What Is a Supercycle?

By Matthew DiLallo – Updated Feb 22, 2025 at 9:19 AM

Key Points

Economic supercycles are long, demand-driven booms impacting commodity prices.
China's economic growth catalyzed a supercycle, significantly increasing demand for metals.
Supercycles often conclude with excess supply, causing sharp declines in commodity prices.

The global economy tends to be very cyclical, meaning it is prone to alternating periods of boom and bust. The four stages of an economic cycle are expansion, peak, contraction (also known as recession), and trough, followed by another expansion to mark the beginning of a new cycle. A typical economic cycle lasts about 5.5 years, although some are quite short (as little as 18 months) and others span more than a decade.

A supercycle is defined as a sustained period of expansion, usually driven by robust growth in demand for products and services. Economic supercycles tend to produce strong, sustained demand for raw and manufactured materials, such as metals and plastic, that exceeds what commodity producers can supply. Supercycles, which are also good for stock prices, are often associated with long-term periods of growth for the commodity markets.

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Brent Crude Oil Spot Price Chart — Brent Crude Oil Spot Price data by YCharts

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The next supercycle may not mirror those of the past

It's important to realize that a sustained transition to low-emission power sources and modes of transportation, along with a move away from industrialization and toward digitalization, could significantly change which commodities experience the most demand growth during a supercycle. These broad market transitions could negatively impact the demand for fossil fuel commodities such as oil, coal, and natural gas -- all of which have historically experienced robust and growing demand during a commodity supercycle. Given this possibility, investors should pay close attention to what exactly is driving an economic boom in order to invest in the commodities and producers likely to benefit the most over the long term.

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About the Author

Matt DiLallo has been a contributing Motley Fool stock market analyst specializing in covering dividend-paying companies, particularly in the energy and REIT sectors, since 2012. He also covers pre-IPO companies, ETFs, and other investing topics. He holds an MBA from Liberty University.

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