Quote:
Originally Posted by Roughneck
Another big one was Urea. In the past three years it went from ~$250/T to over $1000/T and is now back to around $300/T. Fertilizer prices basically doubled seemingly overnight in Fall of 2021 and that was after they had already been increasing to levels most users hadn't seen or prepared for.
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And it's important to note that many of those reductions are just starting to reach end users now, as most of the intermediate stages of the supply chains clung to those increase as long as there was robust pent up demand following the outages of whatever they were selling in 2020. With demand starting to balance off to normal levels, the buyers are becoming more and more successful at linking product costs back up with their base commodity costs, which have long since fallen way off their peak.
The tipping point in this inflation run was always transitory, I think people just underestimated how long of a cycle we were in, and how resistant sellers would be to returning the price gains they realized. With the long cycle some base salaries and consumer expectations did experience real inflation, that will stick for sure. But to blame this inflation on government policy, or expect it will sustain itself for years to come just isn't what the market has showing for a while now (if you consider base commodity prices the bellwether for what everything else will cost in the future, I'm a commodities guy, so I'm pretty bias to seeing the world through that lens)