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Another day and another Commodity skyrockets to fresh record highs. That’s one of the most exciting trends of the current Commodities Supercycle that we find ourselves in right now!
Commodity prices across the board from the metals, energies to agricultural markets started the week on an absolute tear as China – the world’s second-largest economy and biggest importer of Commodities – officially ended a two-month lockdown on June 1.
Since March, China's lockdowns notably in Shanghai, have taken a toll on production, supply chains and spending – slightly easing momentum in the Commodities boom that has been on an unstoppable run since the world emerged from the pandemic in 2021.
But once again, in true bull market fashion, as China comes out of lockdown – it comes as no surprise that the Commodities Supercycle is back on track and firing on all cylinders!
Oil prices took the lead on Tuesday rallying back $120 a barrel, the highest level since March – on expectations that the Oil market may see an identical V-shape recovery in demand as seen in 2020 when China previously ended lockdown. That event triggered an historic bull run taking Oil prices from sub $40 a barrel in April 2020 to a decade high of almost $140 a barrel in April 2022. That's a record-breaking gain of more than 450%, in the last two years.
Elsewhere in the Commodities complex, another star performer this week has been Copper.
Copper which is a key metal in infrastructure, electric vehicles and renewable energy surged on Wednesday after China launched a $120 billion credit line for mega Infrastructure and Green Energy projects to stimulate the economy.
The cliché move, straight out of an old policy playbook, echoes similarities with President Biden’s ambitious ‘Infrastructure spending frenzy and Green Energy Revolution’, almost exactly a year ago – which played a pivotal role in kick-starting the current Commodities Supercycle.
Ultimately, China’s mega Infrastructure and Green Energy push means one thing. China is going to need more Commodities and lots of them.
But as we know, for the first time in decades, the world is running out of Commodities at a record pace and facing an historic shortage off the back of a “triple deficit” – low inventories, low spare capacity and low investment.
China’s demand is only going exacerbate those issues and inevitably add further fuel to the Commodities Supercycle as global demand continues to outstrip supply and push up prices.
Where are prices heading next? Watch The Commodity Report now, for my latest price forecasts and predictions:
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