Metals demand to slow in line with economy
Slowdown in fixed-asset investments causing weaker end-user growth, with financial market reforms unlikely to make up for the shortfall
End-user metals demand growth on the mainland is set to slow further in step with a deceleration in the economy in the years ahead and growth of metals' investment demand from financial market reforms is unlikely to make up for the gap, says a senior banker.
Li Tong, chief executive of BOC International, an investment bank with substantial business interests in the metals sector, told Hong Kong Exchanges and Clearing's LME Week metals seminar that slowing fixed-asset investment growth was the main reason for the weak growth in end-user demand.
"In the medium term, slower fixed-asset investment growth will reduce commodities demand growth and weigh on prices," she said.
Fixed-asset investment grew 17.6 per cent in the first quarter, the lowest in 12 years, as Beijing steers the economy away from investment-led growth with consumption playing a bigger role.
BOCI projects the mainland's economic growth to slow from 7.5 per cent last year to 7.3 per cent this year and 7.1 per cent next year.
Li expects financial sector reforms, which aim to gradually dismantle restrictions on mainlanders' investment in overseas financial markets and overseas investors' participation in mainland markets, will increase investment demand for metals and other commodities.