A surge in commodity prices has Wall Street banks gearing up for the arrival of a new supercycle, but underlying dynamics suggest it isn’t going to be a repeat of the epic China-led boom at the start of this century.
Copper heading for new all-time highs, surging agricultural markets and oil prices back at pre-Covid levels are driving excited talk as economies, juiced by massive stimulus, rev up after Covid-19 lockdowns.
The theory is that this could be just the start of a years-long rally in demand for raw materials across the board.
But there are conundrums at the center of longer-term term forecasts. For example, the energy transition that heralds a bright new age for green metals like copper would be built on the decline of a key commodity: oil.
And as investors flock back to markets like copper in anticipation of a growth-led bounce in inflation, policymakers and economists alike are increasingly alert to the consequences of higher food and fuel prices.
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