RAW MATERIALS AND COMMODITY MARKETS DURING AND AFTER COVID: GOLD AND IRON RATHER THAN OIL

The world has just experienced the most violent negative economic shock since the 1930s. In the past, such macroeconomic disorders took on an even more spectaculor dimension in the raw materials markets – and more broadly in the commodity markets – which acted as a revelation of all the tensions at play, whether geopolitical or economic. Thus, in 1929, the depression of agricultural markets against a backdrop of global overproduction largely preceded the stock market crash. In 1974, the final spark of the crisis was the first oil shock that set all the markets ablaze for the rest of the decade. In 2008, a major shock on the markets (with the record price of oil at $147 a barrel) preceded the subprime crisis by a few weeks. Nothing like that in 2020. The markets have of course suffered a demand shock, and this in a rather marked context of overproduction: in April-May 2020, most commodities hit low points (even negative in the exceptional case of oil in the United States) before rebounding thanks to the prospect of the Chinese economic recovery. All in all, raw materials were little directly affected by Covid and the outlook for autumn 2020 does not really contrast with the longstanding outlook dating back to January 2020. In the meantime, two “barbaric relics” have stood out, gold thanks to negative rates and iron thanks to Chinese demand: gold and iron, which have almost made us forget the oil follies.