The slowing demand for Australian commodities from China and weak sales had prompted financial services house Goldman Sachs Asset Management (GSAM) to take a negative stance on resources.
Recent research efforts into China enabled the GSAM research team to directly communicate with the people consuming commodities to form an outlook, rather than relying on government statistics, according to its head of Australian equities.
"The focus is somewhat misplaced as a gauge for commodity demand," GSAM head of Australian equities Dion Hershan said.
"There's also a fair bit of complacency for resource demand and expectations going forward."
The probability was rising for a price correction in certain commodities as consumption and production levels adjust to what is a more predictable and arguably more sustainable trajectory, which would result in a destocking phase, Hershan said.
"We are heading into one of those destocking phases. As this phase occurs, there's a real vulnerability around certain commodity prices and by implication, resource stocks," he said.
"There's some chance we could feel an air pocket for commodity demand, distinct from some sort of long-term train wreck or bust, which is certainly not our view."
There was an "infatuation" with whether or not China will have a soft or hard landing, Hershan said.
"In 2008, China had gross domestic product (GDP) growth of 8 per cent, which a lot would say is robust but commodity prices still fell by about 60 per cent in that time period," he said.
"This highlights the importance of the composition of GDP growth and equally, whether or not China's environment was in a stocking or destocking cycle for commodities."
Goldman Sachs took a narrower focus on demand patterns for three commodities in particular - iron ore, copper and coal, which were key exports for Australia.
"You can't underestimate the importance of the resources sector for the Australian equity market and the economy more broadly," Hershan said.
"Resources are probably 30 per cent of the broader equity market in Australia but spoke for about half the volatility or the movement in the market.
"Some of the hot air might come out of commodity prices, on balance that could actually prove to be okay for the Australian economy - if commodity prices were less elevated, my sense is that the Australian dollar would probably be weaker and that would take a lot of pressure off other parts of the economy."
