....China needs cheap commodity prices to stage an economic recovery.
....when demand now hinges on lower and lower prices, Chinese businesses become dependent on cheaper raw material prices. As a super low cost production house, China is prolific in producing cheap products at a fast pace, probably unmatched anywhere else in the world. Its mission to access cheap and abundant raw material inputs will allow it to become the global powerhouse to produce cheap yet quality products e.g electric vehicles amongst others.
Iron ore hit by fresh selling as traders fret over China demand
Bloomberg
Iron ore futures tumbled in Singapore yesterday, extending a stretch of volatile trading amid deepening anxiety over Chinese demand. Base metals also fell.
The steelmaking ingredient has swung between gains and losses as investors attempt to gauge what’s next after a 25 per cent slump in prices so far this year. The absence of strong policy signals from Beijing has fuelled uncertainty on whether construction activity will pick up.
Iron ore dropped 4.2 per cent to $US104.05 a tonne in Singapore, still higher than the nine-month low of $US97 that it hit last week.
“Investors are very cautious about the demand outlook,” said Wei Ying, an analyst at China Industrial Futures. “Prices fall whenever there are signs of demand weakness” and steel-trading volumes in China have faltered again, she said.
Chinese steel consumption has been battered by the nation’s years-long property crisis, and the weak start to 2024 has seen iron ore inventories piling up at ports. The spot price of rebar — a popular construction steel product – is at the lowest in almost seven months.
Aluminum dropped from its highest close since early January on the London Metal Exchange. It fell 0.3 per cent to $US2,318 a tonne as copper, zinc and nickel also retreated.
“The rally in base metals prices has gone ahead of real demand,” said Jiang Hang, head of trading at Yonggang Resources Co. “Chinese demand has been badly hit after prices rose especially copper.”
