For is rapidly increasing the stock of critical commodities

For is rapidly increasing the stock of critical commodities
For is rapidly increasing the stock of critical commodities

The devaluation of the yuan is also due to strategic and geopolitical reasons.

From the opening of the mines to the London Stock Exchange, the price of copper has plummeted. In view of the psychological border of 10,000 dollars per ton, this can both tighten the situation on the supply side and, consequently, strong demand from it. And the same is true for other key commodities, from oil to iron ore and cobalt. The result is an unusually strong growth of human resources across the commodity spectrum.

If we stay with copper, its price is often used as an indicator of the condition of the national economy. And the real payoff, that the strong demand is taking its toll on the economy, is evident in the industry, which did better than expected in the first quarter. But the whole pbh is very complex. There was no demand for such a large number of works, which, from a historical point of view, even taking into account the traditions of writing, is considerably above standard (see graph).

What is the value of such an aggressive accumulation of resources? One possibility is to prepare for the devaluation of the yuan. In such a case, it would make a strong personal sense, since the vast majority of commodities are traded in US dollars. Moreover, the devaluation of the Czech currency would support imports of electric cars or solar panels, for which mine is a critical input. The US presidential election can also play a role. Otherwise, carrying out the entire operation while Joe Biden is in the army or retaliated by Donald Trump could be significantly tough.

Strategic-geopolitical reasons can also be an explanation. M is the most precious metal undergoing decarbonization, without which it is not possible to build a green infrastructure such as solar panels, batteries or electric cars (the production of an electric car requires about 90 kg of copper, for internal combustion engines it is about 23 kg). The high quality of this strategic metal, in addition to the global responsibility for its processing, accounts for no more than 50%, giving Beijing two important competitive advantages. And you and the opportunity to flood foreign markets with your green products, often vehemently supported by state subsidies.

While it has a very strong position in the entire supply chain of critical minerals, Europe has fallen asleep in this regard. It’s stupid about resources for which there will be a strong demand for a limited supply. Europe must therefore stick to gas if it wants to strengthen its own competitiveness and fulfill the ambition of full carbon neutrality. The alternative is the increasing verticality to n, which is best avoided after the experience with Russian gas.

Source: SOB, SHFE

The article is in Czech

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