By ETimes

Most commodity markets enjoyed a strong performance in 2021, despite the continued threat of Covid-19 and fears over its impact on demand for metals and energy.

Precious metals were the only commodity assets to make losses over the year, but agricultural commodities, with the exception of US coffee prices, generally underperformed industrial metals and energy prices.

Market moving events: pandemic effects

The Covid-19 pandemic was the biggest single influence on commodity markets in 2021 and worked both ways on prices:

Commodity market prices rallied strongly in the early part of the year as the world’s economies emerged from lockdowns to surging consumer demand for goods and services.

Prices continued to increase as demand for raw materials outpaced supply due to the impact of Covid on production capacity and labour and shipping availability.

Prices stabilised and eased in many cases as new waves and new variants of Covid-19 drove fresh concerns that renewed restrictive measures from governments would stifle consumer demand again.

Energy markets

Oil prices, despite falling away during November, recovered in December to enjoy a strong 2021, with Brent Crude gaining nearly 54% over the year to $79.63 a barrel. Nymex West Texas Intermediate gained nearly 59% over the 12 months to $77.02 a barrel.


In addition to the Covid impact, oil prices were subjected to the whims of producer cartel OPEC and its allies, which caused the occasional blip in the recovery as internal member wranglings caused concerns the market could become oversupplied.

Nevertheless, the price of Brent hit a three-year high of $86.70 in October, while WTI hit $85.41 in the same month to reach levels not seen since 2014.

Industrial metals

Tin was the best performer over the year surging since November following concerns Indonesia would impose export bans. It gained 93% over the year to $39,260 a tonne.

Elsewhere, the same story of surging consumer demand and supply bottlenecks led to inflated prices for raw materials and aluminium rose 41% over the year, while zinc added 29%, copper gained 25% and lead climbed 14%.

Precious metals

The inflationary impact of higher raw materials costs on consumer prices ought to have driven support for gold – traditionally bought by investors to mitigate the impact of inflation on their portfolios.

However, an increasingly hawkish Federal Reserve piled on support for the US dollar, undermining gold’s attractiveness for investors wanting to purchase it in non-dollar currencies. Gold fell by 4.4% over the year to $1,818.60 an ounce.

The worst performance came from palladium, as carmakers – hobbled by semiconductor shortages – reported falling production rates throughout the year. Palladium, used in catalytic converters, fell 20.6% over the year to $1,949 an ounce – Harare



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