China Slowdown Will Weaken Commodity Shares

Morningstar equity analysts expect a structural change in demand growth from China as its economy matures and transitions toward less commodity-intensive industries

Daniel Rohr, CFA 12 October, 2017 | 2:26PM

China iron ore mine

With China’s credit growth slowing, Morningstar equity analysts continue to expect mined commodity prices to fall materially and for share prices to follow. 

With few exceptions, we continue to see mined commodity and miner share prices as overvalued, propped up by Chinese stimulus. Iron ore’s relative buoyancy since early 2016 is emblematic of most industrial commodities. The steelmaking ingredient’s Indian summer continued into July and August.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Alcoa Corp5.97 USD-1.81
Alumina Ltd1.42 AUD7.17
Anglo American PLC1,275.60 GBX4.76
Bayer AG ADR14.34 USD-0.62
BHP Group PLC1,282.60 GBX3.34
DuPont de Nemours Inc31.87 USD-1.97
Eldorado Gold Corp6.48 USD-1.97
Glencore PLC125.56 GBX4.63
Martin Marietta Materials Inc169.51 USD-6.01
Norsk Hydro ASA21.74 NOK5.43
Nutrien Ltd32.64 USD-0.49
Rio Tinto PLC3,776.00 GBX0.40
Vulcan Materials Co99.21 USD-7.54

About Author

Daniel Rohr, CFA  is a senior equity analyst at Morningstar.

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