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Raw material prices rise by about 10.5% in January 2021 - Deutsche Industriebank

Europe / Analytics

The world has entered an era of total shortage of raw materials and components, which was caused by a disruption in logistics as a result of a pandemic and quarantine measures.

Raw material prices rise by about 10.5% in January 2021 - Deutsche Industriebank

According to calculations by Deutsche Industriebank (IKB), world raw material prices in January 2021 rose by about 10.5 percent. Semiconductors, steel, copper and transhipment capacity are in short supply: companies everywhere are facing rising prices for advanced products and services that were in surplus before the pandemic. The pandemic "could affect the economy in 2022 and lead to lower economic growth than originally expected," says the IKB study.

For many years, the European steel industry has been in crisis due to overcapacity in the world and increased competition from abroad. But things have changed since late last year, with steel prices hitting multi-year highs as a result of a supply shortage after producers cut their capacity during quarantine.

Steel mills are now lagging behind recovery in many consumer sectors. The deficit is observed for all product groups and all products.

Heinz-Jürgen Büchner of IKB believes that it is not only the capacity of steel producers that is crucial for the rise in steel prices this year, but also the rise in ore prices, which have also risen sharply in recent years. Higher prices also put pressure on steel companies. "Since the pre-crisis level of production has not yet been reached here, this moment is used to raise prices," says Buchner.

Recall that in the further rise in steel prices confident at ArcelorMittal Kryvyi Rih. The rise in prices for metal products in recent months is fully justified and will continue, says Yevgeny Chumachenko, Director of the company's sales department.

In the European Association of Steel Producers Eurofer predict that apparent steel demand in the EU and the UK will reach 152 million tonnes in 2021, up 13.3% YoY, but 2 million tonnes less the result of 2019.

As we already reported , JPMorgan Chase believes that the commodity market has begun a new supercycle of multi-year earnings growth. Goldman Sachs Group, Bank of America and Ospraie Management are also expecting a rise in commodity prices thanks to government stimulus programs to support the economy and mass vaccinations to fight coronavirus around the world.

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