(MENAFN- Khaleej Times)A collapse in commodity prices prompted by a slowdown in the world's most vor Wacious consumer China has rocked financial markets and sent Russia Brazil and even Canada into recession.
But for much of the world the crisis may in fact be good news. China accounts for 40-50 per cent of the entire world's demand for commodities according to a review of the price slump by credit rating agency Standard & Poor's. So as the world's second-largest economy tries to shift from an investment-led model that hoovers up commodities towards one of slower consumer-led growth it has prompted a dizzying decline in prices. "Signs of concern over Chinese economic growth send shockwaves across commodity prices" Standard & Poor's said in a report. The world's most important raw material - crude oil - has roughly halved in price in a year. Iron ore has taken a similar dive. Other commodities from coal to copper soya to sugar have slumped by 20-40 per cent. "The fall in commodity prices has looked particularly dramatic because it has included oil" said Julian Jessop chief global economist and head of commodities at London-based research group Capital Economics. While many raw materials have been declining in price since 2011 when China's boom began to slow oil prices had been propped up by supply concerns after the Arab Spring shook up some of the world's top producers Jessop said in an interview. "Once the concerns about the potential threat to supply from the Arab Spring disappeared and were replaced by the reality of massive oversupply because of the shale revolution in the US and Opec's response of keeping production high when people had thought it might cut then oil tanked" analyst said.
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