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2000s commodities boom
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2000s commodities boom
The 2000s commodities boom, commodities super cycle or China boom was the rise of many physical commodity prices (such as those of food, oil, metals, chemicals and fuels) during the early 21st century (2000–2014), following the Great Commodities Depression of the 1980s and 1990s. The boom was largely due to the rising demand from emerging markets, particularly China, from 1992 to 2013, as well as the result of concerns over long-term supply availability.[citation needed] There was a sharp downturn in prices during 2008 and early 2009 due to the 2008 financial crisis and European debt crisis, but prices began to rise as demand recovered from late 2009 to mid-2010.[citation needed]
Oil prices began to slip downwards after mid-2010, but rebounded as the Arab Spring disrupted supply lines; thus, the price of oil kept rising into the 2010s. The commodities supercycle peaked in 2011, "driven by a combination of strong demand from emerging nations and low supply growth". Prior to 2002, only 5 to 10 per cent of trading in the commodities market was attributable to investors. Since 2002 "30 per cent of trading is attributable to investors in the commodities market" which "has caused higher price volatility".
The 2000s commodities boom is comparable to the commodity supercycles which accompanied post–World War II economic expansion and the Second Industrial Revolution in the second half of the 19th century and early 20th century.
The prices of raw materials were depressed and declining from, roughly, 1982 until 1998. From the mid-1980s to September 2003, the inflation-adjusted price[citation needed] of a barrel of crude oil on NYMEX was generally under $25/barrel. Since 1968 the price of gold has ranged widely, from a high of $850/oz ($27,300/kg) on 21 January 1980, to a low of $252.90/oz ($8,131/kg) on 21 June 1999 (London Gold Fixing).
The analysis of this period is based on the work of Robert Solow and is rooted in macroeconomic theories of trade including the Mundell–Fleming model. One opinion stated that
"The volatility and interest rates found its way into commodity inputs and all sectors of the world economy."
Hence, in the case of an economic crisis commodities prices follow the trends in exchange rate (coupled) and its prices decrease in case there are downward trends of diminishing money supply.
Foreign exchange impacts commodities prices and so does money supply: the advent of a crisis will pull commodities prices down.
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2000s commodities boom
The 2000s commodities boom, commodities super cycle or China boom was the rise of many physical commodity prices (such as those of food, oil, metals, chemicals and fuels) during the early 21st century (2000–2014), following the Great Commodities Depression of the 1980s and 1990s. The boom was largely due to the rising demand from emerging markets, particularly China, from 1992 to 2013, as well as the result of concerns over long-term supply availability.[citation needed] There was a sharp downturn in prices during 2008 and early 2009 due to the 2008 financial crisis and European debt crisis, but prices began to rise as demand recovered from late 2009 to mid-2010.[citation needed]
Oil prices began to slip downwards after mid-2010, but rebounded as the Arab Spring disrupted supply lines; thus, the price of oil kept rising into the 2010s. The commodities supercycle peaked in 2011, "driven by a combination of strong demand from emerging nations and low supply growth". Prior to 2002, only 5 to 10 per cent of trading in the commodities market was attributable to investors. Since 2002 "30 per cent of trading is attributable to investors in the commodities market" which "has caused higher price volatility".
The 2000s commodities boom is comparable to the commodity supercycles which accompanied post–World War II economic expansion and the Second Industrial Revolution in the second half of the 19th century and early 20th century.
The prices of raw materials were depressed and declining from, roughly, 1982 until 1998. From the mid-1980s to September 2003, the inflation-adjusted price[citation needed] of a barrel of crude oil on NYMEX was generally under $25/barrel. Since 1968 the price of gold has ranged widely, from a high of $850/oz ($27,300/kg) on 21 January 1980, to a low of $252.90/oz ($8,131/kg) on 21 June 1999 (London Gold Fixing).
The analysis of this period is based on the work of Robert Solow and is rooted in macroeconomic theories of trade including the Mundell–Fleming model. One opinion stated that
"The volatility and interest rates found its way into commodity inputs and all sectors of the world economy."
Hence, in the case of an economic crisis commodities prices follow the trends in exchange rate (coupled) and its prices decrease in case there are downward trends of diminishing money supply.
Foreign exchange impacts commodities prices and so does money supply: the advent of a crisis will pull commodities prices down.