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Surge in Raw Material Prices : 2008 vs. 2011

Surge in Raw Material Prices : 2008 vs. 2011

KIM Hwa-Nyeon

Mar. 10, 2011

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Originally released on January 25, 2011

I. Raw Material Prices Break 2008 Records

Prices of raw materials such as copper and tin hit an all-time high during the period from the fourth quarter of 2010 to early 2011. The price of copper surged to US$10,148 per ton in February 2011, breaking the record of US$8,985 per ton set in 2008. The price of tin also jumped to US$32,550 per ton in February 2011, exceeding the 2008 record of US$25,500. The price of industrial raw materials (such as rare earth minerals, silicon, tungsten and antimony) and agricultural products (such as raw sugar, raw cotton and coffee beans) also posted record breaking prices in the fourth quarter of 2010. In particular, the price of raw sugar, which spiked due to poor harvests, hit a 30-year high while the price of raw cotton marked the highest figure since the American Civil War in the 1860s.

The majority of raw material prices have stopped short of the record breaking figures set in the first half of 2008; however, the prices of certain raw materials either exceeded these figures or have come very close. The CRB spot price index posted 537.9 as of January 2011, 10.3 percent higher than the 2008 all-time high of 487.7. Other raw material prices held at 68 - 96 percent of 2008's all-time high prices, leaving room for the possibility of new record breaking prices, depending on future increases in major raw material prices. Meanwhile, the international oil price is currently around US$110 per barrel, hovering well below the US$140 set in June 2008.1 The price of major grains such as wheat, soybean and corn, which jumped in the latter half of last year, have settled at 63-96 percent of 2008 all-time highs.

Note

1. International oil prices take up the biggest part of raw material price indices. In the case of DJ-UBS raw materials price index, oil accounts for 21.1 percent of the total weight.

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