The commodity rout continues with the Terms of Trade set to slump once more coming into 2016 as the RBA released its Index of Commodity Prices.
Preliminary estimates for December indicate that the index declined by 4.9 per cent (on a monthly average basis) in SDR terms, after declining by 3.1 per cent in November (revised). The decline was led by the prices of iron ore and oil. The base metals subindex declined slightly in the month while the rural subindex was little changed. In Australian dollar terms, the index declined by 6.0 per cent in December.
Over the past year, the index has fallen by 23.3 per cent in SDR terms, led by declines in the prices of bulk commodities. The index has fallen by 17.1 per cent in Australian dollar terms over the past year.
Consistent with previous releases, preliminary estimates for iron ore, coking coal and thermal coal export prices are being used for the most recent months, based on market information. Using spot prices for these commodities, the index declined by 5.3 per cent in December in SDR terms, to be 25.6 per cent lower over the past year.
Thats a sweet unwind of a boom that was going to last decades…