As we look back on the past financial year, the world of commodities has been nothing short of a rollercoaster ride. From gold to uranium, each commodity has had its own unique journey, influenced by a myriad of factors from geopolitical tensions to supply chain disruptions. This post aims to provide a comprehensive review of the price movements of several key commodities over the course of FY24.
Gold, often seen as a safe haven in turbulent times, experienced a year of steady growth. Starting at US$1,919 per ounce at the start of the financial year, it saw a steady increase throughout the year, closing at US$2,320/oz. This represents an increase of approximately 20.8% over the financial year. With the AUD:USD rate trading in a relatively tight range for the year, it meant that many of the Australian based gold miners were able to generate solid cashflows over the course of the year.
Silver started the year at US$22.76 per ounce and ended the year around US$28.90/oz, marking an impressive increase of approximately 27%. The white metal proved to be a dark horse, outperforming its golden counterpart.
Copper, often referred to as ‘Dr. Copper’ due to its ability to gauge the health of the global economy, had a tumultuous year. Starting at US$3.73 per pound, it experienced a surge in May to US$4.92/lb before easing to close at around US$4.37/lb, an increase of around 17%. Producers such as Sandfire Resources and Metals X benefited from the stronger prices, each gaining by more than 40% during the year.
Nickel, a key component in lithium-ion batteries, was the key underperformer for the past financial year, continuing the drops that started in early 2023. Nickel started the year at $20,940 per tonne and ended at US$17,220/t, marking a decrease of approximately 17%. It looked like Nickel had broken its downward run when it recovered to US$21,275/t in mid-May, however it fell into another steep negative curve soon after. With a decision looming on the future of BHP’s Nickel West operations, the recent correction doesn’t lean towards a positive outcome without serious Government intervention.
Zinc, known for its anti-corrosion properties, started the year at US$1.20 per pound and ended at US$1.30/lb, marking a small increase of approximately 8.3%. The positive gain was despite reduced demand from China, the world’s top zinc importer.
Tin, widely used in soldering, had a cracking year. Starting at US$12.50 per pound, it gained steadily to US$16.20/lb in April before easing to finish the year at US$14.85/lb, marking an increase of nearly 19%. The growth was driven by robust demand in the electronics industry. As with copper, Metals X was the big winner on the cash generation and share price appreciation front, however, tin explorers generally got some wanted attention this year.
Uranium, the fuel for nuclear power, started the year at US$56.50 per pound and ended at US$83.60/lb, marking an increase of approximately 13.9%. The trajectory looked strong in early February as the price hit a whopping US$107/lb before easing off in the past few months. The future looks bright with many countries announcing plans to triple their nuclear power by 2050, including Australia if political winds blow a certain way.
Brent Crude Oil, the international benchmark for oil prices, started the year at US$74.90 per barrel and ended at US$83.44, marking an increase of approximately 11.4%. The rise was driven by geopolitical risks and recovery in global demand. It was a bit of a mixed bag for the bigger oil & gas companies, with Santos coming out ahead 3.5%, whilst one time suitor Woodside fell nearly 18% over the course of the year.
Overall, the past year has been a whirlwind for commodity prices, with each commodity carving its own path and providing a range of wins and losses for investors in the resources sector.
Looking forward, there is so much uncertainty with regards to the outcome of the US election, issues in the Middle East, the ongoing Russia-Ukraine war and how China responds to various tariffs and policy barriers. Forecasting commodity prices is challenging at the best of times, which these certainly aren’t.
For investors in the junior space, this means keeping up to date with short term commodity movements and global events, and assessing whether there are gains to be made on underappreciated companies.
White Noise communications is provided a fee for service working with companies which may have exposure to commodities or securities mentioned in these articles. All articles are the opinion of the author and are not endorsed by, or written in collaboration with, our clients.
Photo by Priscilla Du Preez
