During the epidemic in last year, oil prices have plummeted, and oil futures have fallen to -37 US dollars per barrel. It can be said that oil is not as valuable as oil barrels. But since the Year of the Ox in 2021, prices of raw materials, non-ferrous metals, bulk commodities, and crude oil have been soaring. Oil prices are coming up, and relevant stocks in the capital market are rising.
The rising cost of raw materials has promoted the general increase in the prices of bulk commodities. The recovery of production in downstream industries has formed a situation of tight supply and demand, and financial attributes such as non-ferrous metals and some chemical products are prominent.
Coupled with the normalization of epidemic prevention, many logistics and transportation require high deposits and inspections, and the time period is also lengthened. This will increase the cost of transportation of raw materials, and ultimately present the intuitive feeling to users that they are in a state of inflation. As capital flows began to enter the manufacturing industry, the cost of raw materials has shown an upward trend by leaps and bounds.
What's the reason? demand, supply tells.
² Demand
1. At present, the global epidemic is basically under control. People have vaccinated, they don’t have to worry about travel. The air transportation industry is picking up, which increases the demand for crude oil.
2. In order to get rid of the impact of the epidemic, the United States has introduced policies to distribute money to the people and increase the demand for crude oil.
3. The Fed promises to maintain interest rates at around zero in the next few years, which will benefit the prices of commodities and ultimately lead to an increase in the inflation rate.
² Supply
1. At present, the production of crude oil in the United States is not high, because the price of oil has not reached the attraction for them to increase production.
2.In order to gain more market share, OPEC countries in the Middle East have reduced production in place. There are reports on the Internet that OPEC+ representatives stated in the ministerial meeting held by the 14th Organization of Petroleum Exporting Countries and its allies (OPEC+) that they decided not to increase production by 500,000 barrels per day in April, while Saudi Arabia decided to maintain voluntary in April. The scale of crude oil production is reduced by 1 million barrels per day, so this has led to a tighter market supply. And because of the proper control of the epidemic and people’s need for more travel after being vaccinated, people’s demand for crude oil is still increasing.
3. The purpose of OPEC countries in the Middle East to reduce production is to wait for market supply to exceed demand and prices to soar, so as to obtain more benefits from it. However, recently the weather in the United States for oil production has been cold, which has further reduced the supply of crude oil, so it is inevitable that prices will continue to rise.
However, if the price of oil rises to $70 or even more than $70, then U.S. crude oil production will return, because such high prices are profitable for producers. Then, the supply of crude oil will gradually increase.
Therefore, the rebound in demand for crude oil has caused the price of most materials to skyrocket.
The capital market has always been a barometer of the economy. It always precedes the performance of the real economy. However, when the price of anything is high, it will return. It will not continue to skyrocket, nor can it continue to rise.
Therefore, the increasing price of material cost, most of factory orders decrease greatly. But personally speaking, the spring will come very soon . we should think for the better.
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