Help companies cope with skyrocketing costs
Rising commodity prices triggered a series of steps to stabilize China’s economy. Rising prices of commodities such as iron, copper and oil have fueled possible inflation. Which is the buzz of the world’s prime time today. In the global context of global geopolitical tensions and the stubborn COVID-19 pandemic caused by the wave of destruction. Investors seem unable to over-analyze the situation in major economies such as the United States and China.
The Bloomberg Commodity Index is composed of more than 20 exchange-traded contracts for physical commodities. It has risen by more than half since the trough in March 2020. As of mid-May, it has exceeded 92 points, the highest level since the mid-1950s. . 2015.
Tony Sycamore, an Asia-Pacific analyst at City Index, a UK-based trading service provider and part of profitable capital, said that infrastructure stimulus, resurgent economic activity, weaker U.S. dollar and Seasonal factors are the main factors supporting the rise.
He said that these factors and supply bottlenecks will keep international commodity prices at a high level in the coming months.
Iris Pang, chief China economist at ING Bank in the Netherlands, said that some of the reasons behind the rise in commodity prices are people’s expectations of US infrastructure stimulus measures. Which may be too early and eventually lead to commodity prices. Fall back.
Experts say that any news that suggests an impending increase in inflation due to rising commodity prices could deter investors and trigger a chain reaction across the market and economy. For example, It may prompt the central bank to tighten liquidity. Which will cause asset prices to plummet, squeeze corporate profits, increase household burdens, and threaten the initial global recovery.
what are the opportunities for fear, worries, and other worries? Is it possible to ask the wrong question?
It means to ask whether this question is correct: can the world overcome all the inflationary pressures caused by the rebound in global demand, the global supply chain damaged by COVID-19, and the global market structure that has injected large amounts of liquidity during the pandemic?
No matter what the problem is, it is imperative for investors to remain rational and remain calm. Experts say that they should reconsider what they take for granted.
They said that as the market continues to speculate on the relative shortage of demand. Higher-level commodity prices may still be supported, but overall price increases will be short-lived.
They said that due to the uncertainty surrounding the COVID-19 pandemic and infrastructure stimulus plans. The recovery of global demand will still become complicated, and the damage to the supply chain will gradually disappear.
They added that in China, given China’s prudent monetary policy, the decline in pork prices and the slow recovery of domestic demand, the inflation rate this year will remain moderate.
Commodities such as iron, copper and oil have performed well in the international market, rebounding from the trough of COVID-19 early last year.
According to data from Bloomberg News, the rise in commodity prices in April heated up, causing the monthly increase of the Bloomberg Commodity Index to exceed 8%.
The recovery of global commodity supply faces many obstacles, such as the impact of COVID-19 and severe weather. Which have disrupted the production and transportation of commodities.
For example, Vale, one of the world’s largest iron ore producers headquartered in Brazil. Reported that iron ore production in the first quarter fell by nearly one-fifth compared with the previous quarter. The reason for the decline is the usual seasonal rainfall.
According to industry news outlet mining.com, Vale also reported a drop in copper production due to maintenance. Which slowed down by restrictions related to COVID-19.