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Javier Blas is commodities editor at the Financial Times

The equity sell off of the last 48 hours is evoking the memory of the start of the financial crisis in mid-2008. Oil and other commodities prices have fallen, although from historically high levels. The big fear -- reflected in a dramatic sell off of natural resources stocks -- is that the commodities boom is over, with raw materials set to drop sharply.

Oil has indeed fallen sharply, with Brent trading on Friday morning around $105 a barrel, down from a peak of about $125 a barrel after the start of the civil war in Libya. Copper and other base metals have also fallen, but remain higher than a year ago. Agricultural prices have dropped somewhat, but continue to trade high on the back of supply worries. Bulk commodities are the exception, with both iron ore and thermal coal on the rise.

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Is the commodities boom over? The fundamentals still look robust, but the economic outlook is deteriorating rapidly, particularly in developed countries. Oil is a good example: U.S. and European demand has fallen significantly over the last past two months, while Chinese consumption growth slowed down to a year's low in June.

According to the International Energy Agency, global oil demand growth, which averaged last year 2.8 million barrels a day, slowed to 0.7 million b/d year-on-year in the second quarter. It was 2.2 million b/d between January and March. The impact of plus-$100 a barrel oil prices, together with softer economic growth, appear behind the slowdown.

Oil analysts, who forecast oil consumption growth of 1.5-1.7 million b/d for 2011 as a whole only a few months ago, are now scaling down their numbers to around 1-1.1 million b/d. It could be worse. As the crisis of 2008 taught the market, the economic uncertainty would lead consumers to draw down stocks, cutting apparent demand growth temporarily.

Yet industry executives from oil companies and miners say that overall commodities demand remains robust, with little sign of a marked slowdown in China.

The companies had better believe in that outlook.

Cost inflation means that their margins have narrowed over the last two years. Labour costs in Australia have increased by 40 per cent over the last two years for some miners. So if prices continue to drop, their profitability would suffer more than it did in 2008. Over the medium term, the surge in production costs also means that commodities prices would find higher support levels as supply would be curtailed earlier. But the medium-term is a very long period for the chief executives of the world's largest natural resources groups.

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