Iron Ore and Oil Reach 2008/2009 Financial Crisis Levels

Oil, iron ore and coal are now at the price level since the start of the 2008/2009 financial crisis, signaling not only an oversupply of raw materials, but also the weakness of the global economy, analysts say.

Raw materials are particularly sensitive to the health of the global economy. Oil and coal are important sources of energy used to make steel, and iron ore is the main raw material. Iron ore prices fell to $ 69 per tonne amid weaker demand growth in the largest market, China.

Oil prices fell by almost half compared to June to just over $ 60 per barrel, while in the coal market, futures contracts fell below $ 70 per tonne to a level comparable to the decline in 2007-2009.

At first, analysts believed that this could be due to increased extraction of raw materials, as well as energy efficiency of production and the use of renewable energy sources. However, over time, it became apparent that a significant cooling in demand in emerging economies, as well as continued stagnation in developed economies, are the main reasons, especially after OPEC's announcement of its unwillingness to cut oil production to maintain its price.

Oil demand from the United States, China or the European Union is driving prices, but European economies are still struggling to recover from the 2008/2009 credit crunch, only economic growth in the United States and China is helping to stabilize oil prices. But this year, China's economy has shown signs of cooling. Iron ore is viewed as a key gauge for the health of China's economy, which is by far the largest steel producer in the world.