International commodity prices to fall further in 2020 

Almost all major commodity price indices fell in the third quarter of 2019, led by energy – which declined more than 8 percent quarter over quarter this year on a weaker outlook for global growth and softer demand. 

The World Bank, in its October Commodity Markets Outlook released Tuesday, said crude oil prices are projected to average $60 per barrel in 2019 and weaken to $58 per barrel in 2020 – significantly lower than $68 per barrel in 2018. 

Brent crude oil price jumped 15 percent, from $60 per barrel on the first day of trading to $69 per barrel, following the attack on Saudi Arabian oil facilities on September 14. 

However, prices returned to their pre-attack levels by the end of September, amid a rapid resumption of Saudi oil production, a coordinated policy response by other oil producers, more diversified global oil production and refining capacity, and weak global demand.

Energy prices, which included natural gas and coal, are expected to average almost 15 percent lower in 2019 than in 2018, and to continue to decline in 2020, said the report.

Speaking to The Business Standard, Md Sarwar Alam, director of Marketing at the Bangladesh Petroleum Corporation (BPC), said that decrease in the price of any international commodities is a blessing for Bangladesh. 

"But the government will keep oil prices stable because some corrupt businessmen could create an artificial crisis to get the benefit from the decreased oil price that will make the domestic oil market volatile," he explained.  

Currently, the BPC is losing Tk10 crore to Tk30 crore every day due to the US-Iran tension. 

"If the BPC can buy oil at lower price from the international market, its investment capacity will increase and will enable it to use this in some projects such as the Chattogram-Dhaka 246km oil pipeline," Sarwar said. 

The slowdown in global trade and manufacturing poses a risk for losses for natural gas and coal, given the importance of the industrial sector in their consumption.

Prices of precious metals, which have risen sharply this year, are expected to continue their upward trend and increase by 5.6 percent in 2020, following an expected gain of 8.3 percent in 2019. 

According to the report, gold price rose 12.6 percent in third quarter of this year and are forecast to average 5.8 percent higher in 2020, following an expected gain of 9.5 percent. The price of silver increased 14.3 percent

The price of platinum rose 4.7 percent, which is much less of an increase compared to both gold and silver.

Price of metal and minerals, including iron, copper and zinc are also projected to fall by 5 percent in 2019 and continue to slide next year.

Zahid Hussain, former lead economist at the World Bank's Dhaka chapter, said that the decline in metal and crude oil prices in the international market would reduce the cost of imports for the construction and power sector.

"As a result, import payments will reduce for these sectors," he stated.

However, he opined that Bangladesh would not be able to benefit from the decreasing prices if it occurs only for a short period of time.  

Trade tensions could push up the prices of some agricultural commodities, such as soybeans and corn, while lower energy prices could lower fuel costs and fertilizer prices – reducing prices of energy-intensive crops such as oilseeds, the report said.

Urea prices increased by 2.9 percent due to strong demand in Brazil, India, and the United States, while robust shipments to China continued to support potash prices.

Phosphate (DAP) prices fell 6.9 percent, and Potash (MOP) prices remained unchanged in the third quarter. 

Overall, fertilizer prices are projected to rise 2.2 percent in 2020, after an expected 0.6 percent loss in 2019, on continued acreage expansions. 

The World Bank's Commodity Markets Outlook is published twice a year, in April and October. 

The report provides detailed market analysis for major commodity groups, including energy, metals, agriculture, precious metals, and fertilizers.