China worries likely shadow metal markets in 2017

Metals ended the year 2016 in a positive tone; as a pack, the returns on metals were only second to energy, which found support in the OPEC and N-OPEC deals. For example, iron ore the key ingredient for steelmaking, returned 81 percent in 2016. The Industrial barometer, copper, which has been a relatively weaker performer, was up more than 17 percent for the year. However, 2017 unlikely to be a repeat of 2016 for the metals as concerns with regard to China’s economic activities have surfaced once more and likely to be a dominant factor for the metal prices.​

The price of metals rallied strongly after Donald Trump’s victory in the US election, who has promised to revive investments in the country’s infrastructure but the rally has lost the steam as China remains the dominant player for the metals, not the United States, even if the investments are revived. With people’s Bank of China (PBoC) struggling to contain a steady depreciation of the yuan, and the rising interest rates there are lots to worry on the demand side in 2017 as the higher prices would surely lead to an increase in the supply. In addition to that, US President-elect Donald Trump is likely to take a hard stance towards China, and take up retaliatory trade measures, which would surely put additional burdens on the world’s second largest economy.