{"id":13108,"date":"2015-10-07T06:36:10","date_gmt":"2015-10-07T11:36:10","guid":{"rendered":"http:\/\/olduvai.ca\/?p=13108"},"modified":"2015-10-07T06:36:10","modified_gmt":"2015-10-07T11:36:10","slug":"with-a-collapse-in-commodity-prices-what-happens-next","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=13108","title":{"rendered":"With a Collapse in Commodity Prices, What Happens Next?"},"content":{"rendered":"

With a Collapse in Commodity Prices, What Happens Next?<\/a><\/h3>\n

This has to be a scary time for virtually all commodities investors, whether one is talking about investing in commodities directly or in commodities companies. From oil to aluminum, nearly all commodities are not just trading near multi-year lows, but multi-decade lows. Bloomberg recently\u00a0noted<\/a>\u00a0that commodities are now trading at the same level they were at in the mid-1990s after a major run-up in the late 1990\u2019s and throughout much of the new millennium.<\/p>\n

This begs the question: \u2018what will it take for commodities to recover?\u2019<\/p>\n

To get to the answer, one first has to understand two important things about commodities prices in recent years. First, in recent years and up to the present, China has been consuming the vast majority of commodities. As economics website the Visual Capitalist\u00a0showed<\/a>\u00a0in a stark chart recently, despite making up only 20 percent of the world\u2019s population and less than 15 percent of global GDP, China consumes 60 percent of all concrete, 49 percent of all coal, 46 percent of all steel, and 54 percent of all aluminum among other commodities.<\/p>\n

Related:\u00a0Is Russia Plotting To Bring Down OPEC?<\/strong><\/a><\/p>\n

\"\"<\/a><\/p>\n

(Click to enlarge)<\/p>\n

The point here is that China\u2019s infrastructure boom has had a massive and unparalleled effect on global commodities demand. So much so, that China was able to temporarily offset the second important point about commodities \u2013 they have largely been declining in price not just for the last few years, but for decades. In current dollar terms \u2013 that is, non-inflation adjusted terms, commodity prices have often risen over the last century, but in real terms have generally fallen substantially over time. The 2000\u2019s led many investors to forget this trend as numerous commodities\u00a0rose rapidly<\/a>\u00a0in price.<\/p>\n

…click on the above link to read the rest of the article…<\/p>\n","protected":false},"excerpt":{"rendered":"

With a Collapse in Commodity Prices, What Happens Next? This has to be a scary time for virtually all commodities investors, whether one is talking about investing in commodities directly or in commodities companies. From oil to aluminum, nearly all commodities are not just trading near multi-year lows, but multi-decade lows. Bloomberg recently\u00a0noted\u00a0that commodities are […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2,3],"tags":[130,1851,9456,1775,5332],"class_list":["post-13108","post","type-post","status-publish","format-standard","hentry","category-economics","category-energy-2","tag-china","tag-commodity-price-collapse","tag-gap","tag-oil-price-collapse","tag-oilprice-com"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/13108","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=13108"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/13108\/revisions"}],"predecessor-version":[{"id":13109,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/13108\/revisions\/13109"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=13108"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=13108"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=13108"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}