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IMFBlog: Chart of the Four Factors Behind the Metals Price Rally

As economies reopen in various parts of the world, the price of some commodities has soared, including the prices of prominent industrial metals…

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By Martin Stuermer and Nico Valckx As economies reopen in various parts of the world, the price of some commodities has soared, including the prices of prominent industrial metals. The extent to which the metals price rally may lose steam depends on how multiple factors will play out. As our latest chart of the week shows, metals prices have increased by 72 percent relative to their pre-pandemic levels—reaching a nine-year high in May (in inflation adjusted terms). The increase has been broad-based across industrial metals—copper is up 89 percent in May (year-over-year), iron ore is up 116 percent, and nickel is up 41 percent. The prices of most agricultural and energy commodities are also tracking upward, but at a slower rate. Energy commodities (oil, coal, and natural gas), in particular, sit only a few percentage points above pre-pandemic levels. Why have metals prices increased much more than other commodities? There are four reasons: 1. A manufacturing-based recovery: Manufacturing activity did not slump as much at the start of the pandemic and recovered more quickly than services, especially in China, which is the major user of metals. At the same time, sectors in which energy commodities feature prominently, like the transportation sector, remain depressed. For example, global road fuels consumption is still at 93 percent of pre-pandemic levels, restraining a further rebound of petroleum prices. 2. Supply-side factors: Many mining operations were temporarily disrupted by COVID-19. What’s more, freight rates for the transportation of bulk materials reached a ten-year high due to congestion in key ports, quarantine restrictions, ongoing problems staffing shipping crews, and a rebound in fuel prices from the deep troughs in Spring 2020. This all added to the cost of metals. 3. Expectations for faster energy transition and infrastructure spending: Buoyant expectations about the pace of the transition to a greener economy and ambitious infrastructure programs gave metals prices an additional boost. Both would increase the “metal intensity” of the global economy. A fast energy transition, for example, could require a 40-fold increase in the consumption of lithium for electric cars and renewables, while the consumption of graphite, cobalt, and nickel for these purposes may rise around 20 to 25 times, according to the International Energy Agency. Ambitious infrastructure programs in the European Union and the United States would drive up the demand for copper, iron ore, and other industrial metals. 4. Storability of metals: Metals are easier to store than crude oil or some agricultural goods, which need special facilities. This makes their pricing more forward looking and, thus, more sensitive to changes in interest rates (lower interest rates reduce the “cost of carry,” which also includes cost of storage, insurance, and other expenses, and, thus, tend to support commodity prices) and market expectations, such as the ones about a faster energy transition and infrastructure spending. Will metals’ prices keep increasing or retrench? This is a challenging question. Market participants seem to expect a peak in metals prices relatively soon, as factors (1) and (2) are supposedly temporary in nature. Indeed, futures markets suggest an increase of industrial metal prices by 50 percent in 2021 (year-over-year), but a decrease by 4 percent in 2022. Still, prices are expected to remain high and could rise further, especially if demand from an energy transition accelerates. On the flip side, prices may decrease more than expected if legislative approval and government actions required for the energy transition and infrastructure programs do not materialize as expected.
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COVID-19 may never go away, but practical herd immunity is within reach

It is unlikely that we will reach full herd immunity for COVID-19. However, we are likely to reach a practical kind of herd immunity through vaccination.

The level of immunity needed — either through vaccination or infection — for practical herd immunity is uncertain, but may be quite high. (Shutterstock)

When people say that we won’t reach “herd immunity” to COVID-19, they are usually referring to an ideal of “full” population immunity: when so many people are immune that, most of the time, there is no community transmission.

With full herd immunity, most people will never be exposed to the virus. Even those who are not vaccinated are protected, because an introduction is so unlikely to reach them: it will sputter out, because so many others are immune — as is the case now with diseases like polio and mumps.

The fraction of the population that needs to be immune in order for the population to have “full” herd immunity depends on the transmissibility of the virus in the population, and on the control measures in place.

It is unlikely we’ll reach full herd immunity for COVID-19.

For one thing, it appears that immunity to COVID-19 acquired either by vaccination or infection wanes over time. In addition, SARS-CoV-2 will continue to evolve. Over time, variants that can infect people with immunity (even if this only results in mild disease) will have a selective advantage, just as until now selection has mainly favoured variants with higher transmission potential.

Electron micrograph of a yellow virus particle with green spikes, against a blue background.
The B.1.1.7 variant of the SARS-CoV-2 virus. Over time, variants of concern will likely continue to emerge. NIAID, CC BY

Also, our population is a composition of different communities, workplaces and environments. In some of these, transmission risk might be high enough and/or immunity low enough to allow larger outbreaks to occur, even if overall in the population we have high vaccination and low transmission.

Finally, SARS-CoV-2 can infect other animals. This means that other animal populations may act as a “reservoir,” allowing the virus to be reintroduced to the human population.

