In September a little-noticed report was published by Standard Chartered that revealed the results of an exhaustive global study of mothballed or delayed mining projects since the beginning of the financial crisis in 2008. It revealed a stark picture of supply dynamics in the commodities market that Standard Chartered predicts could fuel the next commodities price bubble. This goes against the conventional market view, which suggests that a faltering economic recovery and a controlled slowing of the Chinese economy will keep a cap on commodity prices in the medium term, perhaps with the exception of gold.
Time warp
The report claimed that the market was caught in a time warp. "The financial crisis and the lingering effects today have planted the seeds for the next mega bull run in the commodities market," it argued. This was based on a study of 776 projects worldwide, and Standard Chartered’s own estimates of projected start-up dates, rather than the companies’ official line because "mining executives often held out for as long as possible before they announced delays to their project start-up dates."
The report discovered that nearly 130 projects, worth $200 billion, had been delayed or cancelled since the crisis began in late 2008, which left a gaping hole in mine supply expected during 2010-13.