Have we seen the bottom of the commodity super-cycle?
Everyone remembers the drama of the technology bubble: the mega deals, the colourful chief executives and the subsequent spectacular bust.
Far less sexy, but equally profound for many investors, was the commodities super-cycle - the huge boom that saw natural resources companies achieve sky-high valuations on the back of China's industrialisation.
The popularity of natural resources companies started almost as soon as the technology bubble had finished, as the market searched for a new story. After all that blue-sky thinking and new paradigms, it was reassuring to back companies that dealt in something tangible. What could be more tangible than oil, steel, copper or iron ore?
The growth of China was the catalyst. In the years between 1998 and 2007, China's GDP grew at an average rate of 9.9 per cent.
RESOURCE-HUNGRY CHINESE GROWTH
More importantly, this was resources-hungry growth: the country was industrialising at a dizzying pace, building new cities and infrastructure. In doing so, it threw off unprecedented demand for commodities, particularly base metals, and prices soared.
Olivia Markham, manager of the BlackRock Commodities Income Investment Trust, says: 'The super-cycle started in 2001/02, following the unprecedented growth in demand that came from the rapid urbanisation occurring in China.
'The mining sector had come out of the late 1990s with very little new supply entering the market. This meant there wasn't enough supply to meet the new demand and prices rose.'
Iron ore was a good example. Its price rose 15-fold between 2005 and 2011, peaking at $187 a tonne in February 2011. This was good for groups such as Rio Tinto, where the share price rose over 100 per cent in the two years to 2008. Anglo American shares rose from 1,300p to 3,500p over the same period.
Anna Stupnytska, global economist at Fidelity International, points out that commodities prices were also supported by accommodative monetary policy from developed market central bankers.
Interest rates were probably lower than they needed to be, given the level of economic growth. This drove liquidity and fuelled the boom.
Like all good booms, there was much financial indiscipline. Companies spent huge amounts trying to bring supply on stream quickly. There was a wave of consolidation activity and vanity mergers.
There were big company deals such as those between Barrick Gold Corporation and Equinox Minerals, but merger mania also saw a number of smaller, single commodity producers snapped up by larger rivals.
Markham says: 'Companies focused on growth and capital spending. They wanted to grow production at almost any cost and capital allocation was very poor.'
Nevertheless, in the short term, those fund managers with an allocation to the sector could do no wrong.
James de Bunsen, fund manager in the multi-asset team at Henderson Global Investors, says: 'Particularly in the UK, if a fund manager was a believer in the commodities trade while it was working, it almost didn't matter what they did elsewhere. It was a major influence on returns.'
Commodities became a significant part of the blue-chip index - almost 20 per cent at one point.
De Bunsen says the boom also spurred product innovation within asset management. There was a wave of ETFs launched, designed to capture the investment demand.
A number of sector funds came to the market. Commodities were increasingly seen as an important source of diversification and return in investment portfolios.
PLENTY OF CASUALTIES AS PRICES PLUMMET
Inevitably, it started to go wrong. Expectations were too high. Stupnytska says: 'Higher prices had spurred innovation, such as the shale industry in the US. With that and higher production elsewhere, there was an oversupply of commodities.
'The macroeconomic environment was more sluggish, with huge debt and very low growth. However, the main trigger was China slowing. This saw a major repricing of commodities.'
It didn't happen all at once. Markham says that while the mining sector was hit hard in the global financial crisis, it experienced a relatively buoyant recovery. It is only in the last four years that the sector has been in real trouble.
She adds: 'People's expectation of the growth of Chinese demand started to change, but supply in the mining sector takes a long time to respond.'
There were plenty of casualties among the fund management groups. The natural resource specialist funds had a torrid time. The JPMorgan Natural Resources fund, for example, saw double digit falls in each year between 2012 and 2015.
Investment trusts also suffered as poor investor sentiment saw discounts widen at the same time as asset values fell. Notable casualties were Baker Steel Resources, down 69.9 per cent over five years, and New City Energy, down 62.1 per cent.
It also hit other UK funds with a large weighting in natural resources companies; perhaps the highest-profile example of this was the M&G Global Basics fund. The fund had been built on ongoing emerging market demand for 'basics' such as commodities.
As China faltered, the thesis was found to have a shelf-life and after a run of poor performance, manager Graham French left in 2013. The fund has since been repositioned.
Trackers also had a difficult time. The UK's major indices had built up a relatively high weighting to mining companies during the boom.
These businesses had also proved a valuable source of dividends - another knock for income seekers, who had only just recovered from the blow inflicted by the banking sector on dividend payouts.
There have been a number of attempts to call a turn in sentiment towards natural resources companies and therefore a recovery in prices. It appears that it may finally have arrived, with the sector staging a significant recovery since the start of the year.
Supply has come out of the market. Markham says: 'Capital expenditure has come down 60 per cent from 2012.' Equally, Chinese growth has proved more resilient than many feared.
There are other supportive factors for the commodities sector. For example, Markham adds: 'If we are going to see governments start spending on infrastructure projects, it could be positive for the mining sector.' This looks like a real possibility as governments try to come up with alternative solutions.
However, Stupnytska believes it would be premature to call the end to the disruption in commodity prices just yet. 'It will probably take another two to three years for the supply side to shrink,' she says.
'It would be complacent to assume we've reached the bottom and we're staying there. There are so many events that could happen.'
Will there ever be another China? Probably not. Nevertheless, there are economies moving up the scale - India, for example - which may prove supportive for commodity prices in the longer term.
However, commodities have proved themselves a volatile and unpredictable asset class and many investors won't be tempted back in a hurry.