[ennui2]

Copper and high-quality metallurgical coal have a similar constraint as oil---the remaining reserves are dispersed

Sure, if you limit yourself to freshly mined. But copper can be recycled, unlike fossil-fuels. I also don't think it's fair to judge economic activity solely on the amount of construction going on.

[Pops]

But copper production isn't falling by much

[opps, forgot this]





A lot of what we are seeing is overproduction brought about a decline in the 14% YoY growth rate of China — a 49% investment rate, pretty well unheard of and a large portion of that was construction.

In the back of my mind it seems like it could be written in the history as a master stroke by the China government to get in the final big push before the real limits kick in.

But that is just my way my knee jerks ...

.

[davep]

One of the reasons I am not a doomer per se is I believe the consruction recycling will become the major industry in the future.

I watched a program on French TV the other day where they showed how 98% of a car is recycled, including all the various metals including copper. Finding old landfill sites will surely one day become like hitting a rich seam.

[kublikhan]

No country anymore is on a building binge. Low demand even in the face of low prices, not supply, created a supply-constrained environment.

Low demand growth would be more accurate. Coal and oil demand are growing, as is world gdp in general, just not as fast as before. However coal producers were still expanding production as if the Chinese building binge would continue forever. It didn't. It's slowing down. Thus we have supply expanding faster than demand. This lead to an enviornment where there is a glut. Not supply-constrained. Similiar situation in the oil market.

Global demand for coal over the next five years will continue marching higher, breaking the 9-billion-tonne level by 2019, the International Energy Agency (IEA) said in its annual Medium-Term Coal Market Report released today. The report notes that despite China's efforts to moderate its coal consumption, it will still account for three-fifths of demand growth during the outlook period. Moreover, China will be joined by India, ASEAN countries and other countries in Asia as the main engines of growth in coal consumption, offsetting declines in Europe and the United States. “We have heard many pledges and policies aimed at mitigating climate change, but over the next five years they will mostly fail to arrest the growth in coal demand.”

Global coal demand growth has been slowing in recent years, and the report sees that trend continuing. Coal demand will grow at an average rate of 2.1% per year through 2019, the report said. This compares to the 2013 report's forecast of 2.3% for the five years through 2018 and the actual growth rate of 3.3% per year between 2010 and 2013.

Global coal demand to reach 9 billion tonnes per year by 2019

Global production continues to exceed demand, resulting in inventory builds. Global oil inventory builds are projected to average 1.3 million bbl/d through the first half of 2015, with the builds moderating during the second half of the year, as demand rises and non-OPEC supply growth slows. The expected inventory builds in 2015 are on top of an estimated average 0.9 million bbl/d increase in 2014.

EIA estimates that global consumption grew by 0.9 million bbl/d in 2014, averaging 92.2 million bbl/d for the year. EIA expects global consumption to grow by 1.0 million bbl/d in both 2015 and 2016.

Global Petroleum and Other Liquids

[Outcast_Searcher]

Here's a couple pretty decent slides capturing a rough picture of the overall Global economy, on Bloomberg.

Note: This data comes from a securities firm with their own axe to grind (sell stocks), but at least their research group likely knows a little about economics. And, from what I've read, what they're saying generally makes sense.

We have a MIXED global economy, not all corny sunshine OR "we can't afford gas even at $20" of the other extreme view.

http://www.bloomberg.com/news/articles/ ... big-slides

[Pops]

It may just be me but some things just don't seem usual, mostly the strong trend to deflation since 2008 - PRIOR to the oil price collapse - that sucked up all the QE that was "supposed" to lead to hyperinflation - and the fact that so many countries see the "success" of the US progrm as a reason to do their own.

Which makes the US$ very attractive as an inflation hedge.

China is a huge factor in the price of everything over the span of PO.com, their growth has fallen from 14% in '07 to around 8% (if you can believe their PR any more than any other .gov fluff).

[onlooker]

I think all this actually makes sense looking at the timeline and the underlying structure of the US and World economy. If you ascribe to consumerism being a bedrock of economic dynamism, then what you have is a combination of consumers wary of another hike in oil price and/or economic jolt such as happened in 2008 (Maybe saving instead of spending). Also, the underlying state of consumers was already weak even before 2008 as debt and lack of job creation/income reduction has been more and more weakening consumers. Another factor being the bursting of the real estate bubbles around the world and no other bubble to take its place. Finally, factor in higher prices for many commodities and one can then gauge how we have reached this point. Oil prices and China slowdown are effects of all this slowdown or deflation. All this occurring despite QE policies in many countries.

[Outcast_Searcher]

Finally, factor in higher prices for many commodities and one can then gauge how we have reached this point. Oil prices and China slowdown are effects of all this slowdown or deflation.

I agree with most of your post, but not this part.

All the commodities I tend to watch are cheap and getting cheaper. Foods like staple crops, building materials like copper, oil of course. Where are these expensive commodities (aside from the precious metals) you speak of?

