Beginning of the end for mining and high commodity prices?
Are commodities en route for a “Super Cycle Sunset?” Recently I spoke to a number of Middle East traders and investors who highlighted the importance of being able to predict the commodity super cycle to maximize return on investments; of course this is quite obvious for anyone with an interest in financial markets. The more pressing question is, where are we now in that commodity super cycle?
Let’s take the metals sector. A recent article in the Financial Times describes how prices are already down 20% from last year’s highs and many predict that Chinese growth is slowing and becoming less commodity intensive. Moreover, the cost of running and building mines is rising rapidly. So, should we take all these factors to be an indication that the metals super cycle is over? Not necessarily.
Some analysts believe that the sector may strike a counterbalance if mining companies encounter difficulties bringing new supply to the market.
Is this really the end of the metals boom or just a dip in the market? What do you think?