SINGAPORE (BLOOMBERG) - Commodities sank to the lowest level in 16 years as China's economic slowdown exacerbates gluts of everything from oil to metals.
The Bloomberg Commodity Index, which tracks 22 raw materials, lost as much 1.1 per cent to 86.8556 points, the lowest intraday level since August 1999. The gauge, which was at 86.8620 points at 10.30am in Singapore, has dropped for the past four years.
Brent crude slid below US$45 (S$63.70) a barrel on Monday (Aug 24) for the first time since 2009 after Iran vowed to raise supply at any cost to defend market share.
Raw materials are in retreat as supplies outstrip demand amid forecasts for the slowest Chinese growth since 1990. The largest user of energy, grains and metals was much weaker than anyone expected in the first half of the year, according to Mr Ivan Glasenberg, head of commodity trader Glencore.
Brent for October settlement declined as much as 2 per cent to US$44.55 a barrel on the London-based ICE Futures Europe exchange, the lowest price since March 2009. Copper on the London Metal Exchange lost 2.1 per cent while wheat futures in Chicago fell 1.2 per cent.
While there is speculation that financial-market turmoil may prompt the Federal Reserve to delay an increase in US. interest rates, the dollar is still 16 per cent higher over the past year, making commodities more expensive for holders of other currencies.