The foundations of the 21st century mining boom lie in step-change price rises across the major global commodity markets – led by iron ore, but with bellwether metals such as copper and gold also leading the charge upwards.

That looks set to change by 2017. While prices for all three ‘headliner’ commodities will remain at levels where there is very good money to be made, the larger commodity markets look set to be outdone by many of their smaller market peers in the next five years. Zinc, tin, palladium and cobalt are among the better-placed commodity markets well positioned to run hard.

Who says so? CRU Group analysts do. This week, your scribe has been reviewing the latest CRU commodity market price rankings out to 2017, with those prices referenced to average Q1 2013 price performance.

A total of 26 mineral and metals markets are ranked in the latest CRU release – from alumina through to zinc. Newcomers in the latest compilation are bauxite, molybdenum and oil. Latest mid-range market analysis is still in progress for uranium, so the energy metal is not included in this iteration of the rankings.

For those unfamiliar with the CRU multi-commodity price forecast rankings, the mechanics of compiling the 2017 commodity outlook are as follows: firstly, the respective CRU Group analysts across the various markets compile their forecast average mineral market prices for calendar 2017; then a recent reference date is chosen, set at the average price for the preceding quarter (here Q1 2013); finally, a comparison of the 2017 to the reference level gives the directional indicator – whether a particular market will go up or down. Percentage price changes are ranked on a graded scale as to how ‘hot’ or ‘cold’ each commodity market will become. Hottest markets rank highest, cooler markets rank lowest.

The usual words of caution apply at this juncture to avoid misinterpretation: A higher forecast for 2017 above prevailing prices does

not

imply a steadily rising commodity price over the intervening period. Likewise, a lower price in 2017 than the Q1 2013 benchmark does

not

imply a steady fall either. Similarly, lower prices for some markets in 2017 do

not

automatically imply lower margins for all producers in that particular market – but do place greater focus on management to maintain attractive margins.

Looking at the latest 2017 analysis, CRU sees far more commodities due to experience substantial price increases than falls. There is clearly light at the end of the commodity price ‘tunnel’

The numbers are good. CRU expects the average of prices across the commodity basket of 26 markets to increase by some 14%. Winners outnumber losers in price terms. Sixteen of 26 commodity prices will rise by 2017, while only 10 markets will see price declines from the benchmark set by the 2013 Q1 average price in each market:

Base metals are the group winner when it comes to commodity price forecasts versus the likes of commodity groupings such as steel raw materials, precious metals and fertiliser minerals.

Here is the latest ranking table of mineral commodity price outcomes ordered from highest to lowest in terms of forecast movement in commodity price percentages. The 1-26 ranking takes the Q1 2013 average price as the baseline benchmark – and then compares this with the latest available average 2017 price forecast from CRU Group analysts in each market. The number in brackets next to each commodity refers to the previous ranking position (based on a Q4 2012 price benchmark and forecast 2017 price).

1. Zinc (2)

2. Sulphuric Acid (15)

3. Palladium (1)

4. Tin (3)

5. Nickel (4)

6. Cobalt (6)

7. Alumina (5)

8. Coking Coal (7)

9. Met Coke (19)

10. Platinum (8)

11. Ferrochrome (-)

12. Phosphate DAP (11)

13. Aluminium (9)

14. Bauxite (-)

15. Molybdenum (-)

16. Lead (10)

17. Urea (13)

18. Manganese (12)

19. Oil (-)

20. Ammonia (18)

21. Gold (17)

22. Potash (21)

23. Copper (15)

24. Sulphur (20)

25. Iron Ore (16)

26. Silver (22)

Good hunting.

Allan Trench is a professor at Curtin Graduate School of Business and research professor (value and risk) at the Centre for Exploration Targeting, University of Western Australia. He is a non-executive director of several resource sector companies and the Perth representative for CRU Strategies, a division of independent metals & mining advisory CRU Group (allan.trench@crugroup.com).

* With thanks to Peter Ghilchik CRU, multi-commodity market analysis manager at CRU Group peter.ghilchik@crugroup.com