A major bear market in the Sydney CBD is over and prices have slumped to the lowest levels since June after an upturn in commodity prices.
Key points:The market fell to a record low in July and August, when prices were up 30% from June2015 to SeptemberThis was followed by a massive drop to about $1,000 per hectare last weekAfter a 10-month boom, prices have now fallen by a third since June, after falling by 30% to about the same price point in June.
At the end of the day, the market remains far below its peak and is now heading back towards the $1 billion mark.
“There is no room for the market to grow,” the chief executive of the Sydney-based Centre for Economics and Business Research, David Boulton, told News.au.
“It has been very disappointing for many people and certainly for me personally.”
In terms of the market’s health, there is no longer room for this to go on.
“The market’s decline has come after a 10 month boom that saw the prices of a range of commodities rise from about $US40 to nearly $US60 per tonne.
It was an explosion in demand and a spike in production that was driven by China, which was sending billions of tonnes of coal to China every year.
But the boom was short-lived.
China, which is not a party to the US-China Free Trade Agreement, began slowing down its mining and mining-related industries in 2016.
That had a knock-on effect on the prices.
It is unclear how much of the price drop can be attributed to the reduction in Chinese demand.
But a major reduction in the volume of imports is expected to drive prices down further.
While the boom continued, a number of other things have also caused the market price to fall.
The global financial crisis and a recession in Europe led to a decline in commodity demand, which had a further knock-down effect on prices.
In addition, the Federal Government cut its $10 billion concessional lending guarantee to the energy sector in the September quarter.
Some of the other reasons are the impact of the global financial situation, the global downturn, the uncertainty over the Chinese economy, the impact on the dollar and so on.””
There are a number factors in play,” Dr Boulson said.
“Some of the other reasons are the impact of the global financial situation, the global downturn, the uncertainty over the Chinese economy, the impact on the dollar and so on.”
The global downturn is also a significant contributor to the fall in commodity rates and also in commodity exports.
“The outlook for the next few months is bleak.
The next big fall in the market will be the drop in commodity supply due to a prolonged drought in the Hunter region, Dr Boullard said.
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