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Visualizing the Rise in Commodity Prices

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Rise in Commodity Prices

commodity prices

The Stuff that Makes Everything

If you ever wonder why commodities are important, just think of an object around you and ask yourself—what’s that made of?

From the wires in our electronic devices to the tables in our offices, these raw materials are everywhere. Of late, commodity prices have been surging as the global economy recovers, with rising demand from various industries including infrastructure, construction, and livestock.

The above infographic tracks the futures prices of 10 commodities that have seen significant price increases since January 2020.

Commodity Prices, from Bust to Boom

From lumber for home construction to metals for electronics, commodities across the three categories—agriculture, metals, and energy—have been rallying since hitting pandemic lows around March 2020.

CommodityClosing Price (Jan 1, 2020)Closing Price (May 7, 2020)% Increase
Lumber$406.7 per 1,000 board ft$1,645 per 1,000 board ft304%
Iron Ore$92.6 per tonne$197.7 per tonne114%
Soybean Oil$0.35 per lb$0.65 per lb85%
Corn$3.9 per bushel$7.3 per bushel85%
Tin$17,170 per tonne$30,950 per tonne80%
Soybeans$9.6 per bushel$15.9 per bushel66%
Copper$2.8 per lb$4.6 per lb65%
Lean Hogs$0.71 per lb$1.1 per lb56%
Palladium$1,928 per oz$2,961.5 per oz54%
Silver$18 per oz$27.6 per oz53%

Percentage increases may differ slightly due to rounding.

Among agricultural commodities, the price of lumber futures increased 304% between January 2020 and May 2021, reaching record highs. Food prices have also seen a sharp increase since the halfway point of last year. As of May 7th, the price of corn futures was at $7.3 per bushel, nearing its all-time highs of $8.3 per bushel in 2012. Furthermore, soybean oil prices were also at their highest level in the last decade.

Among metals, iron ore futures climbed 114%, reaching a record high. Tin and copper were also both moving towards all-time high prices as of May 7th, followed by palladium and silver, both of which saw more than a 50% rise in prices since January 2020.

Several commodities are either nearing or have broken past their all-time highs. Why are commodity prices increasing?

Lumber

Lumber—the form of wood that builders use to build and renovate homes—has been the talk of the town due to the massive increase in its price.

This is in stark contrast to 2019 when lumber prices were so low that some sawmill owners were better off ceasing operations. In addition to sawmill shutdowns, outbreaks of a bark-eating species of beetle have destroyed 15 years worth of log supplies in British Columbia, Canada, limiting the supply of lumber.

Meanwhile, home buyers are taking advantage of the low costs of borrowing due to record-low mortgage rates in the U.S. This is driving up the demand for lumber from the housing market, while supply is in a bottleneck.

Corn and Soybeans

Corn and soybeans are common feed grains for livestock, including swine, beef, and poultry.

China—the largest producer and consumer of pork—has been battling outbreaks of African swine fever (ASF) since 2018, losing over 100 million pigs. As the country’s hog-herd recovers from this disease, Chinese demand for corn and soybeans is increasing and supporting higher prices. In fact, China’s corn imports from the U.S. increased 2,072% between 2019 and 2020.

Iron Ore and Tin

The global economic recovery, led by China, is fueling the demand for steel, and in turn, for iron ore. On the supply side, the industry is facing a shortage, with a decline in output from top producer Vale following a disaster at its tailings dam in Brazil.

Tin prices are soaring due to rising demand from consumer electronics amid tightening supply. According to Roskill, pandemic-induced supply disruptions led to a 10% decline in refined tin output in 2020. Additionally, shipping disruptions and low stocks at the London Metal Exchange (LME) are intensifying tin’s supply squeeze.

Copper

Copper’s story is similar to that of iron ore, wherein rebounding economies are boosting demand for the red metal. However, investors are particularly bullish on copper due to its critical role in green technologies, with looming concerns over its long-term supply.

Palladium

Many countries are imposing stricter auto emission standards—and while this may surprise you, it’s driving the demand for palladium. The precious metal is a key ingredient in catalytic converters that turn toxic emissions from gas-powered vehicles into less harmful gases.

