Emerging markets build more and developed markets eat more. That seems to be a universal truth in this world.
Here’s some commentary from Societe Generale’s new Global Economic Outlook report:
…Urbanization usually comes with economic development and commodity intensity evolves with economic development. Steel intensity is expected to peak first as the construction cycle matures and as emerging economic growth transitions from being investment-led to consumption-led. Commodities such as copper are generally regarded as mid/later cycle commodities and tend to plateau later in the super-cycle. We are not at that stage for China or India (based on GDP per capital figures). Energy and food demand is linked with economic expansion in a more linear fashion. Corn and soybeans and meat especially are driven by income and population growth as people switch to more expensive food items. Population rather than income growth will be the main driver of wheat demand in the commodity super-cycle because China (for example) has already reached a per-capita calorie intake level that is comparable with the OECD countries.
From hard commodities to soft commodities…
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