Published on : 18/05/2022 – 00:42
Copper, zinc, aluminum… The price of several industrial metals has been easing for two months. The erosion of Chinese demand has something to do with it.
Copper and aluminum lost all of their year-to-date gains. Same trend on the side of nickel or even zinc which fell by 1,000 dollars in one month. Aluminum and tin lost more than $1,000 in two months.
Price levels remain historically high, above the last ten years, but the “ peak of anxiety in the words of an expert in early March after the start of the Russian offensive in Ukraine is behind. ” We are witnessing a kind of breathing », explains our interlocutor, « amid concerns about Chinese growth ».
In anticipation of a drop in demand, prices fall back
« Chinese growth is still the primary factor explaining fundamental market trends and the expectations expressed therein explains Yves Jegourel, professor at the National Conservatory of Arts and Crafts, holder of the “economy of raw materials” chair. When China buys cereals at all costs, or when it reduces its consumption of metals, it is China that guides the market. And this is still the case today. Due to a rebound in contamination and drastic health measures, Chinese industrial activity is marking time. The market anticipates a lower demand for metals. And prices are falling. But there is no reversal of trend for all that, believes the economist who speaks rather of ” correction ” prices.
China’s biggest suppliers are also the most vulnerable
This fear of a fall in demand concerns in particular the countries which export mainly to the Middle Kingdom and which are therefore very sensitive to the Chinese slowdown. This is particularly the case for the Democratic Republic of Congo, whose copper and cobalt go mainly to China, or Guinea, which is China’s leading supplier of bauxite, an ore transformed into alumina and then aluminium. For the time being, customs data for March do not reflect a drop in exports of Guinean red gold to China: the country exported more in March 2022 than in March 2021. But the country, like other partners of the China is not immune to a backlash.
« We are certain that China will slow down, but it is not clear how this impact will be received given the nervousness of the markets », explains Jean-François Di Meglio, director of the Asia Center. ” A reopening of a Chinese port, or the announcement of measures in favor of Chinese growth may be enough to make the markets react. »