Investing in commodities has become nightmarishly difficult

Only a few years ago, analysts and investors were aflutter with talk of a new “supercycle” in commodities. Some believed the world was about to repeat a surge in raw-material prices that began in the early 2000s, and lasted until the global financial crisis of 2007-09. This time the prompt was meant to be a mixture of a fast economic recovery, as the West emerged from covid-19 lockdowns, combined with a shift to green energy.

Today the thesis looks far less certain. Prices of lithium and nickel, which are vital for electric-vehicle (EV) batteries, exploded in 2021 and 2022, but have since collapsed. Nickel is almost 50% cheaper than at the start of 2023. Lithium’s fall has been even steeper: its price is down by more than 80% over the same period. The Bloomberg Commodity Index, made up of a basket of foodstuffs, fuels and metals, has declined by 29% since its peak in mid-2022.