To determine whether the commodity market is really from the “bear” to “cattle”, must have three conditions: First, the continuing upward trend in market conditions; Second, the market rise in demand from the rise in demand; Third, the strong growth in demand Sustained, driven mainly by long-term factors.It now appears that the above three conditions are already available, commodity bear market is coming to an end, into a new rising cycle, which opened a new bull market.
One reason is that China and the US economy to stabilize speed, market demand to return to strong.
The sustained and stable growth of the economy is the basis of strong demand for commodities, as well as the main features of the commodities transferred from “bears” to “cattle”. According to statistics, in three quarters of 2016 the Chinese economy (GDP) an average annual growth rate of 6.7%, expected fourth quarter economic growth may be higher than the first three quarters of the level, indicating that the Chinese economy began to stabilize, continue to fall space is not.
The second reason is that infrastructure investment plays an engine, and strong demand is stable and lasting.
It is expected that in the coming period, China will continue to invest heavily in infrastructure projects and replenish the national economy as the most important measure for China’s steady economic growth. Trump, the newly elected president of the United States, is also aiming to rebuild infrastructure, transform roads, railways, bridges and airports across the United States.
The third reason is “along the way” building into the global infrastructure, providing new impetus to demand growth.
Today’s world economy there are three major problems: First, the lack of strong economic growth engine demand, a single monetary easing is difficult to reverse the recovery situation. Second, there is a huge world infrastructure debt, the international authority of the forecast of up to 70 trillion US dollars, a serious constraint to the sustainable growth of the world economy. Third, the rise of global trade protectionism, the world snatches both “cake” conflict of interest intensified. It is in this context, China “along the way” economic development strategy came into being, for the establishment of Asia Investment Bank, to provide financing for the construction of infrastructure within the scope of global services.
The fourth reason is that the global manufacturing industry back to Wang.
Economic growth stabilized rebound, the market demand gradually turn, resulting in manufacturing orders began to increase. Manufacturing is the most important direct consumer of commodities, such as China’s metal manufacturing industry consumes more than 5 percent of the world’s high-grade iron ore and copper concentrates. With the global manufacturing industry to pick up, and the trend of enhanced, of course, to promote the demand for commodities back to strong.
Commodity bear market tends to end, open a new bull rising cycle, will not be smooth sailing. Due to a variety of factors constraints and repression, the process is more slow, tortuous hard, and thus led to the sharp fluctuations in market conditions, rose after the crash, . Even so, the new commodity rising cycle is still worth the wait.