What do Australian Mining Trends Tell us About Raw Material Prices?

Australia has thoroughly enjoyed the boom in its mining sector that started around the time China entered the WTO in 2001. The additional demand for raw materials from China and other EMs induced higher prices and the predictable supply side response of more capacity (i.e. CapEx) from Australian producers. Indeed, mining CapEx (blue line in chart 1 below) increased 10x from 2001-2011 as the CRB Raw Materials Index (red line in chart 1 below) increased from about 220-600. But raw materials prices as defined by the CRB peaked in 2011 and have been basically flat for more than two years. Australian mining CapEx peaked a bit later, in 2012, but has been in clear decline since then. What's even more interesting, however, is that corporate expectations for mining CapEx (blue line in chart 2 below) have also clearly hooked lower suggesting continued weakness in raw materials prices going forward. This would seem to make sense as the growth rate of Chinese fixed asset investment continues to slow (last chart).