McKinsey, one of the world's most prestigious management consulting firms has labeled talk on the demise of the commodities super cycle as premature. In a report released today, the firm said that prices remained near pre-GFC highs, and focused on the higher marginal costs of production due to easy resources having already been exploited. McKinsey said this factor appears to be pervasive and puts a floor under the prices whilst supply will be less able to adjust upwards to meet demand in the future. Starting up projects has also been more difficult, with the cost of an oil well doubling in the past decade whilst mine development now takes 20 years, compared to 6 - 10 years in the 1980s and 1990s. The firm also remains bullish on emerging market development, especially the urbanization of China and India. (VIEW LINK)
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