Price behavior for new commodities (from my email)

You made a point in your podcast with Jeremy Grantham about the commodities market being relatively stable over the number of years that we can measure it, but I think when you refer to the commodities market, you’re talking about larger commodities, like copper and steel for which we have a much longer period of history.

In commodity markets some materials are relatively new. The history of markets for things like neodymium, dysprosium, and lithium is not long. These materials only recently became commodified enough that there was even such a thing as a market price.

These advanced refined materials may not fit our historical understanding due to: relative scarcity (geographic and in china, Dy, Nd mostly) specialized & region dependant extraction techniques; specificity in applications, (for example: i don’t know of any application for Dy other than high power magnets and wavelength specific lasers)

Consider that modern commodity markets in highly technological, relatively new, specific materials might not be subject to the same rules as historical commodity markets.

We haven’t seen an “advanced material commodity squeeze” yet, but I think we are due for one even bigger than the RE shock in 2011 (https://www.theguardian.com/business/2011/jun/19/rare-earth-minerals-china). So many technologies are based on a very fragile (geopolitical, economic) supply chain that we are bound to have a problem eventually.

Love the podcast & MR.

That is from Anonymous!