Supercycle

A supercycle is a prolonged, multi-year period in which a broad range of commodity prices rises together, driven by a structural shift in demand or supply.

A supercycle lasts years, not months, and touches many commodities at once rather than a single crop or metal. The classic cause is a large, sustained shift in demand, such as a wave of industrialization and urbanization that requires far more steel, copper, and energy than before, arriving faster than mines and wells can expand to meet it. Prices across metals and energy can stay elevated for a long stretch before enough new supply comes online to bring the cycle down.

Supercycles are identified with confidence only after the fact; while a period of high prices is underway, it is difficult to tell a true structural supercycle from an ordinary cyclical upswing that will fade once new supply or a recession arrives. Commentators pointed to the years of rapid Chinese growth in the 2000s as the clearest recent example. See commodity supercycles.