Are we in a new commodity supercycle? asks The Economist. Many raw materials enjoyed strong gains last year, with copper prices up by more than 25% since the start of 2020 and iron ore surging by 75%. China responded to Covid-19 with an infrastructure-led stimulus plan that turned the country into a “voracious importer” of industrial metals and food.
As demand spiked, supply contracted; Covid-19 disruption meant Chilean copper mines and Brazilian iron ore excavators were unable to operate at full capacity. Even energy prices are perking up now: a cold winter has sent Asian liquefied natural gas prices to a record high. Bank of America analysts think the trend will continue, notes Zero Hedge. It says that a cocktail of stimulus, reflation and economic reopening should ensure continued robust commodity demand. Copper could end the year at $9,500 a tonne, up from $7,973 now.
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