Practical herd immunity

Nonetheless, we are likely to reach a practical kind of herd immunity through vaccination. In practical herd immunity, we can reopen to near-normal levels of activity without needing widespread distancing or lockdowns. This would be a profound change from the situation we have been in for the past 18 months.

Practical herd immunity does not mean that we never see any COVID-19. It will likely be with us, just at low enough levels that we will not need to have widespread distancing measures in place to protect the health-care system.


Read more: COVID-19 variants FAQ: How did the U.K., South Africa and Brazil variants emerge? Are they more contagious? How does a virus mutate? Could there be a super-variant that evades vaccines?


What level of immunity (either through vaccination or infection) we need for practical herd immunity is uncertain, but it may be quite high. The original strain of SARS-CoV-2 was highly transmissible and transmission is thought to be higher still for some variants of concern.

Empty vials of Pfizer's COVID-19 vaccine
To achieve two-thirds immunity, 90 per cent of the eligible population would need to be vaccinated or infected naturally. (AP Photo/John Locher)

The amount of immunity we need will also depend on what level of controls we are willing to maintain indefinitely. Continued masking, contact tracing, symptomatic and asymptomatic testing and outbreak control measures will mean we will require less immunity than we would without these in place.

Some estimates suggest that we may need two thirds of the population to be protected either by successful vaccination or natural infection. If 90 per cent of the population is eligible for vaccination, and vaccines are 85 per cent effective against infection, we can obtain this two thirds with about 90 per cent of the eligible population being vaccinated or infected naturally.

The United Kingdom has already exceeded these rates in some age groups. Higher rates are even better, because there is still uncertainty about the level of transmissibility and vaccine efficacy against infection (although research shows they are very good against severe disease). We don’t want to discover that we do not have enough immunity through vaccination and have another serious wave of infection.

Emerging variants

A sticker reading 'I'm COVID-19 vaccinated' from Vancouver Coastal Health
Booster vaccinations will hopefully allow us to maintain long-term practical herd immunity against future variants of COVID-19. THE CANADIAN PRESS/Jonathan Hayward

Higher vaccine uptake will mean there are fewer infections before we reach practical herd immunity. The remaining unvaccinated individuals will be safer, protected indirectly by the immunity of those around them. Outbreaks will be smaller and rarer, and there will be fewer opportunities for vaccine escape variants to arise and spread.

That said, variants of SARS-CoV-2 will continue to emerge, and selection will favour variants that escape our immunity. Vaccine developers will continue to broaden the spectrum of the vaccines that are available, and boosters will hopefully allow us to maintain long-term practical herd immunity.

It’s possible that an immune escape variant will emerge that is severe enough, and transmissible enough, that it will cause a new pandemic for which we do not have even practical herd immunity. But barring that, while we may not be free of COVID-19, we can be confident that in the not-too-distant future it will be manageable when we return to near-normal life.

Caroline Colijn's research group receives funding from the Natural Sciences and Engineering Research Council of Canada, Genome British Columbia, the Michael Smith Foundation for Health Research, the Public Health Agency of Canada and Canada 150 Research Chair program of the Federal Government of Canada.

Paul Tupper's research group receives funding from the Natural Sciences and Engineering Research Council of Canada.

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UK Government Adviser Says Mask Mandates Should Continue “Forever”

UK Government Adviser Says Mask Mandates Should Continue "Forever"

Authored by Paul Joseph Watson via Summit News,

A UK government adviser and former Communist Party member Susan Michie says that mask mandates and social distancing should…

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UK Government Adviser Says Mask Mandates Should Continue "Forever"

Authored by Paul Joseph Watson via Summit News,

A UK government adviser and former Communist Party member Susan Michie says that mask mandates and social distancing should continue “forever” and that people should adopt such behaviour just as they did with wearing seatbelts.

Michie, who is a Professor of Health Psychology at UCL and a leading member of SAGE, said such control measures should become part of people’s “normal” routine behaviour.

"Vaccines are a really important part of pandemic control but it is only one part. [A] test, trace and isolate system, [as well as] border controls, are really essential. And the third thing is people’s behaviour. That is, the behaviour of social distancing, of… making sure there’s good ventilation [when you’re indoors], or if there’s not, wearing face masks, and [keeping up] hand and surface hygiene."

"We will need to keep these going in the long term, and that will be good not only for Covid but also to reduce other [diseases] at a time when the NHS is [struggling]… I think forever, to some extent…"

"I think there’s lots of different behaviours that we have changed in our lives. We now routinely wear seatbelts – we didn’t use to. We now routinely pick up dog poo in the parks – we didn’t use to. When people see that there is a threat and there is something they can do to reduce that [to protect] themselves, their loved ones and their communities, what we have seen over this last year is that people do that."

Michie’s comments once again emphasize how many scientific advisers have become drunk on COVID-19 power and never want to relinquish it.

