Reasons for Recent Price Increases in Raw Materials such as Aluminum and Copper

Recently, the prices of materials such as copper, iron, aluminum(LED aluminum profile, LED tube housing), and plastics have all increased by more than 30%. What are the reasons for these price increases? It's likely not the result of a single factor, but rather the combined effect of multiple factors. Today, we will analyze this from the following aspects:

First, let's look at the surface reasons. Economic recovery expectations: In 2020, the global economy stagnated or declined due to the pandemic, reducing demand for basic industrial raw materials such as copper, aluminum, iron, and plastics, leading to a significant decrease in inventory. As the pandemic eased, expectations for economic recovery became strong, and the expected demand for these basic raw materials also increased significantly. However, short-term production capacity failed to recover in time, creating a contradiction between strong demand and insufficient supply, thus pushing up related asset prices.

Second, let's look at inflationary factors. To cope with the pandemic and prevent deflation, countries have adopted loose monetary policies, significantly increasing the money supply, i.e., "massive quantitative easing." In a certain period, the total amount of assets does not change significantly, but the amount of money in the market increases, leading to a mismatch between funds and assets, causing asset prices to rise, and raw material prices to follow suit.

Finally, let's analyze deeper reasons. The United States may be using its dollar hegemony to exploit the world. As the world's strongest nation, the United States uses the US dollar as the primary settlement currency for international trade. Leveraging this dollar hegemony, when the US over-issues currency, it doesn't trigger severe inflation itself, but rather transfers some of that inflation to other countries. This severely impacts export-oriented economies. For instance, to break free from the dollar's dominance and the influence of international trade, China has proposed a dual-circulation economic strategy, prioritizing domestic circulation while supplementing it with international circulation.

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