Friday, April 25, 2008

Brief explanation of commodity price rise

A couple of things stood out for me:

... many production processes cannot do without these commodities in the short run. Coal, copper, and the like are not always easily substitutable for a factory within the medium run.
Don't forget that logistics and transport are a big part of the production process and so infrastructure often constrains the flow of supply... Infrastructure improves. But yes those adjustments can take ten years or more.

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