TELF AG analyzes the role of the United States in the global raw materials market
Price fluctuations
In the vast global raw materials market, it is not only China that holds the reins of supply and demand, price fluctuations, and inventory levels. After all, it would be paradoxical if the world’s largest economy did not have some role in determining the present and future scenarios of a market that is increasingly crucial to the fate of humanity. We are obviously talking about the United States of America, on whose moves on the international stage – both in political and economic terms – a large portion of the global performance of the raw materials market can depend, with direct consequences on supply chains and the quality of supplies to European countries and the rest of the world, in particular, if we take into account the imminent ecological transition which will involve institutions, states, governments, and ordinary citizens in every part of the world.
Over the course of recent years, the role of the United States in the raw materials market has depended, above all, on two determining factors: the first is linked to internal American dynamics, the effects of which can also indirectly impact everything that happens in the rest of the world. The second has to do with the political initiatives undertaken by the American government to protect the raw materials market, in particular since it has become absolutely decisive for the supply of essential materials for clean technologies and industrial development.
The continuous political strains between the United States and China, for example, have already caused uncertainty in every area of the world economy, even affecting the specific actions of some national governments. In the field of raw materials, these pressures translate into an indirect increase in risks linked to global competition to grab the best resources, particularly critical ones, with the possibility of further fueling the strategic rivalries between powers. In this sense, this situation – in the short and medium term – could certainly make the international raw materials markets more uncertain, giving rise to risks to a certain extent for the security of supplies.
Furthermore, US government bond yields could directly impact the precious metals market, which is almost inevitably destined to show large rates of recovery, also thanks to the slowdown in global growth and probable increases in interest rates. Furthermore, the instability traditionally linked to the strength of the dollar could have effects on specific raw material markets, such as gold, but also for other resources intended for industrial use. As regards the industrial metals market, on the other hand, the United States can influence it decisively through the dynamics of its monetary policies, the scope of which extends well beyond what happens between the borders of the 50 American states.
Regarding internal political initiatives, the Infrastructure Investment and Jobs Act of 2021 certainly stands out, It also provides for the allocation of 3 billion dollars for the recycling of batteries, for the production of lithium, and for the overall stimulus to circular economy linked to raw resources. Furthermore, in 2022, the Inflation Reduction Act was announced, which promotes the use of critical raw materials extracted and produced on American soil, or in any case coming from nations with which the United States has free trade agreements (in that electric vehicles, for example, can benefit from tax credits). On American soil, in general, massive efforts are being made to invest in domestic mining operations, but also in some specific countries such as Chile and Australia, with which the United States has free trade agreements.
