LONDON Too much emphasis has been placed on Chinese demand for historically strong prices of industrial metals and not enough on rising mining costs, the McKinsey Global Institute (MGI) said in a report on Thursday.
The institute, the research arm of consultancy McKinsey & Company, also said it was too soon to call an end to the so-called super-cycle of commodities that sent prices soaring after 2000.
"Despite recent declines, on average commodity prices are still almost at their levels in 2008 when the global financial crisis began. Talk about the death of the super-cycle appears premature," the report said.
"They have risen more sharply than global economic output since 2009."
The 19-commodity Thomson Reuters-CRB index .TRJCRB surged 200 percent from 2000 to a peak in July 2008, then plunged in subsequent months as the global financial crisis hit, before recovering.
The institute says demand from China, the world's biggest consumer of raw materials, is given too much credit for the rally in commodity prices.
"McKinsey's Basic Materials Institute finds that, while demand from such emerging markets has played a major role, the changing cost of supply has also been an important factor," the report said.
"A combination of geological issues and input cost inflation has put significant upward pressure on prices."
The report does not make any forecasts, but warns about various trends.
While renewable technologies and electric vehicles could drive demand for some metals, such as rare earths, new technology could also curb demand for certain metals.
"There is a large opportunity to curtail future demand for metals through technology that increases the efficiency with which we use metals, and through increased recycling," it said.
(Reporting by Eric Onstad; editing by Keiron Henderson)