The importance of PVC steel wire hose to industry
So far this year, commodity prices such as energy and industrial commodities have risen significantly. What are the reasons for the price increase? What will be the impact on the economy?
First, an abundant monetary environment is one of the necessary conditions. Major developed countries are taking measures to cope with the impact on economic growth. On the one hand, the US, Europe, Japan and other countries and regions have lowered their interest rates to zero or even negative. On the other hand, central banks pump money into the economy by expanding their balance sheets, and in January 2021 US M2 grew by more than 25% year on year, again hitting a record. Ample monetary conditions become the “sword of Damocles” hanging over prices.
Second, commodity prices cannot be separated from demand. The fundamental reason why the price increase of bulk commodities was relatively backward at the beginning of monetary release is that the price rise of such bulk commodities with strong commodity properties must be driven by the demand of the real economy. Since the beginning of this year, the severity of the overseas epidemic has eased, the economic activity reflected by the flow of population has stabilized, and the economic recovery has gradually accelerated.
Finally, supply shocks have also played a catalytic role in this round of price rises. Especially in the price of crude oil, the impact of supply contraction is more obvious. On the one hand, OPEC+ decided not to increase production in February at the beginning of this year, and Saudi Arabia said it would voluntarily and unilaterally cut production. On the other hand, crude oil production has also been affected by a cold snap in key oil producing regions of the United States.
U. S. crude inventories and supply days have been lower this year.
The state of supply affects how much prices rise. Supply shocks have certain randomness and contingency, and are relatively difficult to predict. However, in the macro environment of good demand and abundant money, once the supply side is difficult to expand under the influence of some events, price fluctuations will become particularly violent.
In short, although some commodity prices have been at a higher level, but demand positive overlay monetary abundance, making goods attribute strong part of the energy and commodity prices still have upside, among them or developed countries than the varieties of high consumption is more outstanding, really over this round of price increases may need to wait for the fed’s monetary policy.
Related posts
