"The commodities market will be driven by demand from countries like the US, Europe and Japan in five to 10 years period," Nicolas Fragneau, a fund manager with French firm Amundi, told reporters at a briefing on the Global Commodity Outlook in Kuala Lumpur yesterday.
Despite slow global economic recovery, active commodities like energy, industrial metals, precious metals and agriculture sectors are still showing growth over the long term.
He thinks the world is still in a commodity supercycle, with continued strong materials demand and intensive growth in emerging economies, especially in China and India.
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In his presentation, Fragneau said urbanisation in China and India contributes to infrastructure demand, as more and more people move to cities.
Over 40 per cent of people in India do not have electricity and the demand for power generation is clear as the country increases its thermal coal imports, he noted.
The demand for developed countries, especially in upgrading of existing infrastructure is also part of sustainable global growth demand.
"Within China, measures introduced to reduce growth to more sustainable levels means volatility in commodity end-demand is likely to persist," he said, noting that China is the world's top consumer of industrial metals.
China is taking measures to prevent its economy from overheating by tightening credit, introducing targeted taxes and letting its currency appreciate.
"These measures have impact on commodities consumption as residential construction and infrastructure investment are slowing," he said.
According to the American Society of Civil Engineer's 2009 scorecard, US$2,200 billion (RM7,018 billion) of investment are needed to upgrade existing infrastructure in the country.
"In the US, people are losing seven billion gallons of clean water due to pipes leaking," he said.
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