It’s all in the numbers: the price of zinc has doubled over the past five years; the price of copper has tripled; sugar went up 104% in 2007; wheat and soy went up 70%; and the “future prices of crude oil, gold, silver, lead, uranium, cattle, cocoa and corn are all at or near records”.
The reasons behind the sharp ascent in commodity prices have been attributed to many factors, including growth in India, the economies of oil rich Russia and Saudi Arabia, energy, speculators, the weak dollar and a US-led bidding war.
But the single biggest factor at play here is China. According to Bart Melek (via The New York Times), global commodities strategist for Toronto-based investment firm BMO Capital Markets, “Global commodities ranging from oil to base metals to grains are moving higher as billions of people in China and around the world get wealthier and are consuming more as they produce products for us, and increasingly for themselves.”
China’s demand for factories, roads, offices, homes, cars and consumer goods are insatiable. China has doubled the number of steel factories since 2002. Oil consumption has grown from 5.5 million barrels in 2003 to 7.5 million today. This accounted for the country’s record economic growth of 10.1% last year (compared with 2.5% for the US).
What’s more, it appears there’s no relief in sight. “The International Energy Agency projects that China and India combined may increase their oil consumption to 23.1 million barrels [a day] in 2030 from 9.3 million a day in 2005”.
Phew. Let’s hope government, businesses, universities and the like invest some serious R&D into clean energy sources so it doesn’t come to that.