Friday, June 27, 2008

Rising demand among developing countries or among speculators?

Paul Krugman writes about the rising prices of raw materials again today. His perspective is that speculators may be bidding up prices somewhat, but that the rising demand for iron ore, a commodity for which it is hard to buy or sell short, suggests a real increase in demand is at work. In particular, he sees rising demand from developing countries like China.

Ironically, on the same day we see a report on the rising price of scrap metal and the lucrativeness of recycling. Why? Because of demand for raw materials from China and India.