If Cheap Oil Disappears, Do Global Material Prices Spike?

Lately I’ve been thinking a lot about global processing and manufacturing supply chains and wanted to hear other people’s thoughts

China dominates a huge share of global processing across multiple industries. Even when raw materials are mined in other countries, a lot of the refining, processing, and manufacturing still ends up happening in China

That advantage comes from massive industrial scale, integrated supply chains, historically cheaper energy, government support for key industries, and the fact that entire processing ecosystems have been built there over decades

Because of that, a lot of materials and intermediate goods end up being produced at very low prices globally. Graphite is a good example China processes the majority of the world’s supply, which has kept prices relatively low for years

But I keep wondering what happens if the conditions that allowed that system to exist start changing

With geopolitical tensions rising, pressure on countries like Iran and Venezuela that supply discounted oil, and growing efforts in the US, Europe, and Australia to move supply chains elsewhere, the cost structure behind a lot of that processing could shift

If energy gets more expensive, or if some of those geopolitical supply advantages disappear, production costs in those supply chains could rise

And since so much of the world’s refining and processing runs through China, that could mean the price of materials themselves rises globally, not just the cost of finished goods

In a situation like that, companies holding large inventories of materials or processed goods could even see the value of what they’re holding increase simply because the replacement cost becomes higher

At the same time, moving processing infrastructure to other countries would likely be more expensive at first, which could also push prices up

So I’m curious what people think

Are current global material prices partly a result of China’s massive processing scale keeping costs low? And if those conditions change, could we see significant price increases in things like graphite and other key industrial materials?