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Price-determination and -setting in global production networks of critical minerals – The London Metal Exchange, price reporting agencies and digital trading platforms

Aleksandra Wojewska / Cornelia Staritz / Bernhard Tröster

Wien, Oktober 2023

This paper explores the processes behind commodity price determination, focusing on critical metals like copper, cobalt, and lithium in the context of green transitions. Conceptually, we link extractive industry concepts in GPNs with sociological price-making approaches and an infrastructural perspectives. Rather than passive discoveries, world commodity prices result from contested price-making processes. The determination of global benchmark prices differs among the metals and includes derivative exchanges, price reporting agencies or digital trading platforms. Differences are attributed to material characteristics, network territories, historical structures, and the interests of powerful actors. The trend toward short-term benchmarks and financialization, driven by the desire by financial actors for exposure to metal price fluctuations, has led to increased price volatility, impacting distribution along global production networks and posing challenges particularly for actors in producer countries.

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