Improving business conditions and the positive sentiment in financial markets should support the prices of industrial metals and crude oil at least for the remainder of the first quarter and possibly through to mid-year. The “Goldilocks” recovery in the global economy appears warm enough to boost demand from consumers, but not so hot that central banks will be in any hurry to withdraw the monetary stimulus that has fuelled demand from investors. Nonetheless, it is too soon to sound the “all clear” on the three bears – the budget problems in the US, the prospect of a prolonged slowdown in China, and risk of a renewed escalation of the crisis in the euro-zone – all of which still have the potential to come back and bite commodity markets later in the year.
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