So much for that commodity super cycle then, eh?

Rio Tinto sent a shock wave through the mining sector and triggered wider concerns about a global recession yesterday by warning of a major slowdown in China.

The company said it was revising its capital spending plans and would miss its end-of-year target of making $10bn (£5.65bn) worth of disposals.

Shares in Rio Tinto fell more than 16% and other mining stocks lost as much as 26% after the company said it was cutting production at some of its aluminium smelters. The move came as the Aluminium Corporation of China (Chalco) decided to reduce its Chinese output in response to a 40% slide in local prices over the past couple of months.

3 thoughts on “So much for that commodity super cycle then, eh?”

  1. Does this really disprove the super-cycle theory though? Long-term, China and India are still (hopefully) going to build their way out of poverty. It’s been obvious for a while that China must go through a rough patch, overbuilding before the Olympics and their biggest customer going into a nasty recession made this inevitable. It’s been funny reading the comments in the West Aussie press about how they’ll be insulated from recession by Chinese commodity demand, obviously not a lot of joined-up thinking going on over there.
    In the long run though, if 2 billion people are going to join the middle class, they will need a lot of steel, alumina, concrete, copper, oil etc.

  2. Tim,

    Never mind Rio Tinto – nearly a week ago, I blogged that the recent fall in the oil price could be the result of the market anticipating a Chinese slowdown.

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