Record after record broke this year on the commodities market. But now prices are starting to fall again. Iron ore, copper and oil in particular became a lot cheaper on the stock exchanges today.
After the new price drop, the iron ore price is about 40 percent lower than at the end of June. And a barrel of Brent oil cost $66 at the end of the afternoon. That is the lowest price since May.
China is phasing out steel production
Investors seem shy about reports from China and the United States. In the US, the minutes of the central bank were released last night. Investors concluded from this that the Federal Reserve wants to start phasing out emergency support.
Disappointing economic growth figures came from China. Because the country is a major consumer of all kinds of commodities, investors keep a close eye on those kinds of messages. This also applies to another development from China: the reduction of steel production.
The country has wanted the steel sector for some time shrink because of the enormous environmental pollution. Now this week turned out that Chinese production in July was significantly lower than in June, investors seem to see that the plans are serious.
Construction doesn’t notice yet
In the spring, raw material prices rose still extremely. As a result, builders for their own construction materials had to pay a lot more money. Wood and steel, in particular, became much more expensive.
“You also see global wood prices now falling again. They are still higher than before corona, but the extreme peak is over,” says Madeline Buijs, economist at ABN Amro. “But it always takes a while before you notice that on the Dutch market. The import prices of steel and wood are still rising.”
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