According to Jeff Currie, global head of commodities for Goldman Sachs, the banking crisis in March will lead to a commodities supercycle driven by China and capital flight from energy markets. The U.S. bank’s head of commodities spoke at the Financial Times Commodities Global Summit and noted that “as losses mounted, it spilled into commodities.”
Currie explained that this type of scarring event can take months to recover, and the resulting deficit will drive oil prices higher by June. Goldman Sachs predicts that China will be the main driver of this commodities supercycle as the country moves away from relying solely on infrastructure spending to fuel its economic growth.
The supercycle, a long period of high demand and rising prices for commodities, could also be driven by the transition to clean energy and electrification, as well as the potential for inflationary pressures.
Goldman Sachs has been bullish on commodities for some time, citing factors such as the global economic recovery, supply chain disruptions, and stimulus measures. The bank’s analysts have also highlighted the potential for copper and other metals to benefit from the shift to electric vehicles and renewable energy.
However, there are also concerns about the potential for a supply glut in certain commodities, such as oil, as more countries transition to clean energy and demand wanes. Additionally, geopolitical tensions and trade disputes could also impact commodity prices in the coming months.
Overall, the banking crisis in March has led to heightened uncertainty in the commodities market, with some analysts predicting a prolonged period of volatility. However, according to Goldman Sachs, this crisis could also lead to a commodities supercycle driven by China’s economic growth and the shift towards clean energy.
In conclusion, the commodities market is expected to experience a period of uncertainty and volatility in the coming months, but also the potential for a supercycle driven by a range of factors including China’s economic growth, the transition to clean energy, and inflationary pressures. Investors will need to keep a close eye on market developments and economic indicators to navigate this complex landscape.