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The great metals boom: A retrospective

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  • Humphreys, David
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    Abstract

    The metals boom that ran from 2003 to 2008 represented the most powerful and sustained such boom since the Second World War. As the boom gathered momentum, the notion began to emerge that commodities were at the beginning of a multi-year 'super cycle' driven by demand growth in the emerging economies and, in particular, China. The persistence of the boom helped sustain this belief right up to the point when metal prices collapsed in the second half of 2008. Looking back over the period, much of what occurred can be readily explained by the unusual strength of the demand shock and the lagged response of the supplying industry, with prices receiving an additional boost from the activities of commodity investors. There is, however, some evidence to suggest that the combination of downward pressure on the costs of manufactured goods and upward pressure on the costs of mineral commodities which accompanied the boom marked a shift in the terms of trade between these two product groups. This in turn seems to have brought to an end the sustained decline in real terms metal prices that occurred in the years following the boom of the 1970s. In sum, the key structural change taking place may not have been on the demand side of the industry as the super cyclists maintained, but on the supply side.

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    Bibliographic Info

    Article provided by Elsevier in its journal Resources Policy.

    Volume (Year): 35 (2010)
    Issue (Month): 1 (March)
    Pages: 1-13

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    Handle: RePEc:eee:jrpoli:v:35:y:2010:i:1:p:1-13

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    Web page: http://www.elsevier.com/locate/inca/30467

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    Keywords: Commodity price boom Super cycle Terms of trade Structural shifts Supply side Barriers to entry Mergers and acquisitions;

    References

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    1. Radetzki, Marian & Eggert, Roderick G. & Lagos, Gustavo & Lima, Marcos & Tilton, John E., 2008. "The boom in mineral markets: How long might it last?," Resources Policy, Elsevier, vol. 33(3), pages 125-128, September.
    2. Radetzki, Marian, 2006. "The anatomy of three commodity booms," Resources Policy, Elsevier, vol. 31(1), pages 56-64, March.
    3. John T Cuddington & Daniel Jerrett, 2008. "Super Cycles in Real Metals Prices?," IMF Staff Papers, Palgrave Macmillan, vol. 55(4), pages 541-565, December.
    4. Danny Quah, 1999. "The Weightless Economy in Economic Development," CEP Discussion Papers dp0417, Centre for Economic Performance, LSE.
    5. Radetzki,Marian, 2008. "A Handbook of Primary Commodities in the Global Economy," Cambridge Books, Cambridge University Press, number 9780521880206.
    6. Quah, D., 1999. "The Weightless Economy in Economic Development," Research Paper 155, World Institute for Development Economics Research.
    7. Diane Coyle, 1999. "The Weightless World: Strategies for Managing the Digital Economy," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262531666.
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    Cited by:
    1. OCallaghan, Terry, 2010. "Patience is a virtue: Problems of regulatory governance in the Indonesian mining sector," Resources Policy, Elsevier, vol. 35(3), pages 218-225, September.
    2. Filippou, Dimitrios & King, Michael G., 2011. "R&D prospects in the mining and metals industry," Resources Policy, Elsevier, vol. 36(3), pages 276-284, September.

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