Most commodities suffered dramatic price declines Monday, with oil plumbing new lows as worries intensified that China's economic slowdown would slash demand from the world's top consumer of many raw materials.
"The steep fall in commodities today is all down to bearish sentiment about China with the huge rout in its equities market," Daniel Ang, investment analyst at Phillip Futures in Singapore, told AFP.
"Investors are fearing further price drops in commodities and are channelling funds to safe havens including gold and the Japanese yen."
Investors are fearful that China's faltering economy will curb demand for industrial materials that have helped feed its astonishing growth rate in recent years.
New York's benchmark West Texas Intermediate (WTI) oil for October delivery tumbled on Monday to $38.69 per barrel -- a level last seen in February 2009 -- before rebounding to just over $39.
London Brent crude prices hit a similar low at $43.28 a barrel.
A drop in buying from China, the number one energy importer, could be catastrophic for oil prices at a time when international markets are already heavily oversupplied and could soon see resurgent production from Iran after its nuclear deal.
- 'China-driven commodity sell-off' -
Mounting concern over China has also pushed several key base or industrial metals to new multi-year low levels.
Aluminium struck a new six-year nadir in Monday trading on the London Metal Exchange.
Last Tuesday copper collapsed to $4,976 a tonne -- the lowest level since 2009 -- below the psychological $5,000 barrier.
"Prices of many base metals have plunged to six-year lows on the back of the China-driven commodity sell-off," added Commerzbank analysts.
"After all, China accounts for around half of total metal demand."
Meanwhile on Monday, the Bloomberg Commodity Index -- which tracks 22 raw materials -- slipped as much as 1.7 percent to its lowest level since August 1999.
In contrast, gold has rebounded close to its highest price since early July.
"Precious metals were... higher (in the) belief that they could act as safe-haven during the Chinese crisis," noted Sucden analyst Myrto Sokou.
Investors are increasingly worried that the faltering Chinese economy, the world's second largest, could have a domino effect around the world and send the global economy reeling.
Shares on China's stock market have been extremely volatile after a huge debt-fuelled rally -- which saw the market rise 150 percent in 12 months -- collapsed in mid-June.
Beijing then intervened with a rescue package that included funding the China Securities Finance Corp. (CSF) to buy stocks on behalf of the government and barring major shareholders from selling stakes.
But global stock markets have slumped on the back of plunging Shanghai equities, as Beijing's latest intervention failed to boost sentiment over China's economy.
- 77-month low -
Chinese stocks tumbled almost 8.50 percent in value, wiping out this year's gains and sparking heavy losses in Asia and Europe.
Speculation is mounting that the government will soon announce another reserve requirement ratio cut, which will free up banks to lend more. It could also cut interest rates again, or provide more direct funding for policy-led lending.
Over the weekend, Beijing announced that its state pension fund will be allowed to buy stocks -- the latest attempt to calm the market.
However, many analysts and investors remain unconvinced by the measures.
"The People's Bank of China has spectacularly failed to stimulate the Chinese economy," said CMC Markets analyst Jasper Lawler.
Raw materials have slumped this year as concerns have mounted of weakening demand from China, the world's top consumer of everything from industrial metals and energy to food.
Fears were piqued when China devalued the yuan two weeks ago, a move many took as a signal the economy is in worse shape than thought, and which could hurt Chinese purchasing power for dollar-denominated commodities.
Fresh falls in commodities follow weak Chinese manufacturing data on Friday that showed activity slowed to a 77-month low, sparking a selloff in London that saw industrial metals and agricultural commodities slip to multi-year records.