Column: China’s commodity import trend driven by prices, not economy
China's imports of major commodities are often viewed through the prism of the performance of, and outlook for, the world's second-biggest economy.
In early trade on Wednesday copper for delivery in December slipped from one-month highs with copper futures exchanging hands for $2.1550 per pound ($4,750 a tonne).
While other industrial metals and steelmaking raw materials have jumped in value this year, the bellwether metal is trading flat year to date. The metal hit six year lows in January following a 26% decline in 2015.
BHP Billiton, the world’s number one mining company, in its annual report released today, said that every 1c move in the price of copper has a US$32 million impact on its underlying earnings. The Melbourne-based company’s outlook for copper, at least in the short term, is not that encouraging:
“In the near term, new supply under development is expected to continue to keep steady demand growth well covered. In the medium to long term, the trend remains positive: China’s future demand will be fuelled by an increasingly consumption-based economy and will be supported by continued growth in other emerging markets.
“A deficit is expected to emerge as grade declines, a rise in costs and a scarcity of high-quality future development opportunities are likely to constrain the industry’s ability to cheaply meet this demand growth.”