Unlike the rollercoaster rides that are commodity prices, palladium prices have been rising for five years straight. What’s more, the palladium market has seen an annual deficit since 2012. And this trend is likely to continue with flooding at palladium mines in Russia expected to cut global supply by 5% in 2021.

The Start of a Commodity Supercycle?

While it’s difficult to predict the sustainability of these high prices, the increase in commodity prices across the board has investors gearing up for a potential commodity supercycle.

Commodity supercycles are decade-long periods during which commodity prices trend above their long-term averages. The last supercycle lasted from 1996 to around 2016, driven by rapid industrialization in Brazil, India, Russia, and China (BRIC economies). Today, governments around the world are adopting mineral-intensive clean energy technologies, which will likely increase the demand for minerals for years to come.

Are we on the brink of a new commodity supercycle?

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Energy Shift

Visualizing the Products and Fuels Made from Crude Oil

Oil is a building block that makes modern life possible. This graphic looks at the proportion of finished products that are created from crude oil.

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Barrel of oil refined products

What Products Are Made from a Barrel of Crude Oil?

From the gasoline in our cars to the plastic in countless everyday items, crude oil is an essential raw material that shows up everywhere in our lives.

With around 18 million barrels of crude oil consumed every day just in America, this commodity powers transport, utilities, and is a vital ingredient in many of the things we use on a daily basis.

This graphic visualizes how much crude oil is refined into various finished products, using a barrel of oil to represent the proportional breakdown.

From Crude Oil to Functional Fuel and More

Crude oil is primarily refined into various types of fuels to power transport and vital utilities. More than 85% of crude oil is refined into fuels like gasoline, diesel, and hydrocarbon gas liquids (HGLs) like propane and butane.

Along with being fuels for transportation, heating, and cooking, HGLs are used as feedstock for the production of chemicals, plastics, and synthetic rubber, and as additives for motor gasoline production.

Refined Crude Oil ProductShare of Crude Oil Refined
Gasoline42.7%
Diesel27.4%
Jet fuel5.8%
Heavy fuel5.0%
Asphalt4.0%
Light fuel3.0%
Hydrocarbon gas liquids2.0%
Other10.1%

Source: Canadian Association of Petroleum Producers

Crude oil not only powers our vehicles, but it also helps pave the roads we drive on. About 4% of refined crude oil becomes asphalt, which is used to make concrete and different kinds of sealing and insulation products.

Although transportation and utility fuels dominate a large proportion of refined products, essential everyday materials like wax and plastic are also dependent on crude oil. With about 10% of refined products used to make plastics, cosmetics, and textiles, a barrel of crude oil can produce a variety of unexpected everyday products.

Personal care products like cosmetics and shampoo are made using petroleum products, as are medical supplies like IV bags and pharmaceuticals. Modern life would look very different without crude oil.

The Process of Refining Crude Oil

You might have noticed that while a barrel of crude oil contains 42 gallons, it ends up producing 45 gallons of refined products. This is because the majority of refined products have a lower density than crude oil, resulting in an increase in volume that is called processing gain.

Along with this, there are other inputs aside from crude oil that are used in the refining process. While crude oil is the primary input, fuel ethanol, hydrocarbon gas liquids, and other blending liquids are also used.

U.S. Refiner and Blender InputsShare of Total
Crude oil85.4%
Fuel ethanol4.8%
Blending components3.5%
Hydrocarbon gas liquids3.0%
Other liquids3.3%

Source: EIA

The process of refining a 30,000-barrel batch of crude oil typically takes between 12-24 hours, with refineries operating 24 hours a day, 365 days a year. Although the proportions of individual refined products can vary depending on market demand and other factors, the majority of crude oil will continue to become fuel for the world’s transport and utilities.

The Difficulty of Cutting Down on Crude Oil

From the burning of heavy fuels tarnishing icebergs found in Arctic waters to the mounds of plastic made with petrochemicals that end up in our rivers, crude oil and its refined products impact our environment in many different ways.

But even as the world works to reduce its consumption of fossil fuels in order to reach climate goals, a world without crude oil seems unfathomable.

Skyrocketing sales of EVs still haven’t managed to curb petroleum consumption in places like Norway, California, and China, and the steady reopening of travel and the economy will only result in increased petroleum consumption.

