Why are commodity prices falling?

[Yelnoc]

I have my own opinions, but I'd like to hear everyone else's theories.

[Oakvale]

I read this pretty good piece on just this earlier today! http://www.economist.com/news/finance-and-economics/21661675-decade-bingeing-raw-materials-may-leave-even-longer-hangover-goodbye

[Simfan34]

I have my own opinions, but I'd like to hear everyone else's theories.

In short: falling demand from China and a rising dollar.

The sad thing is this would be the perfect opportunity for us to pour money into infrastructure investments with such low commodity prices. But, of course, we're doing no such thing. And African economies dependent on exports to China and cheap credit from that country would have missed an opportunity to painlessly restructure and instead find themselves in hard times.

[Clarko95 📚💰📈]

The end of the Fed's QE plays a role here, no?

[Simfan34]

The end of the Fed's QE plays a role here, no?

Which has led to the rising dollar, yes.

[Yelnoc]

Commodity prices are falling because consumer demand (in particular from Chinese firms) is falling. That's a no brainer. But why is global demand so weak?

[The Free North]

Commodity prices are falling because consumer demand (in particular from Chinese firms) is falling. That's a no brainer. But why is global demand so weak?

Slowing economic growth in developing markets.

[rdouty]

Commodity prices are falling because consumer demand (in particular from Chinese firms) is falling. That's a no brainer. But why is global demand so weak?

I don't believe it's as simple as that. The only real weak part of the Chinese economy is the heavy industry sector.

Opex commodities (oil and gas) still experiencing mid single digit y/y demand growth in china -- the drop in price for these commodities definitely stems from continuous supply growth.

Capex commodities (steel, iron, coal) are experiencing the mid single digit demand declines y/y in China. This is coupled by supply growth in iron ore, copper, etc above 10 year trend.

[🦀🎂🦀🎂]

Fracking is a huge portion of it, both in terms of the oversupply of oil and the subsequent attempts by OPEC to destroy it; as well as the subsequent glut of displaced American coal coming into the overseas trade competing with the oversupply from other coal mines at the worst possible time (when Chinese demand for both thermal and coking coal was collapsing). The question is, is this a cyclic thing or is the coal market in a structural decline as demand falls?

 Of the major players, the Chinese are cutting back on coal imports surprisingly quickly, the Indian coal market is an enormous state of instability at the moment, as are the South Africans, and the coal plants in Germany/Britain/Canada/America seem to be dying a slow death. Only SE Asia (the Phillipines/Indonesia/Thailand/Vietnam) and the Balkans offer a real chance for growth in the thermal sector. I think this coal glut is only going to get worse (RIP AUSTRALIA)