**[investwise]** Ajit Dayal: Why Are Commodities Falling?

 

If you hold a lot of commodity stocks in your portfolio, you may have been frowning at their performance on the bourses recently. And the world's largest consumer of commodities offers a reason for their dull performance.China has been steadily decreasing its import of commodities.  One, because it has begun sourcing more and more of its commodity needs internally. This as it slowly reopens a lot of its capacity that it had been quick to shutdown during the downturn. Second is an element of destocking. The country has been using up some of the inventory of commodities it already has lying with itself, adding to the decline in imports into the country.  However, there's only so much destocking one can do. Thus this factor cannot sustain its self as a reason for a decline in imports for too long. Increases in domestic capacity though are likely to continue to dampen China's import needs going forward. Safe Harbor Statement: Some forward looking statements on projections, estimates, expectations & outlook are included to enable a better comprehension of the Company prospects. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints.   Nothing in this article is, or should be construed as, investment advice.

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