I came across an interesting article in last week’s Wall Street Journal regarding the continuing strength of commodity prices based on demand in China.
This article speculated that a lot of the Chinese buying was a stockpiling of material for which China’s manufacturers had no real demand. If that’s true, then the Chinese buying binge may be over.
This may well explain the recent downturn in copper prices after a steady rise over the last six months. This rise made little sense in light of the overall worldwide decline in manufacturing. If this downturn is real, it could be a harbinger for lots of commodity price reductions.
Why do we care? The cost of extension cords (copper and rubber), mic stands (steel and aluminum), tape (cotton, oil and chemicals) and batteries (tin plate and many minerals) are all tied to world commodity prices.
Lets hope that if this recent reversal in commodity prices is real, that we will see it passed through to the products we sell.
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