Business Cycle & Commodity Price Transmission

When downstream demand surges, upstream supply typically lags, causing raw material prices to spike sharply. Upstream producers release profits in a non-linear burst over the short term. In this dynamic, the further removed a production stage is from end demand, the larger its price swings and profit elasticity—until new capacity comes online to restore equilibrium.

Articles on this principle

• Storage Chips, Lithium, and Metals Surge Simultaneously: Why Upstream Companies Profit Most Ruthlessly

  When AI and EV demand suddenly double, it's not chip and automakers that capture profits first—upstream mining and smelting enterprises see profits spike 10-fold. Why does the segment furthest from end users profit the most?