After skyrocketing in 2021 and 2022, prices of most raw materials came hurtling back to Earth last year. The CyclOpe index, which summarizes the most important commodities, fell by 14%. Some, such as lithium or palm oil, lost up to 80% or 50% of their value, respectively.
To explain this turnaround, we need only look at the economic situation across the globe. Economic slowdown and inflation have dampened consumer enthusiasm for electric cars in developed countries. Weak economic conditions in China have also weighed on global demand for raw materials.
At the same time, international trade routes adapted to war and geopolitical tensions. Ukraine finally managed to export its cereals. China, for its part, buys cheap Russian oil. All these adjustments have contributed to the fall in prices.
This year could bring more upheaval. It’s impossible to predict how Moscow's aggression against Kyiv will turn out and what impact it will have on the global economy.
In the United States, Donald Trump's return to the White House can’t be ruled out. The former president has already said if he wins, his program could include a 60% tax on Chinese imports. If this were to happen the international economic order would be turned on its head and it’s hard to imagine commodity prices not reacting.
These global events are reminders, if any were needed, of just how central a role commodity traders play in feeding the planet and enabling it to decarbonize its economy.
This is why the new issue of Focus Commodities takes a deep dive look at four raw materials that are indispensable to our daily lives: wheat, coffee, LNG, and copper. As we will discuss, these are materials that we must continue to harness, despite the challenges posed by global warming and geopolitical constraints.
It’s also an opportunity to talk about the ecosystem that surrounds these four resources. In particular, the importance of human capital, as no sector can avoid the shortage of qualified personnel. Because, in the end, what the story of commodities in 2023 shows us, is that it’s also about the human factor.
