PricePedia Scenario for August 2024

The PricePedia Scenario has been updated with the information available as of August 2, 2024, and is characterized by a situation of stagnation in global commodity demand due to intensifying geopolitical tensions and a slight contraction in China's manufacturing sector, documented by the manufacturing PMI falling below the threshold of 50. This contraction adds to the difficulties that the European industry is facing since more than 18 months.

In the PricePedia scenario, this stagnation is reflected in the dynamics of the global industrial cycle^[1] shown in the following chart.

On the annual average for 2024, the industrial cycle is flat, with levels virtually identical to those recorded in 2023. In the second half of the year, an industrial cycle recovery is expected in relation to the future progressive easing of monetary policies in Europe and the USA.
A more significant growth is anticipated in 2025, with an expected increase in the index of +1.5% compared to the average values of the previous year. This dynamic is expected to continue throughout 2026.

Commodity Price Forecast

Below is a table illustrating the annual price changes of the main commodity aggregates (Industrials^[2], Commodity^[3], Energy, and Food).

The weak demand situation leads to a forecasted reduction in the Commodity index in 2024, with a decrease of -3.3% compared to 2023 values. Except for Food, which shows a slight increase in 2024, price reductions are expected to affect both Industrial and Energy commodities. However, the dynamics of the two aggregates over the next 24 months appear different, with the former recovering in 2025, in line with the increasing trend of the global industrial cycle, and the latter continuing the reduction path started in 2023.

In the following charts, the prices of two products, copper and oil, are shown, representing the dynamics of Industrial and Energy commodities, respectively.

Copper Scenario

Oil Scenario

The price of copper, representing the dynamics of Industrial commodities, is expected to increase over the next two years, following the adjustment that occurred in recent months. The forecasted price increases are supported by the rising demand for copper to be used in the energy transition. By the end of the forecast period, prices are expected to settle just below 9700 US dollars per ton.

Regarding the price of oil, representing the dynamics of Energy commodities, a downward trend is expected. However, geopolitical tensions and effective supply control policies by OPEC counterbalance the current low demand, and thus the descending trend is expected to be rather gradual, keeping oil prices around $80 per barrel.