2000s commodities boom

The boom was largely due to the rising demand from emerging markets such as the BRIC countries, particularly China during the period from 1992 to 2013,[2] as well as the result of concerns over long-term supply availability.

[citation needed] Oil began to slip downwards after mid-2010, but peaked at $101.80 on 30 and 31 January 2011, as the Egyptian revolution of 2011 broke out, leading to concerns over both the safe use of the Suez Canal and overall security in Arabia itself.

As this happened, Brent Crude surged to a new high of above $116.00 a barrel as supply disruptions and potential for more unrest in the Middle East and North Africa continued to worry investors.

The commodities supercycle peaked in 2011,[a] "driven by a combination of strong demand from emerging nations and low supply growth".

Commodities were seen as a safe bet after the bubble economy surrounding housing prices had gone from boom to bust in several western nations, including the USA, UK, Ireland, Greece and Spain.

[citation needed] Phosphorus, rhodium, molybdenum, manganese, vanadium and palladium are used in high grade steels, oil based lubricants, automotive catalytic converters, chemical plants' catalysts, electronics, TV screens and in radio isotopes.

[citation needed] Molybdenum, rhodium, neodymium and palladium are relatively scarce metals, while manganese and vanadium are, like phosphorus and sulfur, fairly abundant for minor minerals.

[citation needed] Recycling of the aluminum, ferrous metals, copper fractions, gold, palladium and platinum in mobile phones and computers had got under way by the mid-2000s.

[18] The price of wheat reached record highs after Kazakhstan began to limit supplies being sold overseas in early 2008, but had slowed down by late 2008.

[45] The recession caused demand for energy to shrink in late 2008, with oil prices falling from the July 2008 high of $147 to a December 2008 low of $32.

[53] In testimony before the Senate Committee on Commerce, Science, and Transportation on 3 June 2008, former director of the CFTC Division of Trading & Markets (responsible for enforcement) Michael Greenberger specifically named the Atlanta-based IntercontinentalExchange, founded by Goldman Sachs, Morgan Stanley and BP as playing a key role in the speculative run-up of oil futures prices traded off the regulated futures exchanges in London and New York.

[64] Prices increased rapidly from 2001, but the 1980 high was not exceeded until 3 January 2008 when a new maximum of $865.35 per troy ounce was set (a.m. London Gold Fixing).

Rhodium rose in price extremely sharply in January 2021 and by mid February 2021 it had reached an all time high of $21,400 per Troy ounce making it the most valuable metal ever sold.

[67] In the run up to 2000, Russian supply of palladium to the global market was repeatedly delayed and disrupted[79] because the export quota was not granted on time, for political reasons.

[80] Around this time, the Ford Motor Company, fearing auto vehicle production disruption due to a possible palladium shortage, stockpiled large amounts of the metal purchased near the price high.

[109] A spectacular bull market and increased Chinese interest in galvanised construction steel caused prices to top off at $1.20 per pound of metal by January 2010.

Neodymium, a fairly rare metal which is used in high grade magnets,[110][111][112] saw its prices rise due to increased demand, as were typical of this general market trend.

[115] There was also a strong resurgence of interest in wind farms by the UK government between 2008 and 2010 due to the continuing fears of insecurity in Middle Eastern oil supplies to the industrialised nations and after the closure of several old and economically/environmentally unviable coal-fuelled power stations earlier that decade.

[citation needed] The cadmium, tantalum, manganese, thulium, tin, chromium, indium, columbium/niobium, cobalt, molybdenum and vanadium prices rose sharply in early 2007,[67][102] then collapsed to nearly their original starting price by the end of the next year[67][102] [116] due to uncertainty about supplies matching the demand, especially those of the BRIC countries' electronics industries in iPods, computers, mobile phones, et al. Niobium is used in the steel of gas pipe lines due to the alloy's high strength and low corrosion rate.

It increased during the mid 2000s because of global demand for manufactured goods initially and in 2008 the price of oil drove the index higher to an all time high of 11,440 points in May 2008.

Most industrial chemicals exhibited similar price trends due to bad weather in the EU and USA along with increased demand by the BRIC nations.

As a result of fight of supply and high operating rates in May 1997, two chlorine producers took the bold initiative of calling for an average price rise of $25 per short ton.

[citation needed] Chlorine prices rose in May 2005 as both growing energy costs, shrinking supply and high market tariffs in the EU, NAFTA and Latin America,[120] the increased use of chlorine-based chemicals for the aquatics industry.

and some metals like copper, Neodymium and Tantalum rose due to the increased growth of the BRIC countries demand for electrical goods.

[122] As the European chlorine production spiked in November to a daily output of 26,971 tonnes, before falling to 23,667 short ton in December due to the Christmas and New Year holidays.

India the worlds second largest exporter restricted shipments to help its domestic textiles industry [123] Many firms, individuals, and hedge funds went bankrupt or suffered heavy losses due to purchasing commodities at high prices only to see their values decline sharply in mid to late 2008.

[citation needed] The heavy price volatility caused a sudden boom then bust in the mining industry across the world, e.g. in Democratic Republic of the Congo, Zambia, Zimbabwe, Canada, China, Sweden and Australia.

In February 2008, analyst Gary Dorsch wrote: Commodities have historically been regarded as wildly volatile and risky, but since 2006, crude oil, gold, copper, silver, platinum, cocoa, and grains have soared, hitting record highs, and have trounced returns in the mismanaged G-7 stock markets ... A remarkable run-up in prices of wheat, corn, oilseeds, rice, and dairy products, along with sharply higher energy prices, have been blamed on supply shortfalls, strong demand for bio-fuels, and an inflow of $150 billion from investment funds.

[135] Hamilton's own model, a time-series econometric forecast based on data up to 2003, showed that the decline in GDP could have been successfully predicted to almost its full extent given knowledge of the price of oil.

[138][139][140] This downturn in commodities prices also had an important effect on non-left aligned countries in Latin America such as Mexico, Colombia, Peru or Chile, whose economies are largely dependent on mineral resource extraction by foreign companies, plummeting the economic growth in those years.