The price of bauxiteincreased to its highest level due to conditions which impacted supply. Historically, bauxite has traded at between 1500 and 1600 USD per tonne. But the price increased to over 1900USD in November 2020. Growing demand in Canada for bauxite to be turned into aluminium, coupled with a sharp fall in Jamaican production have both been factors in the price increase. Bauxite production in Jamaica for 2017-18 fell 65% year-on-year due to flood conditions causing damages as well as increased competition. The London Metal Exchange predicts that global consumption of bauxite is likely to be greater than production by 20 million tonnes next year. In the US, companies in the steel and petrol industry have put pressure on the US government to relax import controls, warning that otherwise they might run out of bauxite. Commentators predict that most steel and petrol producers will be unaffected because bauxite is such a small part of their spending. a. Explain, using supply and demand analysis, why the price of bauxite has been increasing recently.
The price of bauxiteincreased to its highest level due to conditions which impacted supply. Historically, bauxite has traded at between 1500 and 1600 USD per tonne. But the price increased to over 1900USD in November 2020. Growing demand in Canada for bauxite to be turned into aluminium, coupled with a sharp fall in Jamaican production have both been factors in the price increase. Bauxite production in Jamaica for 2017-18 fell 65% year-on-year due to flood conditions causing damages as well as increased competition. The London Metal Exchange predicts that global consumption of bauxite is likely to be greater than production by 20 million tonnes next year. In the US, companies in the steel and petrol industry have put pressure on the US government to relax import controls, warning that otherwise they might run out of bauxite. Commentators predict that most steel and petrol producers will be unaffected because bauxite is such a small part of their spending. a. Explain, using supply and demand analysis, why the price of bauxite has been increasing recently.
Chapter1: Making Economics Decisions
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Problem 1QTC
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![The price of bauxiteincreased to its highest level due to conditions which impacted supply. Historically,
bauxite has traded at between 1500 and 1600 USD per tonne. But the price increased to over 1900USD in
November 2020. Growing demand in Canada for bauxite to be turned into aluminium, coupled with a sharp
fall in Jamaican production have both been factors in the price increase. Bauxite production in Jamaica for
2017-18 fell 65% year-on-year due to flood conditions causing damages as well as increased competition. The
London Metal Exchange predicts that global consumption of bauxite is likely to be greater than production by
20 million tonnes next year. In the US, companies in the steel and petrol industry have put pressure on the US
government to relax import controls, warning that otherwise they might run out of bauxite. Commentators
predict that most steel and petrol producers will be unaffected because bauxite is such a small part of their
spending.
a. Explain, using supply and demand analysis, why the price of bauxite has been increasing recently.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F328146a8-9bdb-4370-ae68-147512e2e1bc%2Fb6a9c142-6f1b-4a50-806c-31c076b7f8ad%2Fistrz8g_processed.jpeg&w=3840&q=75)
Transcribed Image Text:The price of bauxiteincreased to its highest level due to conditions which impacted supply. Historically,
bauxite has traded at between 1500 and 1600 USD per tonne. But the price increased to over 1900USD in
November 2020. Growing demand in Canada for bauxite to be turned into aluminium, coupled with a sharp
fall in Jamaican production have both been factors in the price increase. Bauxite production in Jamaica for
2017-18 fell 65% year-on-year due to flood conditions causing damages as well as increased competition. The
London Metal Exchange predicts that global consumption of bauxite is likely to be greater than production by
20 million tonnes next year. In the US, companies in the steel and petrol industry have put pressure on the US
government to relax import controls, warning that otherwise they might run out of bauxite. Commentators
predict that most steel and petrol producers will be unaffected because bauxite is such a small part of their
spending.
a. Explain, using supply and demand analysis, why the price of bauxite has been increasing recently.
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