What Drives Mineral Commodity Prices? A Historical Perspective on Demand and Supply Dynamics

Romain Capliez, Valérie Mignon (), Carl Grekou () and Emmanuel Hache
Additional contact information
Carl Grekou: EconomiX - EconomiX - UPN - Université Paris Nanterre - CNRS - Centre National de la Recherche Scientifique

Working Papers from HAL

Abstract: This paper investigates the historical determinants of real mineral commodity prices using a structurally identified vector autoregression (SVAR) with incomplete identification. Drawing on a large sample of mineral commodities covering more than a century of data, we identify supply, aggregate demand, and metal-specific demand shocks using economically motivated prior distributions. Historical decompositions show that price fluctuations are predominantly driven by demand-side forces, with metal-specific demand shocks accounting for the largest share of variation. Aggregate demand shocks also play an important role, particularly during periods of global instability, while the contribution of supply shocks is more limited and tends to decline over time. Elasticity estimates indicate that prices respond more strongly and more persistently to demand shocks than to supply shocks, whereas supply responses remain weak in the short run. We also document substantial heterogeneity across mineral commodities and over time, reflecting differences in adjustment mechanisms across markets. Overall, our findings highlight the central role of demand in mineral commodity price formation and provide little support for the view that increasing scarcity has been the dominant force shaping observed price dynamics over the period considered. Instead, fluctuations in mineral commodity prices appear to be primarily driven by demand-side factors rather than by tightening supply conditions.

Keywords: Mineral commodities; Commodity price dynamics; Resource scarcity; Structural VAR; Historical decomposition (search for similar items in EconPapers)
Date: 2026
Note: View the original document on HAL open archive server: https://hal.science/hal-05664063v1
References: Add references at CitEc
Citations:

Downloads: (external link)
https://hal.science/hal-05664063v1/document (application/pdf)

Related works:
Working Paper: What Drives Mineral Commodity Prices? A Historical Perspective on Demand and Supply Dynamics (2026)
Working Paper: What Drives Mineral Commodity Prices? A Historical Perspective on Demand and Supply Dynamics (2026)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hal:wpaper:hal-05664063

Access Statistics for this paper

More papers in Working Papers from HAL
Bibliographic data for series maintained by CCSD ().