Global iron ore and copper futures prices surged on the 10 May as markets bet that the two are the ultimate winners in the recent commodities boom.
Iron ore futures in Singapore jumped to more than $226 a tonne on the day, taking their gains this year to about 40 per cent.
Why have commodities rallied so violently this year?
And how can we put out this false fire?
This has to look at the root cause.
In the year of the pandemic, all countries have taken measures. Without exception, the fiscal policy has been more active. The central bank cooperated with the government to implement low interest rate policy and quantitative easing policy, resulting in the flood of money.
And usual in times of crisis, money more and failed to drive the investment and consumption in the short term, but rather the collective to the capital market to seek higher profits, which makes the moderate inflation rise, on the other hand, idle capital, the wind of speculation, regardless of the commodity, the stock market, virtual currencies, commodities, currencies collective ascent.
Currency has become the root of price disturbance, or artificially low interest rate distorts the original price in the market, leading to serious resource mismatch, which is extremely obvious in the emerging market of new energy vehicles.
In 2020, new energy stocks will rise sharply, and the stock prices of Tesla, BYD, NIO and other new energy vehicles will double. A large amount of capital will flow into the market through the financial market, forming a car making feast.
The new forces that have been confirmed to enter the bureau in 2020 include Evergrande, Huawei, Xiaomi, Baidu, Tesla, NIO and so on.
In addition, there are domestic giants such as FAW, SAIC and many other powerful state-owned companies.
The future is bound to be a bloody industry.
On top of that, blockades have been imposed by countries affected by the epidemic, disrupting the extraction of some raw materials and splintering the once-global economic chain.
In particular, some important raw material supplier countries, such as Brazil, Chile and so on, have suffered severe disasters, which led to the obstruction or even rupture of the raw material supply chain, and invisibly increased the burden of transportation.
These factors, in turn, increased the bets of "gamblers" on large prices, and the link between futures and spot prices eventually made countries suffer from imported inflation.
In addition, when goods are in short supply, it is also a good opportunity for speculation and hoarding. It is not unusual for gods to raise their prices and make a big profit.
