This is a stark contrast to the early 2000s commodities boom, which was a quintessential “super-cycle”. Back then, China’s strong demand for commodities outstripped global capacity, forced prices sharply higher and motivated a large, multi-year ramp-up in global resources sector investment. This supported global growth and drove economic booms in many emerging economies across Asia, the Middle East, Latin America and Africa. Supply eventually arrived, after a decade, and the super-cycle downswing ensued.
Commodity prices are very high, particularly prices of fossil fuels and food, but this largely reflects shortfalls in supply, not strong demand. After reaching alltime highs in March 2022, global commodity prices have only edged slightly lower.
Supply is being constrained by the impact of the Russia-Ukraine war, the energy transition, the Covid-19 pandemic and climate change — most of which are likely to be sustained disruptions.
