State of cyclicals: Metals & Mining

The cyclicality of the metals-and-mining segment is driven by the law of supply and demand. When companies foresee a rise in demand, they go for capacity expansion. However, this capacity expansion doesn't happen overnight. For example, it takes seven to 10 years to develop a mine and only after that, the supply comes to the market. This mismatch between supply and demand causes metal and mineral prices to rise. Another determining factor is where metals and minerals are produced and consumed. If we consider steel, Australia (around 30 per cent of global production) and Brazil (about 16 per cent) are the major suppliers of iron ore, which is a key raw material for steel. China accounts for 53.3 per cent of the global steel production and around 50 per cent of its consumption. He