China metals optimism
These types of official statements accentuate the positive and are filled with
platitudes. Yet there's actually some evidence that the outlook for metals
demand in the world's biggest consumer isn't as bad as the pullback in prices
the past few months might suggest.
China's exports remain strong, and some emerging industries, led by electric vehicles, are still expanding. And while the solar sector is struggling with a massive glut, installations are continuing apace.
Rio Tinto Group Chief Executive Officer Jakob Stausholm said on an earnings call Wednesday that the miner sees fairly robust and stable Chinese demand.
Taken together, that should mean the nation's consumption of iron ore as well as energy-transition metals such as copper, aluminum, lithium and nickel is unlikely to fall off a cliff.
For more evidence that we might be at a turning point, look no further than the red metal. The bellwether industrial commodity has lost almost a fifth of its value since mid-May, largely on the back of increasing pessimism over China's economic funk.
But according to traders and analysts inside the country, current copper prices hovering around $9,000 a ton may be enough to entice more demand. The key question is whether consumption was only deferred from the first half as buyers waited for prices to fall from excessive levels.
In a hopeful sign, the so-called Yangshan premium a measure of import demand has reached a three-month peak after a highly unusual dip below zero for most of May and June.
While no one is expecting a sharp jump in Chinese growth, or for Beijing to go retro with some big-bang infrastructure projects, the current economic tea leaves do offer something for the glass is half full types.
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China's exports remain strong, and some emerging industries, led by electric vehicles, are still expanding. And while the solar sector is struggling with a massive glut, installations are continuing apace.
Rio Tinto Group Chief Executive Officer Jakob Stausholm said on an earnings call Wednesday that the miner sees fairly robust and stable Chinese demand.
Taken together, that should mean the nation's consumption of iron ore as well as energy-transition metals such as copper, aluminum, lithium and nickel is unlikely to fall off a cliff.
A worker at the Zhejiang Huanergy Co. copper plant in Jinhua, China.
Photographer: Qilai Shen/Bloomberg
For more evidence that we might be at a turning point, look no further than the red metal. The bellwether industrial commodity has lost almost a fifth of its value since mid-May, largely on the back of increasing pessimism over China's economic funk.
But according to traders and analysts inside the country, current copper prices hovering around $9,000 a ton may be enough to entice more demand. The key question is whether consumption was only deferred from the first half as buyers waited for prices to fall from excessive levels.
In a hopeful sign, the so-called Yangshan premium a measure of import demand has reached a three-month peak after a highly unusual dip below zero for most of May and June.
While no one is expecting a sharp jump in Chinese growth, or for Beijing to go retro with some big-bang infrastructure projects, the current economic tea leaves do offer something for the glass is half full types.
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