Coal and power benchmark futures prices have fallen to their lowest levels since late 2010, while the Baltic Dry Freight Index, a barometer of demand for shipping, is languishing at a three-year low.
All three reflect softened demand from industries such as chemicals, autos and construction, as well as utilities.
In oil the picture is less clear, with prices finding support from Washington’s pursuit of a comprehensive embargo on Iranian oil and Tehran’s threat to block the vital Strait of Hormuz shipping route.
“Oil is not a particularly good indicator of the health of the global economy because it is dominated by geopolitical factors which are not fundamental,” said Eugen Weinberg, global head of commodities research at Germany’s Commerzbank.
Goldman Sachs in a recent research note outlined what it called a “bleak outlook for economic activity in the Euro area.” It expects GDP for the euro zone to fall by 0.8 percent in 2012 and grow by just 0.7 percent in 2013.
Industrial activity outside the euro area had also weakened by the end of 2011, the US investment bank said.
“Coal, power and freight are better indicators (than oil), and an even better one is the industrial metals market,” Commerzbank’s Weinberg said.
Industrial metals prices have fallen to levels not seen since late 2010, although steep drops in late 2011 mean that restocking since the beginning of the year has lifted prices.
“Industrial metals point to a low level of gentle growth,” Weinberg said.
Of course, each market is impacted by specific price factors, but the underlying weakness across these markets stems from fears of a gloomy 2012 ahead for Europe and others.
Coal future prices, or what the market is willing to pay now for delivery a year hence, have fallen almost 6 percent since the beginning of the year, the European API2 contract shows.
They are around half the record $200 a ton seen in the autumn of 2008.
“The macro outlook is bearish, that’s the underlying factor, there’s just no demand for coal,” a coal trader with a major European utility said.
“We are still bearish with respect to the forward curve in 2012, but bullish for the following years,” French bank Societe Generale said.
Low coal shipments have helped pull down the freight sector, where a growing surplus of vessels also weighs on the market.
Rates to ship dry commodities, as measured by the Baltic Exchange’s main sea freight index, are at their lowest level in nearly three years.
“An overwhelming number of vessels were looking for business with little cargo to be shipped,” ship brokers BRS said.
Although much more regional by nature, benchmark wholesale power prices also reflect the bleak economic outlook.
German wholesale power prices reflect the health of Europe’s biggest economy and key are power purchases by industries such as chemical and auto firms for the coming year.
Prices for delivery in 2013 at just over 50 euros per megawatt-hour (MWh) are at their lowest level since late 2010, and key European gas prices have seen similar drops.
A key question then for analysts is when or if oil prices will begin to more fully reflect the weak economic outlook.
The front-month Brent crude oil price is off just two percent so far in 2012. While down from a high above $126 a barrel last April, current levels around $112 remain well above those seen during a 2008-2010 slump of approximately $36-$95.
“In the short term, with the sovereign debt crisis and European credit downgrades showing their ugly heads again, and with fundamentals not nearly as strong as Q3 last year, prices may come under some downside pressure,” Barclays Capital said in a research note.
