The world's leading commodities index slumped to a 12-year low this week, surpassing the previous trough during the global financial crisis.
The Bloomberg Commodities Index, which tracks the global prices of 22 commodities such as gold and oil, collapsed to its lowest point since August 2002, hitting 98.76 points by late trading on Thursday afternoon.
This reflected the broader downward trend of the commodities market over the past few years, driven largely by China's slowing demand, CLSA's head of resources research Andrew Driscoll said.
"It's a combination of slowing economic growth in China, coupled with a supply growth in response to an upcycle in prices.
"In the mid-2000s China's GDP was growing at over 10 per cent. Over the last few years, China's economy has started to rebalance and its GDP growth is around 7.5 per cent now."
Leading the plunge has been the rapid slide of oil prices. International benchmark Brent Crude has tumbled almost 60 per cent since its June 2014 high of $US115 a barrel. It was fetching $US49.13 a barrel on early Friday trading.
A global oil glut, triggered in part by the booming United States shale industry, and weakening demand was to blame, Mr Driscoll said.
"In response to a period of high prices, there's been investment in new supply, and that new supply has been hitting the market in a weaker demand environment."
Silver futures have fallen through the previous floor of $US18.36 an ounce in June 2013. It declined a further 7 per cent over the past week to hit $US16.99 an ounce on Friday morning.
While the Bloomberg Commodities Index is significant globally, local analysts tend to leave it aside because it does not include iron ore and coal, which are not set on global exchanges.
Domestically, the commodities slump has been reflected in the RBA Commodities Index, which has declined 18.7 per cent since the start of 2014.
While the commodity decline had obvious implications for Australia as a big commodity producer, the falling Australian dollar was providing a buffer of sorts, Mr Driscoll said.
"This means in Australian dollar terms the falls haven't been nearly as significant as they have been in US dollars, and that's helpful for Australian producers."
In its outlook for the 2015 commodity markets, Mr Driscoll said CLSA had a preference for base metals, such as copper, aluminium and nickel, over bulk commodities, such as iron ore and coal.
"This is because base metals tend to be more mid and late cycle. They go into things like appliances and white goods, and will benefit from the ongoing rising consumer spending in China and should see good growth through the 2020s."