Completely replacing the multi-faceted “black gold” that is crude oil isn’t possible right now, but as electrification continues and we find alternatives to petrochemical materials, humanity might at least manage to reduce its dependence on burning fossil fuels.

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Electrification

The Biggest Mining Companies in the World in 2021

The graphic takes a look at the world’s largest mining companies by market capitalization and the metals they produce.

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The Biggest Mining Companies in the World in 2021

Ranked: The Top 20 Mining Companies

Mining companies have emerged from the COVID-19 pandemic in excellent financial and operational shape and the forecast is even brighter as the economy recovers.

The market is expected to reach a value of nearly $1.86 trillion by 2022, with the increasing demand for minerals for power generation and renewables technology.

In the graphic above, we show the world’s top companies by market capitalization as of June 22, 2021, and the metals they mine.

The Bottom Line: From Smartphones to Food

From roads, hospitals, automobiles, houses, computers, satellites, and even fertilizer for crops, mining provides many of the materials we interact with every day. Copper, iron, rare earth metals, aluminum, and phosphate are just a handful of the mined materials that make modern life and feed the bottom line for mining companies.

The two biggest by market capitalization, BHP ($179B) and Rio Tinto ($132B), both produce a range of commodities, mainly iron ore and copper. The next on the list is also the biggest company in Brazil, Vale ($112B). The miner is the world’s largest producer of iron ore and pellets (small balls of iron ore) used to manufacture steel.

CompanyMarket Cap (USD)Country Main Mining Activity
BHP$179B🇦🇺 Australia iron ore, copper, coal
Rio Tinto$132B🇦🇺 Australia iron ore, aluminum, copper
Vale$112B🇧🇷 Braziliron ore, nickel
Glencore$55B🇨🇭 Switzerlandcopper, cobalt, zinc, nickel
Norilsk Nickel$54B🇷🇺 Russiapalladium, nickel
Freeport-McMoRan$52B🇺🇸 United Statescopper
Anglo American$52B🇬🇧 United Kingdomdiamonds, copper, platinum, iron ore, coal
Fortescue Metals$51B🇦🇺 Australia iron ore
Newmont Goldcorp$50B🇺🇸 United Statesgold
Southern Copper$47B🇺🇸 United Statescopper
Zijin Mining Group$38B🇨🇳 Chinagold, copper
Barrick Gold$37B🇨🇦 Canadagold
Nutrien$34B🇨🇦 Canadapotash
Anglo American Platinum$28B🇿🇦 South Africaplatinum, palladium, rhodium
Franco-Nevada$28B🇨🇦 Canadagold
Polyus $27B🇷🇺 Russiagold
Ganfeng Lithium$24B🇨🇳 Chinalithium
Wheaton Precious Metals$20B🇨🇦 Canadagold, silver, palladium, cobalt
Antofagasta $19B🇬🇧 United Kingdomcopper
Ma’aden$18B🇸🇦 Saudi Arabiagold

A $57 billion gap separates the top 3 from the rest of the group. In fourth place comes Glencore ($55B) with its mixed operations of trading and mining metals, agricultural products, and oil and gas.

The automotive industry is a big consumer of metals, which explains Norilsk Nickel’s ($54B) fifth place. The company, owned by the wealthiest man in Russia, is the world’s biggest producer of palladium, used in vehicles’ catalytic converters.

Miners also serve the luxury market, with precious metals like gold, silver, and gemstones. Number six on the list, Anglo American ($52B) is one of the world’s leading diamond companies.

In terms of countries, Canada leads the ranking with 4 miners on the list. The United States and Australia come next with 3 companies each.

Charging and Changing the Future of Mining Companies

The United States, Europe, and Asia are making big investments in electrification and power generation. By 2024, almost 33% of the world’s electricity is forecast to come from renewables.

This shift from fossil fuels will require a lot of copper, cobalt, and lithium for batteries. Mining companies are in a position to capitalize as the market expands.

For example, no. 17 in the list, China’s Ganfeng Lithium, the world’s third-largest producer of lithium chemicals for batteries, saw its market capitalization grow more than 25% in 2021.

The energy transition is just beginning, and the materials used in building a more sustainable future will also build up the largest mining companies of tomorrow.

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