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Benchmark zinc, steel rebar and rubber have all rallied around
60 percent this year, while Brent crude has climbed more than 50
percent.
Crude oil output cuts announced by OPEC, stronger-than-expected
demand in top commodities market China and expectations of
higher infrastructure spending in the United States after the
victory of Republican candidate Donald Trump all boosted prices.
Looking forward, oil should gradually rise toward $60 a barrel
by end-2017, a Reuters survey found, but gains could be capped
by a strong dollar, rising U.S. exports and a possibility that
some OPEC members adhere to agreed cuts.
"Accelerating non-OPEC (production) declines and OPEC's decision
to cut were key to the rise in 2016," Energy Aspects analyst
Nevyn Nah said, while robust demand growth also helped support
prices.
"But the rebalancing process is still in its infancy and
speculators want to position for that."
TOCOM rubber saw its biggest gain since 2009, a rally driven by
higher oil and a weaker Japanese currency, which makes
yen-denominated commodities cheaper for holders of other
currencies.
Prices for steel rebar, used in construction, have soared more
than 60 percent this year on better-than-expected spending on
building and infrastructure and soaring costs for coking coal
due to government-enforced coal mine closures.
"I expect the steel price rally to continue in the first half of
2017 when stock piling will be at a final phase and
infrastructure construction programs will start," said Zhou
Guangyan, steel analyst at Zhongcai Futures.
However, demand was likely to wane in the second half, with
inventory at a new peak and the market feeling the effects of
real estate regulations and potentially tighter monetary policy
in China, he added.
Zinc, which is used in steel production, climbed to a nine-year
peak last month with support from a series of mine closures that
have tightened ore supply, fuelling a speculative rally.
For precious metals, gold is up more than 9 percent this year,
snapping three years of losses as the market was lifted by a
demand surge due to economic and political uncertainty.
However, the outlook is bearish as a rising U.S. dollar and
higher interest rates, combined with strong equity markets, are
expected to dampen demand for non-interest-paying bullion.
Agriculture had some of the worst performers in 2016, with
Chicago wheat <Wv1> poised to post an annual loss of more than
13 percent due to all-time high global production.
Cocoa <CCc1> has given up almost 33 percent in its worst year
since 1999 as the prospect of a global surplus kept the market
on the defensive.
Palm oil <1FCPOc3> and soybeans <Sv1> were exceptions. Palm oil
has added almost a quarter to its value after dry weather curbed
output while beans are up 17 percent.
(Additional reporting by Muyu Xu in BEIJING and Swati Verma
BENGALURU; Editing by Richard Pullin)
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