Trends in international trade and finance 3
International prices of primary commodities
International prices of primary commodities have been on a downward trend in the past two years, and no measurable upturn is projected for 2015–2016.
The Brent oil price is projected to continue softening in 2015–2016, as the gap between demand growth and supply growth is expected to continue. Oil demand growth has been slowing down throughout 2014, following sluggish economic growth in key economies, including Western Europe and Japan. In addition, weaker-than-expected GDP growth in China has also weighed on weaker demand, particularly during the second quarter of 2014. As a result, growth in oil demand was at its lowest level in more than two years. In 2015–2016, increasing demand in the United States is expected to partially offset the weaker demand from other developed economies. However, global demand growth for crude oil should continue at a moderate pace.
Non-oil commodity markets strengthened slightly during the first quarter of 2014, led by a surge in food prices, but eased thereafter. The Non-oil Nominal Commodity Price Index of UNCTAD4 increased from 245 points in January to 252 points in March 2014 and decreased afterwards by 3 per cent to reach 244 points in August. The average value of the index over the period of January–August was about 6 per cent lower than a year ago, but remains high relative to its long-term trend of the past decades. Compared to 2013, major commodity groups registered an overall decline in their prices, with the exception of tropical beverages, which increased.