BNY Mellon: Commodity Cycle Look Strong For Long Term

Three factors frame a constructive outlook for a strong commodity cycle, a BNY Mellon report notes. China’s recent reforms, OPEC’s promised production cuts and “the election of Donald Trump have cemented the final stages of the commodity correction,” which provides “likely truncated downside risk.” The report is bullish on commodities, but in particular lithium and cobalt, used in battery manufacturing. [dalio] China normalization and production cutbacks will help boost commodity cycle Since 2009, China engaged in a dramatic expansion which created a “demand-binge hangover.” The inflating of commodity prices was due to “free-flowing capital” that also created a “build-up of…