Both sources shows the sudden demand of metal in China. The global finance crisis had strike the metal companies really hard and many companies were forced to shut down because of bankrupt. They did not want to drop their price down, but yet excess supplies kill them.
Due to the excess of supplies and prices of metals did not drop, companies can not sell their products (or if they did, they made losses), thus a crash had happened.I think the podcast is indicating the suppliers will not drop the prices from D1 equilibrium to D2 equilibrum (shown in my video)
Due to the excess of supplies and prices of metals did not drop, companies can not sell their products (or if they did, they made losses), thus a crash had happened.I think the podcast is indicating the suppliers will not drop the prices from D1 equilibrium to D2 equilibrum (shown in my video)
please watch my video!
This incident reminds me of Wall Street Crash 1929 that led to Great Depression. The false and overlooked expectation are mainly the reason of both of these crash. People would though that market price will go up infinitely
The Roaring Twenties, the decade that led up to the Crash, was a time of wealth and excess. Despite the dangers of speculation, many believed that the stock market would continue to rise indefinitely. On March 25, 1929, however, a mini crash occurred after investors started to sell stocks at a rapid pace, exposing the market's shaky foundation.- Wikipedia about 1929 Wall Street Crash
While I am searching for market crash in Youtube, I found out the Dow Jones Crash in 2010. However, this crash is due to Flash Crash. Flash crash occurs for a short amount of time, but the market is recovered within a short time. (A flash crash is a very rapid and deep fall in stock or security prices followed by an immediate rebound to approximately the previous price occurring within a short timeframe.-Wikipedia)
I decide to check out the demand of metals in China again. And according to the article, China's demand of metals rise and China is recovering and gaining its strength back. http://www.reuters.com/article/2013/09/02/markets-metals-idUSL6N0GY19I20130902