Are we entering a new commodity supercycle?

By Darius McDermott on 16 September 2026 in Equities, Specialist investing

The past 12 months have been an uncomfortable reminder that our technologically sophisticated world still relies on commodities to run smoothly. Disruption to energy supplies has sent bond markets haywire, while access to scarce resources has influenced tariff negotiations. Power availability may yet prove the make or break factor in AI adoption, while the transition to clean energy cannot happen without mined commodities.

This has led to discussion of a potential new ‘supercycle’ for commodities. The previous supercycle in the 2000s was led by the expansion of China. It saw sustained growth in commodities prices as demand outstripped supply. Large diversified mining companies, such as BHP and Rio Tinto, alongside crude oil exploration and production groups, were among the strongest beneficiaries.

The strong returns for natural resources companies in 2025 suggested that a new supercycle may be emerging. The average fund in the IA Commodity/Natural Resources sector rose 29.5% over the year*. Strategic metals funds led the way with triple-digit gains. The WS Amati Strategic Metals fund, for example, rose 162.1% over the year*. Areas such as copper, necessary for electrification, silver, used in electric vehicles and photovoltaics, and rare earth metals, vital components in electronics, led markets higher.

The strength of natural resources funds has continued into 2026, with an average return of 20.6% for the year to date*. However, leadership has come from the energy sector, with oil and gas-focused funds leading the way. These have been the major winners from rising energy prices in the wake of the US/Israeli attacks on Iran.

Long-term factors driving commodities

There are long-term factors supporting global commodities prices. There can be little doubt that geopolitics is fracturing, with old alliances torn up and trading relationships disrupted. That has consequences for the availability and pricing of commodities.

There are also other sources of long-term demand. The war in Iran has shown the fragility of outsourcing energy requirements to unstable nations who need to export it through vulnerable bottlenecks such as the Strait of Hormuz. This has galvanised governments’ efforts to wean themselves off fossil fuels.

The Brunner Investment Trust has leant into this growth, through investments in renewables groups such as SSC and Iberdrola**. “(These companies) are investing a huge amount into electrical infrastructure largely powered by renewables. We also have some other companies like Schneider Electric that make a lot of the kit that goes into those networks,” says manager James Ashworth.

AI spending is another source of demand. Evy says copper sits at the centre of this theme, given its critical role in electrification and power intensive infrastructure:

These various sources of demand continue to collide with constrained supply. Evy says this is both a reflection of choices made by the companies themselves, and the difficulty of bringing on new supply. He says: “Supply remains constrained across many mined commodities following years of underinvestment, permitting challenges, operational disruptions and long lead times for new projects. Mining companies generally remain focused on capital discipline, prioritising cost control, free cash flow generation and shareholder returns over aggressive production growth.”

What about the energy sector?

This suggests that there are long-term structural drivers for certain parts of the commodities sector and supply/demand imbalances are likely to persist. However, there are areas where the debate is more nuanced. The energy sector, for example, draws differing views. Here, there are cyclical factors, with the Iran conflict pushing up prices, but also structural growth in demand for energy.

James Ashworth adds: “The global population is still rising and the global affluence levels are rising as well, which drives increased energy needs, an increasing number of people wanting to heat houses to travel, to drive, to consume goods, which often require energy to manufacture.” There is also new demand coming from data centres. The International Energy Agency said electricity demand from data centres soared by 17% in 2025, and that of AI-focused data centres climbed even faster***.

James says that renewable energy can only meet some of this demand and fossil fuels will be necessary for some time to come. They hold companies such as ConocoPhillips to gain exposure to this ongoing fossil fuel demand, adding that valuations are still cheap across much of the sector**.

Mark Dunley-Owen, co-manager of Orbis Global Balanced, agrees that the oil price is likely to remain high in the short term, but this is not why they are invested in the sector:

It is realistic to talk of a new supercycle in certain commodities where new supply is hard to generate, and demand is rising in response to AI growth, decarbonisation, infrastructure development and resource nationalism. The factors driving the energy sector are a little different, and while there are reasons to invest there, ‘supercycle’ is not quite the right label. It is also worth remembering the power of commodities to insulate portfolios against inflationary shocks – supercycle or not, they have a place in a portfolio.

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*Source: FE Analytics, total returns in pounds sterling, discrete calendar year, 15 September 2026

**Source: Allianz Global Investors, 11 June 2026

***Source: IEA, 16 April 2026