What's going on?
Now we’re not saying global companies are only after one thing, but the price of copper did hit its highest level in a decade on Monday…
What does this mean?
With the vaccine rollout well underway and the world’s businesses gradually shaking off last year’s rust, the global economy is on the up and up. And investors trying to gauge the strength of that rebound need look no further than copper, whose many industrial uses – in construction, transportation, and infrastructure – make it an invaluable economic bellwether.
Copper isn’t the only metal that’s having a moment, either. Lithium, cobalt, and nickel are essential to electric vehicles, which might be about to get a shot in the arm from the US president’s $2 trillion infrastructure plan. All three have seen their prices hit multi-year highs this year, and they could just be getting warmed up.
Why should I care?
For you personally: Someone’s going to pay for this.
Rising commodity prices push up companies’ costs and dents their profits, so it’s no surprise that those firms have been talking about raising product prices to make up for the shortfall. And it’s not just big-time industrials you’ve never heard of: drinks giant Coca-Cola and household goods conglomerate Procter & Gamble both told investors at their quarterly earnings announcements that they’d be passing their higher costs onto consumers soon enough.
The bigger picture: All good things might come to an end.
Still, this rally might be about to hit a snag. For starters, India – one of the world’s biggest raw materials consumers – just reported record coronavirus cases for a fifth-straight day, and there’s no guarantee other countries’ recoveries won’t end up derailed too. Secondly, commodity-hungry China is planning to withdraw the economy-boosting support it introduced during the pandemic. And that could knock its surging growth – and its demand for sweet, sweet metals – off course.