The bulk commodities market is sluggish, and industrial gases are on a downward trend – what lies ahead?

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Last Friday (November 6), the United States released its October non-agricultural employment report. The expected increase in non-agricultural employment for October was 182,000 jobs, while the actual increase was 271,000 jobs, marking the best performance of the year so far. Such impressive figures indicate a strong recovery in the U.S. labor market. Speculations regarding an interest rate hike by the U.S. dollar have been circulating for almost a year now; just last week, Federal Reserve Chair Yellen made it clear that if the upcoming data align with expectations, then it would be appropriate to take action to raise interest rates in December. It can be concluded that, following the significantly better-than-expected non-farm payroll data last week, a rate hike by the Federal Reserve this year is almost a certainty. If the Federal Reserve announces rate hikes in December, global dollar liquidity will shrink and real dollar interest rates will rise. As a result, the prices of international commodities, which are priced based on the risk-free interest rate in dollars, need to be reevaluated. Affected by both a strong dollar and a slow global economic recovery with weak demand, commodity prices are likely to decline. On the other hand, market trends also confirm this point: last week the U.S. dollar index rose sharply, while commodity prices suffered heavily; industries closely related to industrial gases, such as steel, coal, crude oil, and chemicals, all saw significant price drops, and a recovery in commodity prices seems far off. The industrial gases industry is also unable to stay immune to these challenges: weak demand and continuously falling prices. What lies ahead for industrial gases?