The Reserve Bank of Australia’s Index of Commodity Prices increased by 25.3% in SDR terms from a year earlier, led by higher LNG, coking coal, and thermal coal prices. The annual index growth slowed slightly from a 25.7% rise in December and was the lowest reading since February 2021. The index has increased by 30.9% in Australian dollar terms.
Commodity Prices YoY measures the yearly change in the selling price of exported commodities. Commodity exports have on average accounted for more than half of Australia’s export income. Because changes in export prices explain approximately three-quarters of the fluctuations in the growth of export values since 1990, developments in export prices can have a significant impact on export earnings and economic activity in Australia. The most important commodities in the RBA Index of Commodity Prices are iron ore (27.1 percent of the total weight), metallurgical coal (16 percent), LNG (15.8 percent), thermal coal (9.5 percent), gold (7.5 percent), and alumina (4.1 percent).
Oil prices rise:
Energy shares including Santos Ltd and Woodside Petroleum Limited could have a decent day after oil prices are pushed higher. According to Bloomberg, the WTI crude oil price is up 0.5% to US$89.82 a barrel and the Brent crude oil price is up 1% to US$91.72 a barrel. Analysts are warning that oil prices could hit US$120 if Russia invades Ukraine.
Gold price rises:
Gold miners Evolution Mining Ltd and Regis Resources Limited could have a decent day after the gold price pushed higher. According to CNBC, the spot gold price is up 0.4% to US$1,835 an ounce. Traders were buying gold after the US dollar and Treasury yields softened ahead of the release of key US inflation data.
Iron ore prices take the elevator over the stairs:
ASX 200 mining companies with exposure to iron ore also performed well during Tuesday’s session. These included strong share price appreciations across the titans of the industry such as BHP Group Ltd, Fortescue Metals Group Limited, and Rio Tinto Limited.
The strength in these blue-chip mining names comes amid a continued resurgence in iron ore prices. The rally placed iron ore futures above US$150 per tonne. A mere week ago, this figure was hovering around US$138. Meanwhile, if we backtrack to November last year, the price was approximately US$92 per tonne.
According to reports, strong fundamentals and a potential for a supply shock are providing upside pressure to the steelmaking commodity’s price.
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