Papers such as those by Chen and Clements also ask important materials questions and raise critical points. In recent years, major fluctuations in international commodity markets have once again focused attention on the nature and functioning of these markets. Major issues include the following questions:
- How long can high prices be sustained?
- Is there excessive price volatility?
- Do prices reflect underlying fundamentals?
- To what extent has the role of commodities as financial assets changed the way in which they are priced?
- What is the role of speculators? Do they smooth or amplify price fluctuations?
These issues are of direct importance to commodity producers and consumers as well as to governments in large producing countries that rely on commodities for a substantial part of their revenue. In addition, those who consume food, energy and metal products (i.e. everyone) are also indirectly affected by developments in international commodity markets.
Finally, note the price/volume data (Fig. 3 and Table 1) for the 61-year period 1950-2010 from the U.S. Geological Survey (USGS). These metals represent the most valuable among the 38 metal commodities included in USGS data in 2010. Prices are expressed in terms of U.S. dollars per metric ton (which is equivalent to 1,000 kilograms), while volumes are in metric tons.
While the heat treater seldom ventures into this realm, some of the work economists perform has a direct effect on the health and competitiveness of our industry. It is well worth spending the time to learn more about.
- Georgentalis, S. and J. Nutting and G. Philips, “Relationship Between Price and Consumption of Metals,” Material Science and Technology, Volume 6, No. 2, 1990.
- Chen, Mei-Hsiu and Kenneth W. Clements, Patterns in World Metals Prices, University of Western Australia, 2008.