This is nothing like the GFC in some ways it will be worse for commodity markets. This is the unravelling of two decades of unprecedented pent up demand for commodities in particular those used in the steel making industry. China has changed and the old China is never coming back. If the last 6 months haven't been proof of that I don't what is. Most commodities are in some form of major downturn.
The only reason why BHP is holding up is a/ South 32 and b/ it's giving back money. South 32 maybe a bit of a flop as overseas institutional investors maybe forced to sell their allotments because South 32's market cap won't fit into things like the FTSE 100. On top of that BHP is going to struggle to pay out dividends at these levels when they aren't making profits at any significant level.
All the salesman in the world can come on this thread and say prices are cheap things and we just about to see a turn around and sometimes they'll be right for a day or two or even a couple of weeks. But the commodities markets are lying, demand is gone and the markets are seeking equilibrium. Sometimes in getting to equilibrium, markets will overshoot. I'm prepared for a rough ride because you know when people think things are bad and markets
all around the world are at record highs then you've got something to worry about.
BHP Price at posting:
$30.19 Sentiment: None Disclosure: Held
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