https://www.miningweekly.com
Building|Cement|Construction|Copper|Energy|Industrial|Infrastructure|Lifting|Power|Solar|Steel|Storage|transport|Products|Infrastructure
Building|Cement|Construction|Copper|Energy|Industrial|Infrastructure|Lifting|Power|Solar|Steel|Storage|transport|Products|Infrastructure
building|cement|construction|copper|energy|industrial|infrastructure|lifting|power|solar|steel|storage|transport|products|infrastructure

China’s commodities eye banner year as focus shifts to stimulus

2nd March 2023

By: Bloomberg

  

Font size: - +

Evidence of China’s rapid economic rebound has reignited hopes of a banner year for demand in the world’s top commodities importer. How Beijing chooses to support the recovery at its upcoming annual policy meeting will now be the focus of markets from copper to crude and soybeans.

China’s reopening, and the policy measures that accompany it, are likely to raise demand and prices across a raft of raw materials after the final throes of Covid Zero caused consumption to nosedive last year. But the nature of that support could be crucial to sorting out which markets win most from the government’s renewed focus on economic growth.

The population’s newfound freedom has buoyed sentiment around commodities like oil and fuels, which are keyed to improved mobility after years of lockdowns and transport restrictions. In contrast, metals and power markets have been slower to see the benefits after the Lunar New Year holiday in January dented industrial activity.

President Xi Jinping has made lifting domestic demand a priority. That could signal less emphasis at the National People’s Congress, which begins on Sunday, on Beijing’s usual means of boosting the economy via infrastructure investment. The unexpectedly robust revival in factory activity in February could also douse expectations that the government needs to raise direct spending to keep the economy on track.

If policymakers opt to favor consumption, perhaps via measures to expand credit, then markets for items such as crude, gasoline and derivative products like plastics will reap the reward. Although more spending on consumer goods like cars and appliances will lift metals usage, it’s unlikely to offset the much bigger demand from the airports, railways and bridges that China has built in the past.

Despite the mounting strain on government finances, Beijing can’t ignore infrastructure spending because so much of the economy, which includes the world’s biggest steel, cement and aluminum industries, is geared toward construction. And many of these firms are state-owned.

UBS Global Wealth Management thinks the Congress will set China’s growth target this year at 5% or more, after the economy grew just 3% in 2022. To support that, it expects local government bond sales, the backbone of infrastructure investment, to be at least as high as last year’s 3.65-trillion yuan ($530-billion).

But the type of investment is changing, particularly in light of the climate emergency. That means more solar farms, power storage facilities and expansions of the grid are on the cards, perhaps using less steel and cement but requiring more materials like copper and aluminum that are deemed critical to the energy transition.

The beleaguered property market also remains crucial as a source of commodities demand, mainly in terms of building materials but also the purchases that often accompany a new home. So any further measures to shore up that sector will be closely watched.

“The NPC is expected to stimulate both consumption and infrastructure,” said Wei Lai, an analyst with Zijin Tianfeng Futures Co. “If it can also soften its tone on curbing the property sector, or stress its support for private enterprises, that would be something beyond expectations."

Edited by Bloomberg

Comments

Showroom

Condra Cranes
Condra Cranes

ISO-certified Condra manufactures overhead cranes, portal cranes, cantilever cranes and crane components: hoists, drives, end-carriages, brakes and...

VISIT SHOWROOM 
Weir Minerals Africa and Middle East
Weir Minerals Africa and Middle East

Weir Minerals Europe, Middle East and Africa is a global supplier of excellent minerals solutions, including pumps, valves, hydrocyclones,...

VISIT SHOWROOM 

Latest Multimedia

sponsored by

Hyphen, Eva mine, ferrochrome price make headlines
Hyphen, Eva mine, ferrochrome price make headlines
27th March 2024
Resources Watch
Resources Watch
27th March 2024

Option 1 (equivalent of R125 a month):

Receive a weekly copy of Creamer Media's Engineering News & Mining Weekly magazine
(print copy for those in South Africa and e-magazine for those outside of South Africa)
Receive daily email newsletters
Access to full search results
Access archive of magazine back copies
Access to Projects in Progress
Access to ONE Research Report of your choice in PDF format

Option 2 (equivalent of R375 a month):

All benefits from Option 1
PLUS
Access to Creamer Media's Research Channel Africa for ALL Research Reports, in PDF format, on various industrial and mining sectors including Electricity; Water; Energy Transition; Hydrogen; Roads, Rail and Ports; Coal; Gold; Platinum; Battery Metals; etc.

Already a subscriber?

Forgotten your password?

MAGAZINE & ONLINE

SUBSCRIBE

RESEARCH CHANNEL AFRICA

SUBSCRIBE

CORPORATE PACKAGES

CLICK FOR A QUOTATION







sq:0.145 0.178s - 91pq - 2rq
Subscribe Now