IRON ORE TO BOOM according to PLAATS HEAD

CNBC World Markets

The next wave of the global recovery could send commodity prices soaring

PUBLISHED FRI, SEP 18 20204:50 AM EDT UPDTRF FRI, SEP 18 20204:55 AM EDT
Sam Meredith@SMEREDITH19

KEY POINTS The next phase of the economic recovery is likely to be driven by commodity-intensive infrastructure investment, analysts have told CNBC. It comes at a time when market participants are closely monitoring the strength of the global economic recovery, as many countries grapple with an upsurge in the number of reported Covid-19 infections.

” I’m watching things like iron ore very closely now because those sorts of industrial commodities are going to skyrocket if we do get this bounce-back driven by infrastructure and then that will filter into oil,” Andy Critchlow, head of news in EMEA at S&P Global Platts, told CNBC”.

The next phase of the economic recovery is likely to be driven by commodity-intensive infrastructure investment, analysts have told CNBC, potentially setting the stage for further gains across the industrial space in the coming months.The prediction comes at a time when market participants are closely monitoring the strength of the global economic recovery, as many countries grapple with an upsurge in the number of reported Covid-19 infections.One sign the recovery may be gaining momentum, however, came as the world’s second-largest economy reported industrial output expanded the most in eight months in August.China, which has been in recovery mode for months now, published data on Tuesday that showed industrial output growth accelerated to 5.6% in August when compared to a year earlier. It bolsters the view that Beijing’s demand recovery continues to gather pace, with government stimulus helping to fuel a rebound.

”We’ve already seen a metals-intensive response in China, highly metals-intensive,” Max Layton, head of EMEA commodities research at Citi, told CNBC via telephone.“It has been absolutely stunning how strong China has rebounded on the construction side of things,” he continued, reflecting on the “spectacular” rally seen across the industrial commodity space as a result.

”I’m watching things like iron ore very closely now because those sorts of industrial commodities are going to skyrocket if we do get this bounce-back driven by infrastructure”Andy Critchlow HEAD OF NEWS IN EMEA AT S&P GLOBAL PLATTS

Iron ore prices could ‘skyrocket’“ I do think that a lot of the stimulus will be infrastructure driven. We already know that there is a massive infrastructure deficit in a lot of developed countries and that is something that could be addressed in this period,” Nitesh Shah, director of research at New York-based WisdomTree Investments, told CNBC via telephone.

”Why waste a good crisis? You can actually get through a lot of the infrastructure programs that you’ve been waiting decades to actually get through the door in this time,” Shah continued. “I’m not as optimistic on a big ‘V-shaped,’ rigorous recovery but even some sort of recovery is good for the industrial space.”

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