Metal commodity pricing has fallen to the lowest levels in a decade, but that is likely to quickly rebound.
Photo: Supplied Buyers will start returning to a more competitive market soon, according to commodity research firm BDO.
“Metal commodity prices have been on a downwards trajectory for some time, but this is likely not to last long,” said Ben Wilson, managing director of BDO’s commodities research business.
“While there is some uncertainty about the outlook for metal prices, the overall sentiment is that there is good prospect for recovery in the coming weeks.”
The latest BDO survey of metals prices, compiled by research firm Bernstein, found that metals prices were up 1.7 per cent in 2017.
However, that was driven by a surge in the price of silver, a commodity which has fallen by a third in the past year.
“It’s difficult to say whether metal prices will bounce back to the levels of their 2016 highs and then climb back further,” Mr Wilson said.
“However, silver is expected to start its decline soon, as a result of supply constraints, and will eventually return to its pre-recession levels.”
BDO said there was little room for optimism.
“The current rally in metals prices is driven by demand for metals, which is also an important driver of metal prices,” he said.
The index has been stable in recent months, with metal prices rising by 1.5 per cent last year and 3.1 per cent this year.
However the trend of rising prices was not driven by any significant changes in the prices of gold and silver, according BDO data.
Metal prices have surged in recent years due to increased demand from Chinese investors and mining companies.
But the recent sharp drop in commodity prices has seen commodity prices fall by a fifth since 2015.
“A rebound in metals pricing is likely in the short term, but it is unlikely to last for much longer,” Mr BDO chief economist Tom Higginson said.
BDO expects metal prices to return to their previous levels by mid-2018.