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China – global commodity glutton

China's share in the global commodity consumption explained in chart.

  • China is the largest global commodity consumer, whose massive growth over the past decades has helped the commodity boom.
  • China consumes more than 50 percent of global iron ore, aluminium & nickel. It is above 40 percent consumer of copper and zinc.
  • Recent comments from Saudi oil minister suggest that the demand for oil too is growing in china which already consumes more than 10 percent of global supply.
  • Recent data shows that demand may be slowing down much faster than anticipated. Steel price in china fallen to less than $ 0.5 per kg for some grades
  • As the US congress to pass on restrictions of trade to punish currency manipulation and targeted subsidies, the pain ahead may be acute.
  • Recent data points, that the double digit growth in china may be over for this decade. This has not helped in improving the outlook for the commodities. Growth expectation from china has slowed below 7 percent in the coming quarters.

Based on the current assessment, the expectation for the commodities are to remain bearish until demand outlook improves across globe.

 

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