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2018 | Buch

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Commodities Pricing and the Bulk Trap

Learnings from Industries at the Forefront

verfasst von: Fredrik Andrén-Sandberg

Verlag: Springer International Publishing

Enthalten in: Springer Professional "Wirtschaft+Technik" , Springer Professional "Technik" , Springer Professional "Wirtschaft"

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Über dieses Buch

This book takes a fresh look at pricing, product differentiation and the need for decommoditisation in market sectors where products and services are standardised and interchangeable. In the first chapters the book explains what commodities are, and puts them into a historical perspective to promote an understanding of their production and its effects. From this baseline the book then presents a case study on how decommoditisation has progressed within the energy industry. Building on this case study and learnings from other sectors, it develops a theoretical framework, characterising the processes and mechanisms observed to be extended towards different industries.
This framework is then utilised in the following chapters as a model to explain the progression of decommoditisation, and to examine other sectors through this lens. To conclude, the book presents the implications for stakeholders and suggestions on how to respond to them from a policy and business standpoint. In a final chapter the book develops an outlook on current trends and possible alternative pathways, and summarizes the main takeaways for management professionals and policymakers alike.

Inhaltsverzeichnis

Frontmatter

1. Introduction to Commodities

Abstract

To examine decommoditisation, we first need to understand the process of commoditisation and to pin down what attributes that actually defines commodities. In order to do this, we will dig into the history of commodities dating back to ancient times, and have a look at the golden age of commoditisation and examine the economic rationale for the commoditisation process. We will also briefly take a look of modern day commoditisation, to see what kind products are currently being commoditised, and examine what drivers are currently pushing this process.

Fredrik Andrén-Sandberg

2. The Unlikely Seeds of Commoditisation Reversal

Abstract

What started out as a very good era for commodities in the early twenty-first century, where both prices and volumes skyrocketed driven by a multitude of factors, may counterintuitively turn out to have sowed the accelerating seeds to its own dismantling. In this chapter we will gain some knowledge on what happened in the 2000s commodities boom, and try to understand what irreversible impact it may have had on commodity markets going forward. We will also look into just how considerable commodities and their prices actually affects global politics as well as the economic wellbeing of nations.

Fredrik Andrén-Sandberg

3. Break in the Commoditisation Trend: Information Proliferation Starting to Shatter the Commodity Illusion

Abstract

Technology has undoubtedly had a pivotal impact on production of goods and commodities throughout history. From shipping’s ability to create large interconnected markets, to excavation technologies churning out impressive amounts of raw material for those markets. Technology has arguably been the primary enabler of commodities themselves, and been pushing the trend for increased commoditisation of products through standardisation and ever rising volumes. However, the coming impact of technology on commodities might entail somewhat different consequences. Whereas the historical commodity impact from technology mainly have been in form of ever more sophisticated and larger scale machinery, the coming technology trend will be more focused on information creation and proliferation. Since information proliferation may turn out to be perfect counterweight against commoditisation, the new technology revolution might have an irreversible impact on commodity markets going forward. Which we will examine in this chapter.

Fredrik Andrén-Sandberg

4. The Energy Market Revolution: A Canary in the Coal Mine

Abstract

The energy market if treated as a whole, is by far the largest global commodity market in terms of volume and market turnover. However, due to the massive scale in this industry, the externality that its production and distribution causes is arguably also the far greatest. Taking greenhouse gas emissions, global warming and sea acidification into account—the consumption and production externalities of this commodity class may be the greatest threat to civilisation humanity has ever faced. The flip side of the scale of this sector, is that the potential for disruption becomes equally very large, and might be the main reason that this sector is one of those having been furthest impacted by decommoditisation so far.

Fredrik Andrén-Sandberg

5. Learnings from the Energy Market Decommoditisation Process

Abstract

The decommoditisation trend in the energy market was not driven by any specific market player nor country, and it took much of the sector off guard even though they could see it on the horizon. In the following chapter we will explore the progression of the trend, how it impacted the market players and try to draw some general conclusions which can be applied across different sectors by creating a decommoditisation framework.

Fredrik Andrén-Sandberg

6. Parallel Decommoditisation Trends in Non-energy Markets

Abstract

We have now seen the impact decommoditisation has had on the energy sector which has experienced substantial disruption, partly due to the large externalities involved in energy production and consumption. But what about other commodity markets—are there any signs of decommoditisation and disruption there? In this chapter we will look into several unrelated commodity fields to examine if decommoditisation has started to affect these sectors as well, and whether the drivers might be similar.

Fredrik Andrén-Sandberg

7. Commodities Next in Line for Decommoditisation

Abstract

We have now seen several commodity markets being disrupted by decommoditisation. But what about the other markets seemingly not yet disturbed, what signs should we pay attention to for us to determine if decommoditisation pressure is building up. In this chapter we will examine just this, and which likely candidates that might be next in line for disruption.

Fredrik Andrén-Sandberg

8. How Could Countries Reap the Benefits of the Decommoditisation Trend

Abstract

As we have seen in the previous chapters, there seem to be decommoditisation and commodity differentiation already taking place throughout several commodity markets. Since the trends driving decommoditisation is arguably accelerating rather than levelling out, countries involved in the commodity sector would be well advised to develop a strategy for this changing future. This in order to best reap the benefits that decommoditisation brings while at the same time mitigating the risks this entails. In this chapter, we will examine why such as national strategy might be needed, and what consideration such as strategy should contain.

Fredrik Andrén-Sandberg

9. How Businesses Can Become Winners of the Decommoditisation Trend

Abstract

Countries seem to be able to benefit from the commoditisation trend if they position themselves with the right regulatory regime in place. But the main ‘actuators’ of the decommoditisation will nevertheless be companies which service the new demand stemming from the consumers. In this chapter we will examine what aspects that needs to be taken into consideration by those different market actors to become successful in the new differentiated landscape.

Fredrik Andrén-Sandberg

10. Possible Decommoditisation Derailers

Abstract

In the previous chapters we have followed a red line of arguments which leads to the conclusion that everything will eventually become decommoditised. It is somewhat likely that many commodities will be decommoditised, but there are always market forces beyond our knowledge horizon and comprehension that might counteract this forecast. In this chapter we will examine three alternative scenarios that might unfold which could disrupt decommoditisation, and what signs market actors should be aware of.

Everything comes in threes, you just have to wait for the third one to occur

Fredrik Andrén-Sandberg

11. The Opportunities for a Better Tomorrow

Abstract

We have in this book examined the history of commoditisation and the progression of decommoditisation so far, including what actors within the markets should do to reap the possible benefits. In this chapter will investigate what these general benefits might be.

Fredrik Andrén-Sandberg

12. Epilogue and Further Reading

Abstract

Decommoditisation come as it may, is a trend which we can see currently in the market—but all forecasts are knowingly very difficult to conduct, especially those which concerns the future. There are strong evidence that this trend will continue, but history show’s that there is always room for the ‘Deus Ex Machina’ or ‘Diabolus Ex Machina’ depending on the impeding outcome and your given interest.

Fredrik Andrén-Sandberg

Titel: Commodities Pricing and the Bulk Trap
verfasst von: Fredrik Andrén-Sandberg
Verlag: Springer International Publishing
Electronic ISBN: 978-3-319-72468-3
Print ISBN: 978-3-319-72467-6
DOI: https://doi.org/10.1007/978-3-319-72468-3