(EnergyAsia, December 16, Wednesday) — Driven by government infrastructure spending and favourable demographics, China and India will continue to sustain demand for commodities, according to economists from French bank Societe Generale (SG).

In a briefing last week, Glenn Maguire, SG’s chief economist for Asia, noted that the multi-year nature of fiscal stimulus programmes, specifically in China, would support demand for commodities for some time.

He said: “It will last for quite a while, because [the stimulus package] is a multi-year project. “The railway, irrigation and dams programmes are all multi-year programmes.”

He also pointed out that China and India have each developed a substantial middle-class that is propping up demand for commodity-intensive consumer products such as automobiles.

China, which overtook the US in January as the world’s biggest vehicle market, bought 1.01 million cars and trucks in in November, more than double the number a year ago, according to Shanghai-based China Car Passenger Association, a research firm.

Stephen Gallagher, SG chief economist for US, said demand for commodities is shifting towards Asia and away from the US due to the weakening greenback and China’s rising wealth.

“What we’re seeing is a very long-term trend that the billion-plus population of China is going to be over time taking a greater share of commodities. The US consumer based on 300 million people consuming two-thirds of global commodities just doesn’t work,” he said.

In its multi-asset portfolio research report, SG said that commodity markets will be characterised by stronger demand in 2010 and 2011, and predicted oil and metal prices would rise significantly next year.

It projected that the price of crude oil based on WTI Nymex will average US$82.5 per barrel next year, up from an estimated US$60.9 average this year, and will reach US$87.5 per barrel by the end of 2010. WTI is hovering at around US$70 per barrel.