With the upcoming elections in Taiwan and the USA and the Critical Raw Materials Act coming into force, decisive developments are looming on the commodity markets in 2024. The focus is not only on political decisions, but also on the influence of China, whose trade policy can affect the availability and pricing of critical raw materials.
Developments on the markets for critical raw materials could be characterised by complex political events in 2024. In particular, the elections in Taiwan on 13 January and the US elections on 5 November have the potential to influence the global supply situation for raw materials and primary products. Elections in Taiwan are always also a vote on future foreign policy towards China. The ruling Democratic Progressive Party (DPP) is in favour of Taiwan's independence. An election victory for its leading candidate would be welcomed by the USA. The opposition party Kuomintang (KMT), on the other hand, favours a more China-friendly policy. The third party standing for election is the Taiwan People's Party (TPP). It is in favour of a middle way between Beijing and Washington.
Elections in the USA also a possible influencing factor
Relations with China could also become a major election issue in the USA. Both Republicans and Democrats took a stance on Beijing in the 2022 midterm elections and were critical of China. The mood was heated. This period also saw the introduction of US sanctions on chip production. Since As of 1 August 2023, China again controls the export of the two raw materials gallium and germaniumwhich is seen as a reaction to the US sanctions. The requirements are intended to protect national security: Both technology metals are dual-use goods that can be used for civilian purposes as well as military technology. Restrictions now also apply to other raw materials such as graphite, tungsten, antimony and silver. Additional information must be submitted to the Chinese Ministry of Commerce for the export of rare earths. The export of specific technologies for refining and processing these raw materials is also officially prohibited. Further positions by the US government that are critical of China could fuel the trade dispute.
European law on critical raw materials
Another factor is the entry into force of the Critical Raw Materials Actswhich is expected to happen in April 2024. This European Union law would be a milestone in European raw materials policy, giving European companies greater autonomy in the long term while gradually reducing dependence on Chinese raw materials imports. This is to be achieved, for example, through binding quotas for the domestic extraction of critical minerals. However, the challenge lies in whether investments in European mining projects and the expansion of the country's own processing and recycling capacities can actually realise the desired independence. The coming years will have to show whether political requirements meet entrepreneurial feasibility. Sustainable solutions must also be found for the conflicts that domestic mining could cause for the environment and the population.
Challenges for companies in dynamic commodity markets
The past year 2023 has shown that raw materials have become an important political issue. Reactions and counter-reactions at government levels often come into force faster than companies along the supply chains can react. With an interesting year 2024 just around the corner, the economy needs to keep an eye on these dynamics.
"Without sufficient physical stocks of the necessary materials, production flows could come to a standstill. Companies will therefore be well advised to stock up on emergency supplies and build up storage capacity to make industrial production processes less dependent on just-in-time deliveries."
As one of the leading commodity suppliers with a broadly diversified and stable network, TRADIUM will continue to closely monitor global developments on the commodity markets. Our experts will continue to provide insight into the often very dynamic markets with precise analyses and in-depth background reports in 2024. TRADIUM also operates the news site Rawmaterials.net. The editorial team reports daily on producers and processing companies of raw materials, on political developments that have an impact on the supply situation, and on new applications as well as science and research.
