 per cent. With drought in Brazil, the world’s largest producer and exporter, fear of supply shortage pushed up prices. For cocoa, fears over the spread of the Ebola disease in West Africa hitting supplies from Ivory Coast, made prices shoot up 15 per cent.

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