While China may not play the role it did in the last period when commodity price surged, predictions of another supercycle are in our opinion not without foundation; attempts to reduce advanced economics’ fossil fuel emissions and rising US infrastructure spending will mean more demand for certain metals and other materials-copper, as well as lithium, is vital to make electric cars. The green transition has had an effect on supply, too. Few fossil fuel companies are investing as they once did in exploration and production.

Right now, in our opinion, short-term factors are playing a role. Lockdowns have meant that consumer spending in rich countries has switched from services to goods, increasing demand for the raw materials that go into producing consumer electronics. Meanwhile closures-a freeze in Texas shut refineries, for example-have led to bottlenecks. This combined with a faster than anticipated reopening, leading to higher consumer demand in rich countries. Commodities also appeal to investors looking for a way to bet on the recovery and hedge against inflation.

When these factors start to trade there are in our opinion longer-term trends to consider. Even if China’s population is shrinking, it is growing richer. While government investment spending on the kind of infrastructure the requires steel and copper is helping to dive the immediate recovery from the coronavirus pandemic, eventual rebalancing towards consumer spending will boost sales of cars and white goods. Lower state spending on high-speed rail does not mean the end of demand for industrial metals.

Rich country governments, led by the US, are also planning increased infrastructure investment in ports, roads, bridges and highways. That, too, will fuel demand. So will replacing internal combustion engines with electric ones and building the infrastructure to change their batteries. The green revolution will require some of the same materials as the industrial one.

Not all of them, though. While oil prices have risen along with lithium, this partly reflects lower supply. The OPPC cartel has restricted output and could increase it as prices rise. But other oil and gas majors cut spending last year when the pandemic forced an end to international travel and other economic activity; many are preparing to adjust to a world with structurally lower demand. US shale, which met most of the world’s demand growth since 2015, is no longer growing.

China’s role as the world’s workshop is the 2000s lifted all boats. If the supercycle is to be repeated, with prices rising beyond their long-term tread, it will in our opinion not be an exact replica. This time there are likely to be very different stories for different commodities-therefore the story of inflammation will change as well.