China Is Oversupplied With Commodities as Deflation Persists

China’s commodities markets are heading into the Lunar New Year break on a glum note, with deflation embedded on both the consumer and producer sides of the economy.

Weak aggregate demand is the central issue for policymakers, but last year’s binge on imports has left a lot of commodities looking oversupplied as well. That’s particularly true for energy, which saw record hauls of coal and oil and a big increase in natural gas. Warmer weather and tepid industrial demand are likely to pressure power markets going forward. Crude consumption is also expected to softenBloomberg Terminal once the usual increase in holiday travel Bloomberg Terminalis out of the way.

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