“Unsurprisingly, Channel 5 News made absolutely no effort to scrutinise these claims. The programme’s presenter raised no objection to the idea that mask-wearing and social distancing could continue “forever”, resorting only to friendly laughter,” writes Michael Curzon.

“Professor Michie’s co-panellist, a fellow scientist at UCL, Dr Shikta Das, said:

“I think Susan has made a very good point here,” adding that the vaccine roll-out has created a “false sense of security”.

She concluded:

“I don’t think we are yet ready to unlock.”

How’s all that for balance!

Perhaps unsurprisingly, Michie is known to be a long-time Communist hardliner and was so zealous in her beliefs she garnered the nickname “Stalin’s nanny.”

Her sentiment echoes that of fellow government adviser Professor Neil Ferguson, who once acknowledged that he was surprised authorities were able to “get away with” the same draconian measures that Communist China imposed at the start of the pandemic.

“[China] is a communist one-party state, we said. We couldn’t get away with [lockdown] in Europe, we thought… and then Italy did it. And we realised we could,” said Ferguson.

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Tyler Durden Sat, 06/12/2021 - 11:30

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Venezuela Says US Sanctions Blocking COVID Vaccines: ‘Global Health System’ As Geopolitical Weapon

Venezuela Says US Sanctions Blocking COVID Vaccines: ‘Global Health System’ As Geopolitical Weapon

Authored by Brett Wilkins via via CommonDreams.org,

Venezuelan Vice President Delcy Rodríguez has accused the US-backed international financia

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Venezuela Says US Sanctions Blocking COVID Vaccines: 'Global Health System' As Geopolitical Weapon

Authored by Brett Wilkins via via CommonDreams.org,

Venezuelan Vice President Delcy Rodríguez has accused the US-backed international financial system of blocking the country's access to Covid-19 vaccines under the COVAX program, even though Venezuela has paid all but $10 million of the $120 million it owes.

Appearing in a televised address, Rodríguez said Venezuela was unable to pay the remaining $10 million because it was being blocked from transferring funds to the Switzerland-based GAVI Vaccine Alliance, which directs COVAX. "The financial system that also hides behind the U.S. lobby has the power to block resources that can be used to immunize the population of Venezuela," she said.

Via Reuters

Venezuelan Foreign Minister Jorge Arreaza tweeted a letter from COVAX stating that it "received notification from UBS Bank" that four payments, totaling just over $4.6 million, were "blocked and under investigation."

Arreaza said that "Venezuela has paid all of its commitments," adding that "the bank has arbitrarily blocked" the country's final payments and calling the situation "a crime."

The vice president and foreign minister's remarks follow accusations from Venezuelan President Nicolás Maduro last week that "organizations of US imperialism" are engaged in an effort to stop vaccine producers from selling doses to the country.

"Venezuela might be the only country in the world that is subject to a persecution against its right to freely purchase vaccines," said Maduro, according to Venezuelanalysis. "Venezuela is besieged so that it cannot buy vaccines."

A mural in Caracas symbolically shows Venezuela and Russia uniting to defeat the coronavirus, with the caption: "We will beat Covid-19 together." Image: AFP via Getty

Successive US administrations have targeted Venezuela with economic sanctions that critics say have devastated the nation's once-thriving economy and have caused tremendous suffering for the poor and working-class people whose dramatic uplift was once hailed as the great success of the Bolivarian Revolution launched under the late President Hugo Chávez. 

According to a 2019 report from the Center for Economic and Policy Research, a progressive think tank based in Washington, D.C., as many as 40,000 Venezuelans have died due to sanctions, which have made it much more difficult for millions of people to obtain food, medicine, and other necessities. 

Maduro also denounced the World Health Organization (WHO) for its role in delaying vaccine delivery to Venezuela. The president had expected "many millions" of the Covid-19 jabs to be delivered in July and August. "The COVAX system owes a debt to Venezuela," asserted Maduro. "We made a deposit in April and we are waiting for the vaccines."

That $64 million deposit to GAVI came after a rare deal between the Maduro administration and Juan Guaidó, the coup leader recognized by the United States and dozens of other nations as Venezuela's legitimate head of state despite never having been elected.

Adept at circumventing US interference in its affairs, Venezuela turned to China, Russia, and Cuba to launch its mass vaccination program, which aims to inoculate 70% of the population this year. Earlier this month, the country reached a deal to buy and locally manufacture the Russian EpiVacCorona vaccine. Venezuela has also already acquired about three million doses of the Russian Sputnik V and Chinese Sinopharm jabs, and last month began clinical trials on Cuba's Adbala vaccine.

Compared to other nations in the region, Venezuela has reported a very low rate of coronavirus infections and deaths. According to Johns Hopkins University's Coronavirus Resource Center, there have been nearly 248,000 reported cases and 2,781 deaths in the country of 28.5 million people during the ongoing pandemic. Neighboring Colombia, with just over 50 million people, has reported more than 3.6 million cases and over 94,000 deaths.

Tyler Durden Sat, 06/12/2021 - 16:30

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