From April 2020 to December 2021, commodity prices in global markets took off. The trend involves both energy commodities and agricultural and industrial ones: the most spectacular leap was undoubtedly that of natural gas, which increased by as much as 1.692%, but soybean oil also doubled its value (+108% ), while copper came close (+89%).
The causes of commodity price increases
How do you explain such a dynamic? Second a study by Cassa Depositi e Prestiti entitled "What happens to raw materials?", the reasons are to be found in four orders of factors: cyclical, structural, geopolitical and speculative.
1) Conjunctural causes
On the first front, the study underlines in particular the very marked misalignment between supply and demand. However, the cuts in oil production by the OPEC+ countries also had a more than significant impact, in addition to the extreme climatic conditions that were recorded in many parts of the planet.
2) Structural causes
The second group of causes identified by CDP analysts includes the sharp increase in demand for the commodities necessary to achieve the objectives associated with the ecological transition.
3) Geopolitical causes
On the geopolitical side, a few players play a decisive role (such as the USA, Russia and Saudi Arabia), as well as the occurrence of some destabilizing events that have slowed down global supply chains.
4) Speculative causes
Finally, it must be taken into account that many commodities are real financial assets and that, in this phase, speculation has amplified the upward pressure on their prices.
Europe's energy dependence
The increases in the prices of all raw materials have a decisive influence on the performance of the European economy. In the Old Continent, in fact, the supply of most of the most important raw materials - from copper to nickel, passing through lithium, cobalt and manganese - is satisfied by third countries. Suffice it to say that over 98% of rare earths come from China, while 87% of lithium is Australian and 71% of platinum has South African origins. In Italy, gas production is at its lowest since 1954 and over 45% of our needs are covered by Russian supplies. That is why the beginning of a new conflict in Ukraine it would be a disaster from an energy point of view: if NATO tightened the sanctions against Russia, Moscow would certainly react by turning off the gas taps, with disastrous consequences for the recovery of the European economies in general and Italy in particular.
Focus on the diversification of raw materials
The scholars of the CDP therefore underline that Europe should reduce its energy dependence through a series of interventions: "invest in innovation, diversify supplies from third countries and strengthen the circular use of resources, in order to guarantee a secure and resilient raw materials”. In particular, Italy already has a competitive advantage, being the European country with the highest percentage of recycling out of all the waste collected.
