Material prices during the COVID-19 pandemic [Ryuuji Sato]

Ryuji Sato Profile

Ryuji Satou. Born in 1968. After graduating from a U.S. university in 1993, he joined Genesis Corporation (later Oval Next), a vendor of information on finance and investments, after a stint at a marketing firm. He has written analyst reports on macroeconomic analysis, currency, commodities, and stock markets, and has been involved in trading. Since 2010, he founded "H-Square Co., Ltd.," writing analyst reports and planning/publicing works such as the "FOREX NOTE Currency Handbook," while also serving as a radio host on investment-related programs. He is an individual trader. International Federation of Technical Analysts – Certified Technical Analyst. Main host on Radio Nippon's "The Money OnoSato's Market Forecast" (Mondays 15:00–).

Official site：Ryuji Satou Blog

※This article is a republication/re-edit of an article from FX攻略.com, December 2020 issue. Please note that the market information stated in the main text differs from the current market.

Copper and Timber in Focus

In response to the impact of the novel coronavirus, major central banks, including the U.S. Federal Reserve, shifted to ultra-loose policies in March this year. Looking at the Fed's balance sheet, it swelled rapidly from $4 trillion in March to $7 trillion.

This time, we will focus on commodity prices that are not often noticed in daily life, especially copper and timber, to see what has happened to these two commodities during the pandemic.

Copper: The Economic Barometer

First, let's look at copper. Copper is excellent in corrosion resistance, conductivity, thermal conductivity, sterilization, and processability, and is used in many applications including wires and electronic components, supporting many industries. Therefore, copper demand reflects the reality of housing, public infrastructure, and manufacturing.

On the other hand, supply is stable, and changes in demand tend to be reflected in prices relatively straightforwardly, so copper prices are called the “barometer of the economy.” Currently, more than half of copper demand is in China, and the international reference price for copper is the three-month copper futures listed on the London Metal Exchange (LME).