Commodity demand will rebound and reverse a plunge in prices as Asiaâ€™s middle class swells and as India and China seek to raise energy imports, according to Australiaâ€™s resources minister.
Gluts have been the major factor in the collapse in prices and they will ease with population growth and continued urbanization across the Asian region, Resources and Energy Minister Josh Frydenberg said Monday in an interview with Bloomberg Television.
â€œDemand, which continues to move up steadily, will catch up with supply, andthat will put upward pressure on prices,â€ Frydenberg said. â€œWeâ€™re focused on the next wave of demand and how we attract that level of investment in new infrastructure.â€
Australia is the largest exporter of iron ore and is poised to surpass Qatar as the biggest supplier of liquefied natural gas by 2019 as a wave of projects are brought online, according to Bloomberg Intelligence. Domestic gas prices in the U.S. will probably be the first commodity market to return to balance within one to two years, leading a rebound in materials, BHP Billiton Ltd., the worldâ€™s biggest miner, said last month.
Natural gas exports to both China and India are potential growth areas for Australia, said Frydenberg, who held talks last month with Indiaâ€™s Power Minister Piyush Goyal. â€œHe made it clear that they want more Australian gas,â€ Frydenberg said in a separate interview at Bloombergâ€™s Melbourne offices. â€œThey want to haggle over price, but they want more gas.â€
Iron ore exports to China are also likely to remain strong, supported by the top consumerâ€™s increased steel exports, Frydenberg said. Thatâ€™s likely to keep prices closer to the current level rather than the governmentâ€™s estimate of $39 a metric ton in Decemberâ€™s mid-year budget update, he said. Ore with 62 percent content rose 5 percent on Friday to $53.75 a ton, according to Metal Bulletin Ltd.
Australiaâ€™s government, led by Prime Minister Malcolm Turnbull, has seen its opinion poll lead evaporate amid speculation it may call an election earlier than its due in this yearâ€™s second half as it struggles to produce a clear policy agenda.
â€œThereâ€™s an iron clad rule in politics: you go to an election when you think you can win,â€ Frydenberg said. â€œThe polls are tight. Thereâ€™s a lot of noise. I think people do think that Malcolm Turnbull will win.â€