RPT-COLUMN-You can now be positive on commodities, and that's a big change: Russell
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By Clyde Russell
SINGAPORE, April 12 (Reuters) - - It would be easy to dismiss the assertion by BHP Billiton Chief Executive Andrew Mackenzie that commodity prices have bottomed as the wishful thinking of a mining executive keen to see some improvement in profit margins.
While it's likely that the boss of the world's biggest mining company is hoping for an end to five years of a declining price trend for many of the commodities his company produces, there is enough price evidence to suggest he may be right.
It's probably a little too early to call for a rebound in commodity prices, and Mackenzie was suitably cautious in his comments published last weekend in The Australian newspaper.
But the fact that it is now possible to construct a narrative, with supporting price data, for even a mild recovery in commodities is something of a sea change.
For at least the past two years it has been virtually unrelenting doom and gloom in the sector, with any price rallies proving to be false dawns as the industry battled oversupply as well as slowing demand growth in top consumer China.
The oversupply was a problem the industry created for itself, having believed the hype that commodity demand and prices would rise for decades on Chinese demand, with supporting roles from India and other developing Asian nations.
The slowing demand growth in China was always inevitable, but it arrived sooner than virtually anybody expected, and given Beijing's efforts to move to a more consumer-led economy, it's not likely that China's appetite for commodities will re-accelerate any time soon. Continuación...