Industrial Insight

commodities | October 23, 2015

COMMODITIES

The Commodities Boom Is Dead. Long Live the Commodities Boom.

2 OCT 23, 2015 2:24 AM EDTBy David Fickling

Sorting commodities into capital products that we use once, and operational ones we use again and again, helps make sense of what BHP Chief Executive Officer Andrew Mackenzie is up to.

Steel had a remarkable ride in recent years as China built 36 million new homes and a 19,000-kilometer high-speed rail network. Its main raw materials — iron ore and coal — took up more than half of BHP’s capital spending budget in 2010. That era is past: China’s production of rebar for reinforcing concrete peaked in June 2014, and the floor space of buildings under construction slowed to its most sluggish pace since at least 2005 in August. But while building work soars with a strong economy and plunges when it weakens, oil demand has remained relatively consistent for a decade:

China's oil demand and construction

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