Oil prices, again, seem to be largely due to excess supply from North America, led by the US and to a lesser extent Canada, and a slowing (in the past) in demand due to better fleet mileage. Which may be undone due to lower prices with buyers out to fill their craving for stupid big trucks and SUV's, and sporty cars with lots of HP and relatively scant fuel economy. (Folks in the US have very short memories, make very stupid economic decisions, and then blame job creators, the 1%, and the GOP for their lack of common sense. (Apparently as long as this works and they can, for example, get Obama to bail them out of an idiotic mortgage while blaming EVERYONE but themselves for buying a house they clearly can't afford -- in the day of the something-for-nothing crowd, this can "work" as long as the 1% is willing to stand still and pay for it).

Yes, China is growing slower, which may be putting a damper on commodity prices like base metals. Whether they (with ever more drivers) are dampening oil demand meaningfully is an open question.

[onlooker]

ummm, I thought food prices were going up , was not that the trajectory even recently?

[AirlinePilot]

Good points EXCEPT there is plenty of evidence the 2008-2009 oil price crash was a fear-response to a crashing global economy. People were fearing the possibility of a true depression, and bailing out of industrial (and related financial) assets of all kinds.

Except for sites like this, the world tends to see the banking rout due to the housing bubble and the ensuing carnage to the world's financial assets and confidence as was what caused this -- NOT $140ish oil for a few weeks in the summer of 2008.

Bingo! You win a Cupie doll.

The global economy was plateauing with 110-115$/bbl oil. It has dealt just fine with 90-100 $/bbl oil.....even eking out some ugly single digit growth, but growth none the less.

The 08 Oil price crash was short lived and was the result of asset selling. The price rise was far too short lived to result in such a demand/supply crash. It just doesnt work that way. Thats why you saw the price climb back so quickly with the birth of more easy (or even FREE) money than any capitalistic/western financial system has ever seen!

[AirlinePilot]

Vehicle efficiency gains are responsible for only a VERY SMALL FRACTION of reduction in demand. We have been over this quite a few times on this site in the last two years. The numbers for vehicle miles traveled, product supplied etc. reflect far more the hallmark of reduction in demand due to HIGH PRICE. Lower prices are only very recent but are ALREADY leading to higher vehicle miles traveled.

[ralfy]

From what I know, production costs also went up.

[Revi]

The giant machine that clothes and feeds us is breaking down. We are all slowly being left behind by what's happening. Hopefully we'll figure out something else, but it doesn't look like many people have figured it out. When they do, they'll either turn into some kind of thug or start gardening.

[careinke]

The giant machine that clothes and feeds us is breaking down. We are all slowly being left behind by what's happening. Hopefully we'll figure out something else, but it doesn't look like many people have figured it out. When they do, they'll either turn into some kind of thug or start gardening.

I vote for gardening. I can help.

[onlooker]

This is what was predicted by some people. We would see these spikes and drops along the way to exhausting the fossil fuels. 2008 saw the spike, now we are seeing the drop. I read about this reading some of the book of Richard Heinberg | The Party's Over. Other factors could be in play, but basically this see-saw effect is logical in so much as oil is the blood of the economy. Higher prices cause recession which then kills demand which in turn causes prices too drop which fuels demand raising prices and so on and so on. A classical demand - supply dynamic

[Rod_Cloutier]

The giant machine that clothes and feeds us is breaking down. We are all slowly being left behind by what's happening. Hopefully we'll figure out something else, but it doesn't look like many people have figured it out

Or the uber-wealthy can start paying blue collar folks like myself a real wage. My wife and I presently work two full time blue collar jobs so we can sit at home and stare at 4 walls. We can't go out, we can't dine out, we can't travel.We pay the bills, feed the kids, watch reruns from 40 year old tv on the internet and sleep.

I could use a 100% wage increase to start living again.

[ROCKMAN]

"Vehicle efficiency gains are responsible for only a VERY SMALL FRACTION of reduction in demand. " Exactly. As has been pointed out numerous times: while the fuel economy of NEW vehicle purchases has increased a good bit the fuel economy of the entire fleet of ALL EXISTING vehicle hasn't. The last time I saw the stat it took 4+ years for the ENTIRE fleet to improve A TOTAL of 1 mpg...not 1 mpg per year. It would take at least 10 years to see the full impact of the more efficient cars IF THOSE WERE THE ONLY ONES PURCHASED. Which certainly won't happen especially now that fuel prices have fallen.

[onlooker]

The giant machine that clothes and feeds us is breaking down. We are all slowly being left behind by what's happening. Hopefully we'll figure out something else, but it doesn't look like many people have figured it out

Or the uber-wealthy can start paying blue collar folks like myself a real wage. My wife and I presently work two full time blue collar jobs so we can sit at home and stare at 4 walls. We can't go out, we can't dine out, we can't travel.We pay the bills, feed the kids, watch reruns from 40 year old tv on the internet and sleep.

I could use a 100% wage increase to start living again.

I wonder Repent how many Americans are now like you slaves to debt and bills just eking out a living. I myself am stuck with piles of debt I cannot get out of and what is more have no intention of. I figure what for at this point?