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May 2 - The Price of the Stuff That Makes Everything Is Surging



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 2 weeks ago '15        #1
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May 2 - The Price of the Stuff That Makes Everything Is Surging
 

 
The prices of raw materials used to make almost everything are skyrocketing, and the upward trajectory looks set to continue as the world economy roars back to life.

From steel and copper to corn and lumber, commodities started 2021 with a bang, surging to levels not seen for years. The rally threatens to raise the cost of goods from the lunchtime sandwich to gleaming skyscrapers. It’s also lit the fuse on the massive reflation trade that’s gripped markets this year and pushed up inflation expectations. With the U.S. economy pumped up on fiscal stimulus, and Europe’s economy starting to reopen as its vaccination rollout gets into gear, there’s little reason to expect a change in direction.

JPMorgan Chase & Co. said this week it sees a continued rally in commodities and that the “reflation and reopening trade will continue.” On top of that, the Federal Reserve and other central banks seem calm about inflation, meaning economies could be left to run hot, which will rev up demand even more.

“The most important drivers supporting commodity prices are the global economic recovery and acceleration in the reopening phase,” said Giovanni Staunovo, commodity analyst at UBS Group AG. The bank expects commodities as a whole to rise about 10% in the next year.

China, a crucial source of supply and demand for raw materials, is playing a big role, particularly as the government tries to reduce production of key metals like steel and aluminum. It’s also buying up massive amounts of grains. Food prices are also being affected as poor weather in key growing nations like Brazil and France hits harvests.

As just about every basic material gets rapidly more expensive, here’s some ways the rally is rippling across the globe to create winners and losers.

Going Green
Copper has enjoyed an unstoppable rally for more than a year thanks to pledges by governments to boost renewable energy and electric vehicle use. That’ll make all the various forms of green technology that rely on it a bit more expensive.

Bigger power grids is one such case. About 1.9 million tons of copper was used to build electricity networks in 2020, according to BloombergNEF, and the price of the red metal is up more than 90% in the past year. Usage will almost double by 2050, BNEF forecasts, while demand from other low carbon technologies like electric vehicles and solar panels will also balloon.

Buyers and Sellers
For countries, the impact of the commodity rally depends on whether they’re an exporter or importer. For those relying heavily on exporting raw materials, the huge upswings can only be good news for public finances, especially when they’ve just been stricken by a once-in-a-century pandemic. The likes of Australia (iron ore), Chile (copper) and Indonesia (palm oil) all make huge sums from commodities.

Meanwhile, countries looking to rebuild infrastructure may find their budgets buy less than they used to. President Joe Biden’s $2.3 trillion plan is one such case. Electricity grids, railways and refurbishing buildings are among the items on the shopping list that will use large amounts of metal.

Consultancy CRU Group estimates the program will add 5 million tons of steel to the 80 million the U.S. uses each year, with similar boosts to aluminum and copper demand.
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visit this link https://www.bloomberg.com .. ing-is-surging
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 2 weeks ago '04        #2
orv 
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Damn... I gotta get fencing quick.
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 2 weeks ago '20        #3
Easy Doesit 
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Good post but that title needs work
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 2 weeks ago '16        #4
BathWaterMelody  topics gone triple plat - Number 1 spot x7
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 Easy Doesit said
Good post but that title needs work
he literally took the first sentence and dumbed it down, just trynna figure out why
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 2 weeks ago '20        #5
Easy Doesit 
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 BathWaterMelody said
he literally took the first sentence and dumbed it down, just trynna figure out why
Few of these dudes need remedial English and grammar.

Edit. On second thought maybe he thought we're didn't understand what raw materials were.
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 2 weeks ago '16        #6
BathWaterMelody  topics gone triple plat - Number 1 spot x7
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 Easy Doesit said
Few of these dudes need remedial English and grammar.

Edit. On second thought maybe he thought we're didn't understand what raw materials were.
yea my grown'mansplaining detector caught that one.
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 2 weeks ago '17        #7
Thierry Henry 
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The price of bikes went up...

I don't think i'll be able to afford that titanium jawn i want anymore




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