Surging global demand for “appliances and electronic goods” during the pandemic has powered a boom in commodity prices, report Emily Gosden and Gurpreet Narwan in The Times. Copper and iron-ore prices have both hit all-time highs. The latter, used to produce steel, has more than doubled since early 2020, breaking through $200 a tonne for the first time ever. Brent crude oil is up by more than 30% so far this year.
A supercycle is a prolonged period of rising prices owing to structurally higher demand. The last one started after China’s accession to the World Trade Organisation in 2001 and lasted until the early 2010s.
Copper is white hot
Copper certainly looks to be heading for “a long bull market”, writes Andrew Bary in Barron’s. Decarbonisation means the world will need unprecedented amounts of copper wiring. An electric vehicle contains four times as much copper as an internal-combustion car.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Onshore wind turbines likewise need “four times as much copper” per megawatt generated compared with traditional power plants. On the supply side, the “constraints in copper are the worst they have ever been”, says Chris LaFemina of Jefferies. Relatively little new supply is being added and it can take six to eight years to get a new mine up and running.
There are some signs of excess emerging, says Matt Egan for CNN Business. US steel prices have tripled this year to hit a record high: many mills stopped running last year, creating a “huge shortage”. Yet with the prospects for demand for steel unclear, some analysts think things will “end in tears”.
Not all industrial metals are “glowing white hot”, says Andy Home for Reuters. Zinc is up by 9% so far this year; lead 10%. That makes them comparative laggards: copper has more than doubled since its Covid-19 lows last year. Neither zinc nor lead is likely to benefit from the push to go green. Indeed, lead’s exposure to the car market could see it lose out. The two metals are likely to be left behind again, just as they were during the last supercycle.
The jury is still out on whether the commodity bump is the start of a supercycle or just post-pandemic normalisation, says Tom Stevenson in The Daily Telegraph. Fully fledged supercycles are rare: there have been just four in the last 150 years. But when one gets going it can “last for years”. The “green metals” (copper, nickel, aluminium, platinum) certainly have a good shot. Governments are encouraging green energy. One-third of Joe Biden’s “Jobs Plan” will be spent on “transport infrastructure” and electric vehicles. Raw-materials stocks tend to pay handsome dividends that compound over time. A prolonged boom could “make a generation of investors rich”.
-
Should you invest in UK equities?The FTSE 100 hit a record high this week, but UK equities remain unloved and undervalued compared to their global and US peers. Should you snap them up at a discount?
-
State pension errors: DWP urged to check for mistakes among divorced peopleFormer pensions minister Steve Webb says there are a high number of divorced women on low state pensions. Now MPs want the DWP to check if there were any errors in “potentially underpaying men and women who are divorced”.
-
AstraZeneca CEO’s £1.8mn pay rise approved despite shareholder oppositionAstraZeneca hiked its dividend to persuade shareholders to accept CEO Pascal Soriot’s pay rise. Is he worth his salary?
-
Adidas, Nike or Jordans - could collectable trainers make you rich?The right pair of trainers can fetch six figures. Here's how you can start collecting vintage Adidas, Nike or Jordans now
-
The industry at the heart of global technologyThe semiconductor industry powers key trends such as artificial intelligence, says Rupert Hargreaves
-
Three emerging Asian markets to invest inProfessional investor Chetan Sehgal of Templeton Emerging Markets Investment Trust tells us where he’d put his money
-
What to consider before investing in small-cap indexesSmall-cap index trackers show why your choice of benchmark can make a large difference to long-term returns
-
Why space investments are the way to go for investorsSpace investments will change our world beyond recognition, UK investors should take note
-
Time to tap into Africa’s mobile money boomFavourable demographics have put Africa on the path to growth when it comes to mobile money and digital banking
-
M&S is back in fashion: but how long can this success last?M&S has exceeded expectations in the past few years, but can it keep up the momentum?
