European Commission Vice-President Dombrovskis revealed that Commission services are closely monitoring the situation on global commodity markets as well as specific measures introduced by the Chinese authorities in 2021 in response to commodity shortages.
In recent weeks, prices of critical industrial inputs from coal to copper surged to record highs this year, piling further pressure on supply chains and rising inflationary prospects in multiple industries across the globe. As a result, the Chinese authorities have announced a policy of zero tolerance for speculation and hoarding in commodities together with measures to curb commodity prices.
In June 2021, the National Food and Strategic Reserves Administration of China stated that state stockpiles of certain metals, mainly copper,
aluminium and zinc, would be released in response to the situation. State Owned Enterprises were also asked to limit their exposure to overseas commodities. Dombrovskis recalled that while strong Chinese demand for commodities has an impact on global commodity prices, other factors also play a role at the current juncture, including ongoing supply chain disruptions and surge in shipping costs, accelerating energy transition and, more generally, temporary mismatches between supply and demand as economies reopen after the COVID-19 pandemic.
The Commission Vice President was replying to a parliamentary question by Czech MEP Tomáš Zdechovský, of the European People’s party, who argued that China was restricting exports of specific comodities to Europes, inssting that it was then buying the commodity on the European market and proceeding to sell it back, setting off an inflationary spiral. “We are currently seeing such a situation, for example, in the construction sector, which – judging by the amount of material shortages – is definitely not performing as well as it should, which confirms that construction commodities are disappearing.”
Vice-President Dombrovskis said that there was no evidence that this was happening, while insisting that the Commission was indeed keeping a watchful eye.