Equally misguided, according to the consultancy firm’s research arm, is the argument that recent declines in prices for a range of commodities – from copper to iron ore and oil – mark the beginning of a downward trend.
In the first edition of its 44-page report entitled Resource Revolution: Tracking global commodities markets, McKinsey makes the case that resources supply has already hit the limits of being able to react to short-term shifts in demand, especially in the case of oil. So often in the past, this has resulted in sharp short-term spikes in prices, which affect most people at the petrol pump. Other than natural gas and renewables, the company warns that new sources of energy and commodity supplies remain hard to tap.
Central to McKinsey’s argument is the close link between oil and the rising cost of producing most other raw materials and agricultural commodities. Energy accounts for up to 40pc of the cost of steel and up to 30pc of crop production. >> Read More