Asian slowdown worse than expected and will bite commodities says analyst

Tuesday, 18/11/2008

A leading commodities analyst has warned the prices for base metals, oil and iron ore will fall even further as China's manufacturing sector slows.

Returning from a two week tour of the country, the ANZ's Mark Pervan says the slowdown is worse than first thought.

He says massive share market losses have reduced the wealth of China's top 20 per cent and they've stopped spending on homes and cars.

Mr Pervan expects commodity prices to continue to slide over the next year.

"Base metals might see another 10 to 15 per cent downside, I mean this is really a sentiment driven market and it's a very negative sentiment view at the moment," he says.

"In the iron ore market, I've made a very bold call and suggested that prices could halve next year. [What about oil?] Oil's got another 20 per cent downside."