Dubai: Investors in the equity markets pained by the sideways movement in stocks, have attractive options in another universe called commodities.

Even though commodities as an asset class has reached an end of the super bull cycle, there are enough opportunities in the market, which investors can profit from such as industrial and precious metals.

Bullish copper

Fundamentally, a reduction in the surplus situation and supply worries could support copper, the major industrial metal, going forward. Though Chinese consumption and growth have been a major concern, China’s efforts to prop up growth by way of fresh stimulus will deter a further sell-off, analysts say.

Long-term demand for copper stays intact due to government spending and power grid expansion. Copper production is expected to be higher at 23.175 million tonnes compared to a consumption level of 22.585 million tonnes.

“Technically, copper witnessed an intermediate bottom that has been put in place at $5,339 [Dh19,594]. We expect prices to inch higher towards $5,700 in the short-term followed by $6,400 in the medium-term,” said Gnanasekar Thiagarajan, director with Commtrendz Research.

Aluminium

TransGraph Consulting is bullish on aluminium. The market was in a deficit, and supplies are expected to be tight in the second half of 2015 compared to the first half. TransGraph Consulting expects higher demand growth in 2015 of 4.68 per cent compared to production growth of 3.46 per cent.

Prices also look bullish due to strong US aerospace and auto industries along with tightly held inventories across the value chain, analysts said. Consumption would exceed production in 2015, with 50.44 million tonnes produced with consumption at 51.24 million tonnes.

TransGraph expects aluminium prices to reach about $2,000 per tonne on the London Metal Exchange in 2015.

Precious metals to shine

Gold and silver are on the radar of investors due to problems in Greece. Speculative demand for gold is relatively strong, as oil prices coming down the current account deficit have reduced the import bill for consuming countries such as India, analysts expect decent physical offtake that would help prices.

“This [physical demand from India] would act as an underlying support or floor and keep the downside limited for precious metals. Gold should recover to $1,400-1,450 by year end,” said Pradeep Unni, senior relationship manager with Richcomm Global.

Broadly, silver could follow gold’s direction which is down on the back of a possible interest rate rise in the US that could have a bearing on zero yield assets such as gold and silver. However, the US economy in particular is in recovery mode and the use of hand held electronic devices is on the rise. Silver is used extensively in these devices.

“We feel silver’s downside could be relatively limited and if gold were to rally higher due to geopolitical and economic uncertainties, Silver could take the lead. Short-term prices can test the downside at $15.75 and failure to hold support here could take it to $13.55 in the medium-term from a possible bottom,” Thiagarajan said.

Brent Crude

Brent prices has been outperforming US contracts and the spread between the two benchmarks has risen to almost $9 a barrel, the highest level since August last year, and the trend will continue as a huge build-up in WTI (West Texas Intermediate) inventories and supply disruptions in Libya are favourable for Brent, analysts said.

“Technical signals warn of an intermediate bottom in brent at $45. We expect a test of $67 in the short-term followed by $72-74 or even higher to $80 in the medium-term,” Thiagarajan said.

Sell side opportunities

There are opportunities on the sell side of the market too. Especially in soybeans, said Pradeep Unni, senior relationship manager, Richcomm Global.

The rising US dollar has eroded the export competitiveness of US wheat and analysts strongly believe that this could happen to soybeans too as the South American harvest starts. The strength of the US currency gives overseas competitors the option of reducing their dollar prices to gain market share without undermining profit margins in terms of their local currency.

“This lethal combination of a stronger US dollar and ample supplies are key reasons why we think the price of soybeans will fall to 750 to 800 US cents per bushel at end-year, from around 1,000 today,” Unni said.