Hot Commodities vs. Commodity Glut?

In the red corner, weighing in at 800 pounds we have our current world champion. His simple answers are nearly always undisputed. He's the house of pain. He's the man with the plan. Please welcome, Mr. Gorilla!

Hot Commodities: Precious Metals boom in China

The answer is simple: commodities are booming in China, and commodity industry is the largest investment sector in the dragon land these days. Investors love commodities in China. No wonder, the spicy garlic is now one of the hottest agricultural commodities in China to invest in. Garlic prices have shot up by more than 50 per cent in the last few months in China that there is an acute supply vs. demand crisis on the commodity. Investing in garlic is going crazy in China that analysts are comparing the spicy stuff to gold these days!

In the blue corner, weighing in at 10,000 pounds we have our challenger. He hasn't won a fight since The Great Depression. Some say he's washed out, burned out, a has been. Please welcome, Mr. Elephant in the Room!

China's 'Made in China' Problem

The easy credit helped boost demand for commodities such as steel, chemicals, and glass. But it also led to a boom in new factories to make those goods. That may increase trade frictions if China starts exporting the excess at cut-rate prices—what trade experts call dumping. With the mainland's steel production capacity outstripping domestic demand by nearly 30%, "will they shut those plants down and lay those people off, or export their way out of it?" asks Daniel R. DiMicco, CEO of Charlotte-based steel producer Nucor (NUE). "Their tendency is to export."

China's state planning agency is warning of massive overcapacity in a half-dozen industrial sectors. Cement makers have added 600 million tons of annual production capacity this year to the 1.9 billion tons China already had. Aluminum smelters are running at only two-thirds capacity vs. nearly four-fifths last year. And over the past two years the number of Chinese companies making wind power equipment has quadrupled to more than 80.