A small irritant as of late has been the undifferentiated talk of “commodities”. The very idea of lumping into the same group oil, steel and corn is non-sensical. One of them is a non-renewable resource with high degree of scarcity, the second is a partially (scrap metal) non-renewable resource with very low degree of scarcity while the third is a renewable resource of no scarcity whatsoever. What is the point of calling them all the same and even more of trying to see “trends” in “commodities” I wonder.
Demand and supply for oil are in a very tight balance and flexibility on the supply side is limited – the order of magnitude of additional supply that can be brought to market is significantly less than 5%. Not so with steel where the issue really is not one of availability of iron ore but rather the processing capacity. Huge amount of mining and steel mill capacity has been shut down over the past 10 years and much of it is being re-started now all over the globe. There is a very significant chance of a steel glut within the next couple of years.
And don't even get me started about the corn ...