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China economy
Opinion
Boris Ivanov
Boris Ivanov

Macroscope | What China’s slowing appetite for metals and minerals will mean for the world

  • China’s softening demand amid the global energy transition will bring greater volatility to commodity prices
  • Exporter countries will have to plan carefully to make the most of any growth opportunities

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Workers check rolls of sheet aluminium at a factory in Wuhan, in China’s central Hubei province, in 2021. The resources industry has relied on China’s insatiable appetite for years but this is changing. Photo: AFP
Boris Ivanov

China’s 20th party congress was watched intently by investors, governments and businesses as President Xi Jinping secured an unprecedented third leadership term and outlined his vision and ambitions for the country.

Given that China is the biggest commodity consumer in the world by virtue of its population and growth, its economic health has a great bearing on commodity prices, particularly for metals and minerals.

But China has been facing challenges to its rapid economic growth and is experiencing a structural slowdown. Part of this is due to its zero-Covid policy, which has plunged large cities, including the financial and manufacturing hub of Shanghai, into full or partial lockdowns that have delayed recovery.
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There was no indication from Xi during the congress that the policy would change. Some expect the zero-Covid policy to be further entrenched. This would be sad news for investors and producers of metals and minerals, from iron ore to crude oil, who prefer less draconian policies that would not sap commodity demand.
China is worried about the increase in oil and commodity prices, which is driving up the cost of living. But Xi’s policies seem to prioritise national security and military growth, and an increased focus on science and technology, rather than economic growth. The International Monetary Fund has warned that a sharp Chinese economic slowdown is expected to drag on growth across Asia till the end of next year, deepening an already pessimistic global outlook.
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Demand for core construction metals such as aluminium and copper has already been affected by China’s deepening property crisis. As China accounts for about 60 per cent of global aluminium and copper demand, this has contributed to a plunge in prices.
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