According to a report by China Central Radio and Television Economic Voice “Tianxia Finance”, global commodity prices are ushering in an all-round rise. From crude oil to non-ferrous metals, and then to agricultural products such as cotton (16260, -145.00, -0.88%), prices have risen one after another. This also makes people worry that global inflationary pressures are increasing and risks are accumulating. However, experts believe that the current changes in commodity prices are supported by demand, and inflationary pressures in various countries depend on their respective monetary policies.
Since the beginning of this year, the international market crude oil, steel, non-ferrous metals, chemical products, agricultural products, and other commodity futures and spot prices have risen sharply. Take the London Metal Exchange copper futures price as an example. It has now exceeded $9,000 per ton, setting a new high in more than 9 years. Liu Jie, an analyst at Zhuo Chuang Information, said that my country’s commodity prices have also followed up. Liu Jie introduced: “The average price of spot copper in February increased by 33.45% year-on-year.
Cotton prices rose resonantly, and spot cotton prices rose simultaneously. The average price of 3128B grade lint rose 16.42% year-on-year; the cumulative increase in 2021 was 7.17%. Raw sugar futures also recently It has risen one after another, reaching a four-year high, an increase of 10% in the past 10 days.”
Regarding the reason for this round of commodity price increases, many people believe that the United States has launched a new round of economic stimulus policies, which has led to the flood of global liquidity. However, according to Liu Xiangdong, deputy director of the Economic Research Department of the China International Economic Exchange Center, the bulk commodity market is mainly cyclically adjusted upwards, supported by demand.
Liu Xiangdong said: “During the epidemic, there was a shortage of supply, and some production was suspended. Now that production is resumed, demand is relatively restored. Then there will be some need to replenish inventory, which will trigger an increase in demand for upstream raw materials, especially. If demand increases, it will naturally drive some commodity prices to rebound.”
Rising prices of commodities in the international market will lead to increased inflationary pressures. On the one hand, countries that import these commodities will encounter imported inflation. On the other hand, the price increase will be transmitted downstream, so that the price of consumer goods will follow up, which will, in turn, suppress demand and affect the quality of life of low-income people. Liu Xiangdong said that the current global inflationary pressure is not too great, and market risks mainly depend on the monetary policies of various countries. Liu Xiangdong said: “In general, for each country, its domestic inflation may be related to some domestic monetary policies. Although the transmission effect of the US dollar will have a certain effect, it is relatively small.”
Regarding the next global economic trend, Liu Xiangdong said that we should continue to observe, the key is to see who has the greater role of demand and liquidity release in the process of economic recovery. Liu Xiangdong believes that the current demand has not returned to its strongest state before the epidemic. When demand slows down or reaches saturation, the market will undergo a process of spontaneous adjustment.