Panellists at one of the panel discussions.
Commodity markets 'set for uncertainty'
DUBAI, February 13, 2017
The global commodity markets will experience this year uncertainty and volatility that is unprecedented, commodity experts speaking at a major conference in Dubai felt.
Renowned commodity experts from across the world gathered yesterday (February 12) for the Fourth Global Commodity Outlook Conference (GCOC), hosted by Richcomm Global Services and Dubai Multi Commodities Centre (DMCC) in association with Dubai Gold & Commodities Exchange (DGCX) and Thomson Reuters.
Under the theme “Changing of the Guard”, the conference welcomed over 400 trade specialists, regulatory professionals and government officials whom discussed the key drivers and constraints in the global commodity market.
Wrapping up the keynotes, Paresh Kotecha, managing director Richcomm Global Services, said: “With the background of President Trump’s election and a challenging year with elections in the European Union, the global commodity markets will experience this year uncertainty and volatility that is unprecedented.
“The erosion of trade pacts from Nafta to TPP and, possibly, even the EU; as well as rising inflation, low interest rates, strong dollar and infrastructure spending, will generate tensions between incumbent countries,” he said.
In the opening remarks, Omar Khan, director, international offices, Dubai Chamber of Commerce said: “Dubai, as a city itself, is always working with its partners including the private communities to become more robust and adaptive to change in difficult times. It is not about avoiding losses but making gains in the right place and right time.”
Complimenting his remarks, Sanjeev Dutta, director, DMCC, said: “Internationally, we start 2017 seeing the effects of volatile markets, modest global economic growth, uncertain outcomes of geopolitical conditions, and shifting regulatory environments. It is up to us now as an industry to meet these challenges by embracing them. We need to understand how we can leverage our collective experience to create opportunities. It is our responsibility to take a leadership role in finding the best way forward to unlock new opportunities – and ultimately strengthen confidence in markets.”
Gaurang Desai, CEO of DGCX, said: “This annual commodity conference is the brainchild of Richcomm, a strategic partner of the DGCX for a decade now. We truly believe this is an excellent platform for promoting deeper engagement and meaningful discussions between traders, investors and policy makers, while providing strong insights and outlook for commodities and the macro-economy for the year ahead.
“Last year, we saw the commodities sector emerge as the top-performing asset class - finding great favour with global investors and even outperforming other asset classes such as equities. Therefore, the significance of the global commodities market is indisputable, which is why this conference and the sessions were very enlightening as it will support market players to have a better view of what to expect especially in the present context of continued global uncertainty.”
The event hosted five panel sessions discussing the outlook on the macro economy, energy, agriculture, base and precious metals, as well as the role of blockchain technology in the commodity market.
The panel saw Erik Norland, executive director economics, CME Group, claim that: “We are currently in a transitional period. Markets were optimistic since Trump’s win in November 2016. Nonetheless, since Trumps inauguration, markets have backed-off. Doubts on reality are creeping in on whether Trump’s agenda can be undertaken. Questions regarding advocacy and ideological differences are two reasons why this may be tougher for Trump than he first thought.”
Dr Nawazish Mizra, associate professor of finance, SP Jain School of Global Management, added: “The worst part is over. The macro-economic dynamics have changed and local economies have adapted. The UAE and Bahrain have stabilised their finances; however, Saudi Arabai is the country that may see some issues. The implementation of VAT in January 2018 will boost short-term growth, but it cannot be relied on as the extra revenue source. Governments still need to diversify and spend on infrastructure.”
Robin Mills, CEO of Qamar Energy, started the panel by discussing Opec and the recent announcement to cut costs. “Regarding Opec, compliance has been good so far, but it will get harder as the end dates (six months) nears. Markets has recovered quickly and banks have kept the tap open. Currently, the focus is mainly on Permian Basin; if prices go up and shale comes back on, there will be limited upside.”
Mustafa Ansari, analyst – energy research at Arab Petroleum Investments Corporation, added: “One of the aims of the cut is to try and reduce stock level, and as such, decrease the forward curve, deterring the shale producers to come back to the market as they can’t hedge forward supplies. Impact of geopolitics will play a more crucial role now, especially supply disruption. Without further Opec cut after six months, we will see prices drop a little bit.”
Base and Precious Metals
The two panels discussed a wide range of issues what that means for supply, demand and price; as well as whether gold is a metal or a currency given the recent success of bitcoin. Talking points included prices of base metals, which are due to carry on their rally from Q4 2016, as economic sentiment remains strong.
The panellists also mentioned that they were optimistic about the performance of precious metals in 2017. The market is already witnessing the positive impact of Trumps’ effect with prices increasing by 4 to 10 per cent since beginning of January. Nevertheless, high levels of uncertainty remain at the global macro level because of political instability and major upcoming elections in Europe, which is predicted to boost gold prices after plunging to a 12-month low in December 2016. – TradeArabia News Service