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A recovery of commodity prices seen so far is good news for the commodity-based South African economy, and the outlook for commodities during the second half of 2009 may be even brighter. Recoveries in commodity prices follow the massive commodity fund liquidations and inventory reductions at mine, refinery and final consumption levels in December which, in some instances, gave rise to record stock levels of industrial metals on the London Metals Exchange. According to recent data, the Chinese PMI New Orders and New Export Orders lead metal prices by approximately one month, providing upward momentum to the rally in metal prices. Du Plessis believes the uptrend in commodity prices since the extreme lows in December should be considered as a return to equilibrium due to cutbacks in production and China’s activity in the commodity markets rather than the start of a strong bull market. According to Du Plessis, the outlook for commodity prices in the second half of this year is encouraging. read more

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