Straw for the Camels back, or one of a bunchgreenspun.com : LUSENET : TimeBomb 2000 (Y2000) : One Thread
Another indication that a bit here, a bit there and the house of cards will fall. Re Timothy J Wilbur
Commodities plumb 12-year lows By DAMON FRITH and AFP 7dec98 'The Australian'
COMMODITY prices are at 12-year lows but no glimmer of hope is yet showing on the horizon and expectations are that some commodities, such as oil and nickel, will go lower.
The collapse in prices has been driven by the global economic slowdown and a glut of many key commodities.
The price of crude oil is at its lowest level since 1986, with a barrel of light sweet crude skimming below $US12 and Brent crude just under $US10.
Last Thursday, copper prices dropped to a 1986 level of $US1544 a tonne.
Other metals at or near 12-year lows include nickel, aluminium, zinc and lead.
In the iron ore sector, price negotiations are expected to go badly for Australian producers with observers expecting falls of up to 10 per cent.
The plight of the metals industry has led a number of chief executives from companies such as MIM, North and Pasminco to warn of lower than expected first-half profits.
In the US, the main commodity indicator is at record lows. The Bridge-Commodity Research Bureau index has slid more than 14 per cent since early 1998, reaching a 12-year low.
The Goldman Sachs commodity index registered a 24 per cent loss over the same period, hitting a 26-year low.
"The CRB and the Goldman Sachs indexes may set new lows in the next few months," said Bill O'Neill, director of commodities research for Merrill Lynch.
The CRB index, a global reference point, combines the prices of 22 commodities including copper, tin, scrap iron, sugar, cocoa, rubber, lard and pork bellies.
George Gaspar, energy specialist at Robert Baird, predicts the price of oil could drop to below $US10 a barrel in the next six months.
Adjusted for inflation, the price of crude is roughly where it was just before the 1973 oil crisis.
"It's a demand-led slowdown in Asia, but also in the US and Europe," said Mr O'Neill.
A world oil and metals glut was equally responsible for the drop in market prices, he said.
The Organisation of Petroleum Exporting Countries' inability to agree last week to cut exports, or even maintain current levels beyond June 1999, has aggravated the situation.
To top it all off, unusually high temperatures in the US are cutting demand for heating oil and gas.
The downturn in commodity prices is also affecting agricultural commodities and tropical products.
-- Timothy J Wilbur (firstname.lastname@example.org), December 06, 1998
I predict a rapid increase in the growth of domestic gardens this spring. Follow the water. In those personal and community agricultural commodities you CAN trust.
-- Diane J. Squire (email@example.com), December 06, 1998.
Appreciate the economic info. Your point is well taken. 1926, 1927 and 1928 were non-inflationary years too, even as the economy and stock market were humming along.
-- Kevin (firstname.lastname@example.org), December 07, 1998.