Global Commodity Prices Hit A 10-Year High On Surging Demand

Commodity prices have hit a 10-year high on global supply constraints and surging demand.

Aluminum and steel prices are rallying, and European gas and power have hit record highs, while a gauge of spot commodity prices reached a 10-year high on strong global demand.

The jump in commodity prices is putting pressure on central banks around the world to curb their massive stimulus measures. Booming demand from the economic recovery has combined with supply woes -- from China’s emissions crackdown that’s cutting metals output to scant European gas reserves -- to tighten markets.

At the same time, the cost of shipping goods is rising. With a growing scarcity across physical markets, analysts forecast prices will climb further over the coming year.

Massive global stimulus measures are keeping metals demand strong and helping copper prices to remain historically high. China’s move to curb metals production to reduce pollution has pushed nickel to its highest price level since 2014.

With about a month before the heating season starts, Europe’s gas stockpiles are already at their lowest level in more than a decade for this time of year, pushing up the cost of producing electricity.

Benchmark European gas futures more than tripled this year to a record in the Netherlands, and German power prices have notched all-time highs. A rally in the carbon market has also made it more expensive to generate electricity.

Not all commodities are performing strongly. Iron ore futures in Singapore are down about 45% from a peak set in May as China’s steel restrictions crimped demand. In agriculture, crop futures eased in recent months amid better harvest prospects, even as a measure of world food prices holds near a decade high.

Oil prices have been stable so far in September. After jumping 10% in the final week of August as Hurricane Ida tore across the Gulf of Mexico, crude oil prices have held near $70 U.S. a barrel in New York for most of this month.