Brussels, 2 February 2011
The Commission calls for action on commodities and raw materials
Excessive volatility of prices on all major commodity markets occurs at a time when the competitiveness of European industry crucially depends on efficient and secure access to raw materials. Raw materials are vital for the EU’s economy and particularly crucial for the development of modern environmentally friendly technologies such as electric cars and photovoltaics. The recent volatility in commodity prices threatens to increase inflation and global raw material markets are becoming increasingly distorted due to protectionist measures. The price fluctuation on the agricultural commodity markets has an impact on farmers, food-makers and consumers, including in the poorest countries. In response to these challenges, the European Commission presented today an integrated strategic vision to tackle challenges in Commodity markets and on Raw materials. The Commission proposes actions to improve the regulation, functioning and transparency of financial and commodity markets. The European Commission also calls for the swift implementation of the Raw Materials Initiative adopted in 2008. The Communication on commodities and raw materials contributes to the Europe 2020 flagship initiative 'A resource-efficient Europe' that was adopted last month (IP/11/63).
President Barroso said: “'In order to secure supply of raw materials for the European industry for coming years, we need to link this policy with our reforms of the regulatory framework for financial markets. Better understanding the synergy between the two will ensure that supply of commodities and raw materials matches demand in a resource-efficient way, contributing to sustainable growth in the European Union."
The European Commission presents an overview of developments in financial and physical markets and outlines what has been done since the launch of the Raw Materials Initiative. This includes achievements such as identifying critical raw materials, actions in the area of trade and development, guidelines that clarify how extraction in the EU can be compatible with Natura 2000 requirements, new research opportunities under the 7th Research Framework Programme and development of end-of-waste criteria.
In today's Communication, the European Commission proposes a series of measures, based on its Raw Materials Initiative to ensure a fair and sustainable supply of raw materials from global markets, to foster sustainable supply within the EU and to boost resource efficiency and to promote recycling.
At the same time, recent developments on commodity markets show that the prices of derivative and physical markets may be linked in multiple ways. Clearly, the price of commodity derivatives is influenced by the price of the underlying commodity. It is also clear that investors increasingly use commodity derivatives as part of their strategic investments.
Financial market regulation is one important response to these developments. The regulatory initiatives already undertaken or planned for the coming months will ensure enhanced integrity, transparency and stability of commodity derivative markets. The Communication also notes that further work is necessary to understand fully the interlink between physical and financial markets. The European Commission intends to continue working on this matter, in the framework of the G20-debate taking place at the global level.
The key elements of the integrated strategic approach include:
For more information on the Commission’s raw material policy: