Four underlying causes of the rise in commodity prices – Natixis

In 2021, the prices of all commodities rose sharply: energy, metals and food, construction materials, etc. Analysts at Natixis see four likely lasting causes of the rise in commodity prices.

What accounts for the pressures in commodity markets?

“The shift in the structure of demand of course entails higher consumption of energy and other commodities. It results from working from home, the development of e-commerce and the production of equipment for the energy transition.”

“The problem that arises is that if the energy transition strategy leads to a faster reduction in the supply of fossil fuels than the reduction in demand for fossil fuels, then fossil fuel prices will remain very high.”

“The energy transition will lead to a considerable increase in demand for the necessary raw materials, such as copper and nickel for electrical grids, and nickel, lithium and copper for electric batteries. There is talk of a 40-fold increase in global consumption of lithium and cobalt in 20 years.”

“The abundance of global liquidity is conducive to speculative position taking in commodities.”