Faster recovery in economy drives quotes of many commodities upwards

The prices of raw materials, especially those related to construction and industry, but also agricultural ones, have been rising sharply since the beginning of the year. Manufacturers are stocking up, industrial orders are increasing, and delivery times are lengthening. This translates into prices in the industry and, consequently, those paid by consumers. In the long term, copper, used, inter alia, in photovoltaic installations, while the shortage of some plant-based raw materials, such as lumber or coffee, should be gradually replenished. The dollar exchange rate will also have an impact on commodity prices. Further weakening of the US currency may strengthen the quotations.

"Wood prices have increased dynamically in recent months, mainly due to the mismatch between supply and demand on the global market. products," Dorota Sierakowska, analyst at DM BOŚ, said.

In the first half of May, the prices of construction timber, and specific contracts for lumber used in construction, especially in the United States, climbed to a level twice as high as at the beginning of the year. The same happened with copper: in the first decade of May, it reached record levels of over $10,200 per 1 metric tonne, beating the previous peak a decade ago. This is a result of the increased demand for raw materials used in industry and construction, which in turn was a consequence of the faster recovery of economies after the pandemic. The most powerful markets, i.e. the USA and China, are key here.

“In fact, the entire last year was dynamically growing for the copper market. The global industry is developing much faster than previously expected, macroeconomic data are much better. China generates about half of the world’s demand for copper, so further movements in copper prices will also largely depend on what the demand looks like,” Dorota Sierakowska noted.

The growing demand for industrial products is also visible in the Polish market. The manufacturing PMI index for May was at the highest level in the history of the survey of purchasing managers' moods in manufacturing companies, i.e. since 1998. It reached the level of 57.2, breaking the 2004 record.

(Newseria)