A recent pause in commodity prices hasn’t blunted the view from some observers that we are at the beginning of a multiyear commodities supercycle, where demand outpaces supply and prices rise to new heights.
Copper, in particular, is the favourite play here, given its status as the metal most associated with global efforts to curb carbon emissions through the rollout of renewable energy, efficient buildings and electric vehicles.
But tremendous economic stimulus and many commodity producers’ cutbacks on development costs over the past decade could push up prices for other base metals as well.
“In the medium to long term, we believe that severe underinvestment in new capacity in the context of a declining existing production base combined with growing demand from global decarbonization efforts has set the stage for the next commodities supercycle ahead,” Orest Wowkodaw, an analyst at Bank of Nova Scotia, said in a report.
His report, which focuses on the metals and mining sector, adds to the growing number of voices arguing that the stunning recovery in commodity prices last year is no mere blip.