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China's Metals Demand and Commodity Prices: A Case of Disruptive Development?

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Abstract

The 2003–2011 commodity boom was the longest period of rising commodity prices seen since the Second World War. This article examines the role of China's demand in the price rise and its impact on the future behaviour of hard-commodity prices. The persistence of the demand driver, despite the interruption due to the financial crisis towards the end of 2008, leads us to conclude that the boom is the start of an expansionary phase of a Commodity Super Cycle. China's increase in base metals consumption has directly led to demand disruptions in the global commodity markets and offers a chance of ‘commodity optimism’ for resource-exporting developing countries.

Abstract

Le boum des produits de base observé entre 2003 et 2011 a constitué la plus longue période de hausse des prix de ces produits enregistrée depuis la deuxième guerre mondiale. Cet article examine le rôle de la demande chinoise dans la hausse des prix et son impact sur le futur comportement des prix des produits miniers. La constance du rôle moteur de la demande, malgré l’interruption due à la crise financière survenue fin 2008, nous amène à conclure que le boom représente le démarrage d’une phase expansionniste d’un Super Cycle des matières premières. L’augmentation de la consommation chinoise de métaux de base a été la cause directe de bouleversements de la demande sur les marchés mondiaux de produits de base et représente une cause d’optimisme pour les pays en développement exportateurs de ressources naturelles.

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Notes

  1. Source: World Development Indicators via ESDS, accessed May 2011.

  2. Source: World Development Indicators via ESDS, accessed May 2011.

  3. Source: World Development Indicators via ESDS, accessed May 2011.

  4. Source: Adock (2009).

  5. Source: CIA World Fact book; both cover nearly 9 000 000 km2.

  6. All values from UN Statistics Division COMTRADE, accessed May 2011.

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  1. The Open University, Milton Keynes, UK

    Masuma Zareen Farooki

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  1. Masuma Zareen Farooki
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Farooki, M. China's Metals Demand and Commodity Prices: A Case of Disruptive Development?. Eur J Dev Res 24, 56–70 (2012). https://doi.org/10.1057/ejdr.2011.31

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