George Lekakis
February 03, 2009 12:00am

COMMODITY prices staged a minor recovery in January but international demand for most base metals continued to slide, according to official data released yesterday.

The Reserve Bank's index of commodity prices rose 0.8 per cent in foreign currency terms, as prices for gold, wheat and nickel all retrieved some of the ground lost in 2008.

However, the rise in these commodities was undermined by falls in prices for steaming coal, barley and aluminium.

Despite the recovery in the overall index, all commodities except for precious metals such as gold and platinum continued to trade at least 20 per cent below the highs touched in the middle of 2008. Most base metals including nickel and zinc are trading more than 50 per cent below their peaks.

Further downward pressure is expected to weigh on the index in May after new contract prices for bulk commodities such as iron ore and coal are captured by the index.

The depressed outlook for commodities is linked closely to the downturn in industrial activity in China where unemployment is taking off.

About 20 million migrant workers in China have lost their jobs or are unable to find work due to the economic downturn, according to a top government official reported by the AFP wire service.

"Because of the economic downturn, about 20 million rural migrant workers have either lost their jobs or have not yet found employment and have gone home to the countryside," said Chen Xiwen, a senior rural planning official.

The figure marks a huge increase from previous numbers released by the government.

The National Bureau of Statistics last month indicated that the number of migrant workers who lost their jobs due to the crisis was about six million.

The plight of the migrant workers is monitored carefully by the government, who are worried about the potential for social unrest.

Approximately 130 million rural dwellers in China have left their homes to seek work in the cities, finding employment in the labour-intensive industries that have supplied the world with cheap consumer goods in recent years.