China Bringing Big Profits to Commodities Markets

Filed in archive Commodities on May 27, 2007

Hats off to Steve Faber at Debt Free for his blog on how demand in India and China will impact commodities in the future. The Economist had this to say almost two years ago: "NOWHERE has China's growing economic influence been felt more powerfully than in the world's commodity markets. The country's enormous appetite for base metals, minerals and fuels has pushed their prices to new highs..." The piece said that China was "swallowing raw materials as fast as they can be dug up."

Faber's May 25 blog points out copper as the most obvious example of China's impact on commodities markets. Rewiring there (and in India) for electrical service and data systems has driven copper prices up to more than two and a half times what they were just two years ago. Copper is not alone; Faber's blog points out how China's demand is changing world markets for commodities from soybeans to uranium.

The demand for raw materials in China will continue to rise, providing opportunities in a number of economic sectors - including venture capital projects that focus on innovative ways to make those raw materials go farther.