In contrast with fuel and power, the inflation in metals and some other raw materials seems to have lost its force. Starting out at high levels in the early months of 1974, raw material prices were hit hard both by the disgorging of costly stocks and by reduced demand in a declining world economy. The London Economist's composite index of the dollar prices of industrial raw materials peaked in April 1974 and by early November had fallen by 38 percent. In November, the five members of CIPEC, the copper-exporting trade group, voted to cut exports by 10 percent in an effort to stem the slide that had reduced the price of copper from over $1.50 in the early spring to less than 60 cents near the end of the year. Similar moves were being contemplated by producers of other metals, as slumping consumption, especially in the metal-intensive motor-vehicle industry, began to turn shortages into gluts. Tin prices had fallen by mid-December close to the level at which the manager of the International Tin Council steps in to make price support purchases.
Lumber and plywood prices also hit their peaks early in the year—some in fact as early as late 1973 and late 1974 prices were down by an average of about one-third from what they had been a year earlier. Near the end of the year, paper and paperboard manufacturers were feeling the pinch of recession, but still trying against odds to maintain inflated price levels. And well before that, as inventory built up, the price of some kinds of paper scrap had fallen so low as to threaten the viability of recycling efforts.
General consciousness of this turnaround in materials came too late in the year to have had much impact on 1974 public policy thinking. Even had the facts been appreciated earlier, however, they would probably not have allayed concern about the continuing possibility of unanticipated materials shortages or attempts by other raw material suppliers to imitate OPEC successes. A result was the passage, in September, of an act establishing the National Commission on Supplies and Shortages. The commission is to report on short- and long-term trends in supply factors affecting both raw and processed materials (including agricultural products), as well as on the design of a possible continuing monitoring system. Apprehension that foreign suppliers, acting alone or in concert, might "arbitrarily raise the price of such resources to levels which are unreasonable and disruptive" was specifically mentioned in the law's statement of findings, as was the fact that "existing institutions do not adequately monitor, study, and analyze other market adversities. . . ." It was recognized that a wealth of data is already being collected, but it was found inadequately coordinated and disseminated for purposes of securing timely remedial action. The commission is required to issue an initial report of recommendations by March 1, 1975.
A version of this article appeared in print in the January 1975 issue of Resources magazine.
