The price of copper has almost doubled within a year. Other raw materials are also becoming more expensive at breakneck speed.
There is currently no stopping commodity prices. Whether copper, platinum, iron ore or tin – the prices of many industrial metals are rising rapidly. The situation is similar with agricultural goods such as corn or soy. What makes big raw material suppliers such as the mega-corporations BHP or Rio Tinto happy makes buyers and consumers think. The development ensures rising production costs and consumer prices. Especially since an end to the price boom is not in sight: Experts from large US banks such as Citigroup or JP Morgan are already talking of a new "super cycle" on the commodities market, a sustained rise in prices.
Most recently, raw material prices have risen particularly sharply for metals. The price of copper, which is considered an economic barometer due to its versatile uses, has roughly doubled within a year and is at the highest level in around nine years. The precious metal platinum, known for its use in the production of automotive catalytic converters, is showing similarly strong price increases. The price of iron ore, from which steel is extracted, has also risen sharply in recent months.
There are many reasons for the price boom. The supply of many raw materials is relatively scarce. This has not only to do with the continuing great hunger for raw materials in the second largest economy, China, which has long drawn a considerable part of the supply. Many mine operators also cut back their production during the pandemic. This has meant that stocks have become scarce – especially since the supply in the raw materials sector is typically inflexible and cannot be expanded quickly.
At least as important for the price increase is demand. The corona pandemic also plays a key role here. It is generally expected that the economic downturn, which is sluggish in many places, will pick up as the vaccination progresses and fewer restrictions. The demand for raw materials should also benefit from this, which is already being reflected in rising prices.
