The China Commodities Supercycle: Over, But What's Next?

The China commodities supercycle, which transformed global mining and energy industries over the past two decades, has finally come to an end. As China's economic growth slows and its demand for raw materials wanes, the world is left wondering: will there be another commodities supercycle on the horizon?



The decline in China's steel production, which fell to a four-year low in 2024, is a stark reminder of the end of the China commodities supercycle. The country's consumption of iron ore, a key ingredient for making steel and iron, also declined last year after peaking in 2023. Even Chinese demand for oil is starting to peak, well before most forecasts had predicted. The slowdown in China's economy, particularly in the construction sector, has led to a decrease in demand for commodities, contributing to the end of the supercycle.



However, the end of the China commodities supercycle does not mean the end of commodity supercycles altogether. As the global population reaches 8 billion people and emerging market economies like India continue to grow, there is potential for a new commodities supercycle to emerge. The acceleration of the transition to lower- or zero-carbon energy sources could also create the conditions for a sustained surge in demand, supply, and prices for certain commodities, such as battery metals like lithium carbonate.



Moreover, the growth of infrastructure projects, both in China and around the world, could drive demand for commodities like copper, steel, and concrete. Technological advancements, such as the growth of electric vehicles and renewable energy technologies, could also create new demand for certain metals, such as lithium, cobalt, and nickel.

In conclusion, while the China commodities supercycle has come to an end, the potential for a new commodities supercycle remains. As the global economy continues to evolve and new technologies emerge, the demand for certain commodities is likely to increase, driving a new cycle. However, it is essential to monitor the global economic landscape and geopolitical developments to assess the likelihood and timing of such a cycle.