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Factors That Affect the Commodity Pricing MarketWednesday, February 10, 2021
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Many skilled trade industries rely on the commodity market to fulfill the duties of the workload. The commodity market is prosperous and influential in the world economy. However, it can be risky and uncertain at times. Skilled tradesmen and independent contractors must work with the understanding that, at times, supply-and-demand and countless other factors may impact their ability to accept jobs or, in unfortunate circumstances, complete jobs. The commodity market has traits that are like the stock market in that some industries will stock up on materials when they’re priced at a fair cost.
Investors and traders need to be mindful of how the commodity pricing market can affect their economics and business operations. A variety of factors can impact the reliability of commodities and therefore, the prices you’ll end up paying for them. Here are a few of the biggest contributing determinants that will impact the price you pay for commodities.
Government ActionsThe policies that the federal and provincial governments put in place will affect the cost of commodities. World governments will often have unique importing and exporting rates on certain commodities. If the Canadian government was to place a tariff on aluminum and steel products, the import duties will be reflected in the price of your purchase contract.
Economic FluctuationThe cost of commodities can be drastically affected by events, whether they be economic or political, in the country where your commodities are being exported from. Countries that export goods depend on a stable economy and political regime to empower the nation’s purchasing power, so when a country’s political or financial situation is uncertain, demand for their commodities will also plummet. Working in a commodity-driven industry requires a lot of research and foresight to make adequate and savvy investments.
Product Storage/TransportationGlobalization has benefitted thousands, if not millions, of businesses worldwide as they can access resources at a price point that makes sense. One component that may influence the commodity market is the storage necessities and means of transportation for commodities. While the cost of storage and transportation may not make a tremendous dent in the purchasing contracts, they are important to keep in mind while figuring out your budget.
Supply and DemandSupply and demand may be the most influential aspect in terms of commodity pricing. To generalize, the more in-demand a commodity becomes, the more the commodity producer will be able to charge for their goods, especially if their yield is in low supply. Supply and demand prices may change over time due to the time of the year you make purchases as well as other international obstacles.
For more information on stainless steel, nickel and aluminum distribution, contact Armour Alloys today!
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Generic Administrator 1 August 31, 2022 |
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