- Atradius publishes Global Trade report on the global outlook for raw
- Value of some commodities has quadrupled in just two years
- Commodity-rich nations and mining companies to be the big winners as
supply is restricted
AMSTERDAM, Netherlands, Oct. 1 /CNW/ -- A report by Atradius, a leading
global trade credit insurer, has found that manufacturers are bracing
themselves for further price hikes in raw materials as vital commodities such
as tin and copper suddenly become as highly prized as gold.
Between 2002 and 2006, for example, copper producers enjoyed a 560% price
increase. This price inflation is largely due to China and other emerging
economies developing huge appetites for industrial raw materials. In 2007, the
Chinese economy accounted for 37% of global steel consumption. The U.S. share,
by contrast, was only 10%.
With output and prices up, producing nations are taking advantage of
their new-found market power. A number of commodity-rich countries are
implementing policies that can restrict the supply of vital raw materials.
China, Russia, Venezuela and Bolivia are named as particularly risky
investment sites for this reason. Governments in these countries have
implemented policies that restrict the free flow of materials driving prices
even higher. Despite this, these emerging commodities markets are reaping most
of the benefit from the growing demand. Europe's metals industries have seen
dramatic declines in their share of world metals production output. The EU's
share of aluminum output fell from 21% in 1982 to 9% in 2005, and its share of
steel fell from 25% to 16%.
With raw materials prices at such high levels, raw materials processors'
and manufacturers' margins are being squeezed because they are not able to
pass the full cost of the increase on to consumers. Stefan Dunker, a manager
at Atradius Risk Services comments, "We have not yet seen a wave of
bankruptcies, but if there are further price increases, that could well
In Germany, a recent report by the Federation of German Industries (BDI)
showed that from 2002-2007, German industry had already been hit by euro 97
billion in higher direct raw materials costs. This has led to 148,000 job
losses in German industry and a 0.5% reduction in the overall German GDP.
However, the outlook for commodities buyers is not all bad. Some
manufacturers are taking a number of steps to avoid a direct impact from
rising costs, such as stockpiling raw materials, investing in their own supply
sources, decreasing their use of precious metals, and increasing the
efficiency with which they use materials of all types. Innovation using
alternative materials will also play its part in long-term demand of various
raw materials. All these factors should help to moderate demand and reel in
Isidoro Unda, CEO of Atradius, concluded: "Though the run-up in
commodities prices has been sharp and severe, demand has traditionally been
cyclical depending on demand for the products in which they are found. The
convergence of a number of economic factors, including a looming U.S.
recession, slowing growth in Europe, falling oil prices and tightening credit
conditions, could combine to produce some relief in prices of some raw
materials for both manufacturers and consumers. These changes, however, are
generally slow to take hold, and declining prices may not be in the cards for
a few years."
The Atradius Global Trade report Bedrocks of Prosperity can be downloaded
free of charge from the Atradius website at: http://tinyurl.com/446tqk
The Atradius Group provides trade credit insurance, surety and
collections services worldwide, and has a presence in 40 countries. Atradius
aims to protect its customers against unexpected losses resulting from their
buyers being unable to pay for the customer's products and services. With a
31% share of the global trade credit insurance market, its products contribute
to the growth of companies throughout the world by protecting them from
payment risks associated with selling products and services on credit. With
160 offices, it has access to credit information on 52 million companies
worldwide and makes more than 22,000 trade credit limit decisions daily.
Atradius Corporate Communications
Tel.: +1 410-246-5584
Country Manager - Canada
Tel: +1 613-256-9134
Karel van Laack
Country Manager - Mexico
Tel: +011 52 55 5484 0026
For further information:
For further information: Kathy Farley, Corporate Communications,
+1-410-246-5584, firstname.lastname@example.org, or Ian Miller, Country Manager -
Canada, +1-613-256-9134, email@example.com, or Karel van Laack, Country
Manager - Mexico, +011 52 55 5484 0026, firstname.lastname@example.org, all of
Atradius Group Web Site: http://www.atradius.us