It is an issue that if commodity prices continue to rise, it will impact mining investment in 2018 and beyond. For the RBA, the scenario is clear. The recent low inflation rate screams “rate cut”, but with commodity prices lifting this way, it may be cautious.
The commodity price upswing is certainly an issue that will always be a vital driver of a significant part of the business cycle in Australia.
Just as next to no one saw the start of the commodity boom in the early 2000s, the situation now is one where the price rises are frequently being discounted as a blip, an anomaly or a quirk based on stockpile levels or some other thing.
If China can turn its economy around, the US can lock in growth with a focus on infrastructure building and even the Eurozone, which is strengthening nicely, can sustain a more favourable growth outlook, demand for mining output will be strong and with that, prices surprisingly high.
We may not be there yet, but the recent price signals on a whole range of commodity prices suggest something is stirring.