“The perception is that the trend is still rising and the hope is that a plateau will soon be reached and that commodity prices will stabilize. It doesn’t do anyone any good to have such high prices.” This was stated at time.news by Marco Vedani, the president of Assomet, the national non-ferrous metal industrial association belonging to Confindustria, commenting on the trend in the prices of raw materials.
To explain the upward trend of commodities such as copper, which reached record levels above $ 10,000 per ton on the London Metal Exchange (Lme), and also of non-ferrous metals such as aluminum, zinc or tin, he points out. the president of Assomet, “there are several interrelated factors. The pandemic is one of the first responsible for these trends. First of all – he observes – with the covid emergency there has been a reduction in stocks and production due to the various lockdowns that have occurred happened in the world and because of the consequent economic crisis. At the moment of the restart we all found ourselves displaced by the lack of stocks, which had dropped to very low levels, and of materials “.
To this phenomenon, moreover, “was added the logistics crisis also caused by the pandemic and the balance that existed before the pandemic was interrupted. There were ships blocked in certain ports while containers were blocked in others, creating a bottleneck effect that has generated an increase in prices. Raw materials travel to different geographical areas around the world and have fully suffered this situation “. Then, explains the president of Assomet, “demand has restarted unexpectedly strong thanks to the desire to be reborn after the acute moment of the crisis and thanks to the policies implemented such as Recovery, tax incentives, the various bonuses that have not only been I decided only in Europe but also in other countries such as China and the United States “. Finally, he notes, “the last unexpected element was the energy crunch. The demand triggered an increase in gas demand that upset the equilibrium that existed in the pre-covid world. The price of energy has quintupled in the ‘ span of just one month due to the mismatch between supply and demand “. This phenomenon, Vedani points out, “has also shown how far we are still far from independence from fossil fuels”.
Now, as regards the trend in energy prices “which generated a very strong shock on the prices of raw materials”, observes the president of Assomet, “it seems and it is hoped that a peak has been reached”. In this context, he adds, “the ongoing political dialogue with Russia to try to have greater availability of gas in order to calm prices is positive”.
All these variables, Vedani points out, “need to be resolved one by one to ensure that the situation normalizes and also to ensure that the prices of raw materials return to lower values than the highs recorded in recent weeks” . The demand, observes the president of Assomet, “will remain structurally high also because there is a strong need for non-ferrous metals linked to the need for infrastructures in the world for energy conversion”. The level of commodity prices, therefore, probably “will remain high even if lower than the current trend. It will probably take a long time to return to pre-pandemic levels. It is hoped a floating value between the pre-pandemic prices and the peaks reached. These days. The concern is also linked to the very strong volatility that affects operators and that in this way they find it difficult to plan “. The important thing, therefore, explains Vedani, “is that we arrive at a normalization and a reduction in volatility in order to have much more predictable scenarios”.
In the coming months, therefore, “there will probably be some corrections but the trend is still growing. We do not yet have signs of a change in the trend. There will probably be some drops that could anticipate further rises. The hope is that we will soon reach a plateau and a stabilization of prices “, he remarks again. What matters most at the moment, concludes the president of Assomet, “is the issue of energy. The government has done well to mitigate bills for users but it is essential for companies that energy prices return to values. acceptable, fairly stable and predictable because the energy cost index translates into the cost of the products. In the absence of controlled energy there could be a problem for restarting. An energy price under control could be a prerequisite for a mitigation of metal prices “.