Lately, metals have been trending among traders. Even after the recent pullback, silver prices are up more than 130% for the year, platinum 107%, palladium 71%, gold 68%, and copper 25%. Some see this as the consequence of a new commodities supercycle and expect further growth, while others think it’s just speculative trading.
Who’s right?
A commodities supercycle typically signals a prolonged period of rising prices across a broad range of raw materials, driven by structural changes in the global economy. A recent example is China’s rapid urbanization, which sent demand for iron ore, steel, and energy skyrocketing and pushed prices across the board higher.
The current situation, however, lacks a single powerful global driver. Today, price spikes and shortages are more targeted and fragmented, shaped by policy, technology, and regional factors. It’s more accurate to describe it as structural tightening in specific metal markets, rather than a full-blown commodities supercycle.
For instance, copper and aluminum continue to benefit from chronic underinvestment in mining, growing demand from the green transition, rising geopolitical tensions, and the AI boom. Ongoing conflicts and the resulting surge in demand for arms and military supplies also push up demand for these metals.
As a result, analysts at ING expect the aluminum deficit to grow to 200,000 tons, up from about 100,000 tons last year. If Mozambique’s Mozal smelter shuts down, the shortfall could rise to 600,000 tons. Refined copper shortfalls could also reach 200,000 tons and grow to 600,000 tons, affected by disruptions at major mines.
For other metals, the picture is mixed. In 2022, silver experienced an even bigger supply-demand imbalance. Platinum is now expected to have a deficit of around 4%, down from earlier forecasts of 8%, while palladium is actually expected to see a surplus. So the situation is different from a traditional supercycle.
The difference between a supercycle and a speculative frenzy is that during a true supercycle, tightening monetary policy doesn’t stop commodity prices from rising, as happened in the 2000s. Even a major shock like the financial crisis only temporarily shook the markets, which quickly recovered.
Today, however, if the U.S. economy slips into a recession, most metals are likely to follow the stock market down. The same could happen if Trump decides to scale back some tariffs on steel and aluminum ahead of November’s midterm elections, or if Big Tech cuts back on investment in AI and data centers.
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