Blackrock sees commodity prices down for years

SYDNEY, Nov 25 (Reuters) - Commodities markets are facing years of depressed pricing as users of everything from Malaysian tin to South African platinum see orders dry up and cancel raw material shipments, BlackRock World Mining Fund, the world's largest commodities fund, said on Tuesday. Steel makers worldwide are reducing inventories rather than make more steel, lowering demand for iron ore and coking coal, while a collapse in car making has left South Africa's once-booming platinum industry in tatters, Evy Hambro, the $4.7 billion fund's manager told a media teleconference. Tin production alone is down 20 percent in the last few months and armada-sized fleets of empty oil and ore freighters idle off once-bustling ports in Singapore and China. "It doesn't matter which commodity you are exposed to, they all are doing it tough," Hambro said during a visit to Sydney. He predicted the "total and utter collapse in demand" underway is likely to last for the next tree to five years at least. "We've even had some companies coming through our offices in London telling us that even if they were giving away the products, their customers simply wouldn't take them," he said. In sharp contrast to a few months ago, when buyers were stepping over each other to get their hands on limited supplies of steel, aluminium, copper and other industrial staples, the global financial meltdown is turning the commodities sector upside down, according to Hambro. "The forced deleveraging that's taking place in financial markets has created necessary sellers meeting with reluctant buyers," Hambro said. A lack of credit available to commodities traders, which is forcing even more tonnages on to already-flooded markets at bargain-basement prices, was exacerbating the situation, and resulting in forced liquidations of physical metal, he said. Production cuts by suppliers were so far insufficient to combat the oversupply, he said. Oz Minerals Ltd said on Tuesday it would reduce production at its loss-making Century zinc mine in northeast Australia by almost 4 percent to 495,000 tonnes in 2009 from a forecast 515,000 tonnes. Mining heavyweights Vale and BHP Billiton Ltd/Plc have already turned down iron ore production in Brazil, while Rio Tinto is cutting fourth-quarter output in Australia 10 percent.