NEW YORK Global demand
for commodities likely will survive domestic and global threats
such as the fiscal cliff and the euro crisis over the next two
years, buoyed by global growth and a stronger Chinese economy,
analysts said at the Bank of America Merrill Lynch Global
Research 2013 Year Ahead news conference Tuesday.
"Weve heard about the
impending fiscal cliff. This could be a big risk to markets,"
said Francisco Blanch, head of global commodities and
derivatives research at New York-based Bank of America Merrill
Lynch. "(But) we expect global growth to be roughly 3.2 percent
next year, and this will lend some support (to) commodity
demand in general."
However, analysts at the news
conference did not underplay the danger of the United States
going over the fiscal cliff, which would result in billions of
dollars in increased taxes and spending cuts and could cause
the U.S. economy to spin into another recession.
"The market is too complacent
about (this) $300-billion (fiscal) tightening," said David Woo,
head of global rates and currencies research. "Think about
China. China was already shaking in its boots because Europe,
its largest trading partner, was tightening fiscal policy. Can
you imagine if the U.S. tightened fiscal policy at the same
The most dramatic development in
the U.S. commodities market has been the massive growth in oil
and natural gas production in North America. "The shale oil
revolution is a completely new thing," Blanch told AMM
on the sidelines of the news conference. "It has come out
of nowhere in the past year."
The United States pays one-sixth
of the price for its base load energy consumption compared with
Japan and about one-third compared with Britain and the
European Union, giving domestic producers a competitive
advantage that likely will increase in coming years.
Companies based in the United
States have sought to leverage increasing domestic oil and
natural gas production in recent months by signing exclusive
production contracts with expanding domestic gas producers or
by acquiring the companies outright.
On average, consumers in the
United States pay $630 million less for gas each day than
consumers in the rest of the world, Blanch said. "How much is
that? Well, give or take, thats a little bit over 1
percent of GDP. Just gas alone. This is real money."
Platinum prices could rise next
year on the back of mine disruptions in South Africa and a
recovering European automotive market. "(If) you have a pickup
in car sales in Europe, producers are going to have to go out
and buy a lot of platinum. And guess what? Because of the
disruptions at mines (in) South Africa, youll find
theyre low," Blanch said, forecasting that platinum would
average $1,738 per troy ounce in 2013.
Blanch said that a stronger
Chinese economy could support copper prices next year, which he
expects to average $8,313 per ton.