Commodity prices to dip
The latest Institute for Public Policy Research (IPPR) Economic Watch report has forecasted a decrease in commodity prices in the country courtesy of a strengthening local currency.
“This led, in addition to over recoveries for diesel of the National Energy Fund, to fuel prices remaining unchanged in May for the second consecutive month. Petrol and diesel prices remain 5.3% and 4.4% respectively higher since the beginning of 2014 but 13% and 15.6% above May 2013 levels.”
IPPR added that although oil prices were on an upward trend surpassing the US$100 per barrel mark in mid-May driven by the ongoing crises in Ukraine, South Sudan and Lybia; the elections results in Ukraine have helped easing the price pressure in recent days.
Corroborating the IPPR report, Ministry of Mines and Energy (MME) has kept the price of diesel and petrol unchanged in June attributing it to the reduction in demand for oil in Asia.
IPPR also noted that the uranium price dropped further to levels last seen nine years in May 2005
“A pound of uranium was traded at about N$282 (USD 28.25) by end May 2014 representing a drop by 18% and by 30% compared to the beginning of 2014 and of May 2013 respectively,” IPPR said.
The uranium price started rising nine years ago from N$ 207(USD 20.70) in January 2005 to N$ 290 (USD 29) in the second half of May 2005; it kept the climbing reaching its peak of N$ 1350 (USD 135) mark in July 2007. However, the steep rise was followed by a steep drop for almost two years.
The decrease was driven by the unpopular Fukushima Disaster and anti-nuclear bids by countries like Germany and the Eastern Europe.
IPPR also noted that Husab mine, one the largest uranium mines in the world once operating at full capacity will add on the supply side.
“Without demand picking up at the same path, prices are doomed to stay at low levels. This will force mining companies to cut costs further (And jobs in order to survive), If not to cease production. The low price levels have, however, not only implications for existing operations, but also for the development of the new uranium deposit and for exploration activities,” IPPR noted.
IPPR added that have Copper prices have however recovered from an almost four year low in March when copper was sold at USD 6. 434 per tone while the zinc prices performed better by 14.2% compared to a year earlier.