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Inflation Striking: Prices Surge,
Leading Raw Materials Inflation

Feb. 25, 2004 (EIRNS)—U.S. steel prices have jumped at least 30% in less than two months; it has reached the point that suppliers can't predict from week to week what steel prices will be. This is affecting all those who buy and bend steel, from appliance makers, to tool-makers, to commercial construction companies. During the past year, the cost of nails rose to $25 a box, from $12.

The Journal reports that spot-market price of hot rolled steel—an industry bench-mark—is running about $500, with surcharges included, up 30-50% from a month ago, according to various steel buyers. Peter Fish, of MEPS Ltd, a British steel-market consulting firm, predicts steel prices will reach an eight-year high during March.

The higher steel prices (and those of commodities), could destroy the last remnants of the Bush-Cheney Administration's recovery myth. Nels Leutwiler, president of Parkview Metal Products, based in Chicago, reports that he has already laid off 80 out of his 500 workers—16%. He states that, for those metalforming companies that have survived the depression thus far, "this sudden run-up in steel prices will be the last straw for many of them."

The steel price increase is attributed to China's heavy buying of steel, both for its industrial and infrastructural development, and on top of that, construction for the 2008 Olympics in Beijing. Indeed, in 2003, China consumed one-third of the world's rolled steel. However, though of considerable importance, China's steel import needs by themselves, cannot explain the sudden jump in steel prices of 30-50% in some categories, during the past two months. Instead, one has to look at deeper processes, of the policy of continuance of monetary emission by Federal Reserve Board chairman Alan Greenspan, and the several years run-away inflation of asset prices.

Raw Materials Hyperinflating

The general shooting up of prices of raw materials and some basic foodstuffs, began around June 2003, or equivalently, at the end of the second quarter of 2003. These price increases range from 9% up to 80% over only seven months, for a variety of goods needed for human existence—from metals, to energy supplies, to foodstuffs. Much of the increases cannot be attributed to China, indicating a more fundamental process at work.

Examples (June 2003 to January 2004)
Copper, 48%
Aluminum, 16%
Tin. 38%
Nickel, 80%
Lead, 65%
Hardwood, 9%
Softwood, 11%
U.K. Brent Oil, 20%
Australian coal, 56%
Uranium, 40%
Wheat. 21%
Soybeans, 43%
Soybean meal, 41%
Palm Oil, 19%
Fish Meal,13%
Olive Oil 25%