Some commodities have reached an all-time high in recent weeks, the Handelsblatt wrote in mid-May of “record prices”. There are many reasons why the prices of many raw materials are currently so high. One is the corona pandemic, which is causing a shortage of raw materials in many industries because the crisis and short-time working are leading to bottlenecks in mining and production. Which is also pushing demand in many places, because private individuals, for example, are investing in the expansion of their houses and apartments. Tthe price of wood has risen to extreme heights, and in many places wood is currently almost no longer available.
However, state support programmes weigh far more heavily than private investments, for example in the expansion and construction of various infrastructures during and after the corona crisis. The International Monetary Fund (IMF) estimates corresponding expenditures and commitments at around 14 trillion US dollars by the end of 2020 alone. Not even included in this figure is the approximately 2 trillion US dollar economic stimulus package of the USA, which US President Joe Biden recently announced and with which he wants to boost the domestic economy after the COVID 19 crisis. Cash Online drew a clear balance at the end of May: “The commodity markets are among the winners of the corona crisis” (*).
Price Gouger: Renewable Energies
Another booster for raw materials is the global upswing in renewable energies. Whether in the EU, China or the USA – almost all major industrial nations are increasingly recognising the urgency of climate change and are investing in corresponding economic stimulus programmes. Following the change of power from Donald Trump to Joe Biden, the USA is now also pursuing an ambitious goal: by 2050 at the latest, the entire US economy should be climate-neutral, according to an official statement from the White House at the end of April.
In Germany, too, climate protection is becoming increasingly relevant. At the latest since the Federal Constitutional Court classified parts of the previous Climate Protection Act as unconstitutional at the end of April, politics, business and society are equally under an obligation. It is now really a matter of generating clean energy as quickly as possible, but also of consistently promoting and expanding clean technologies. And this, too, is currently pushing many raw material prices quite considerably, after all, almost every climate-relevant innovation requires rare earths and other strategic metals.
The stock market journalist Christoph Scherbaum wrote about this at the end of May on FAZ.net: “The fact is therefore that the path to the global energy transition with green technologies will be the biggest price driver for certain raw materials such as rare earths, silver or lithium and nickel. Anyone who wants to mass-produce wind turbines, electric motors and batteries as well as solar modules as a company will have to deal with rising raw material prices in the coming months.”