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A slowdown in Chinese growth rates is likely to make the Asian giant's economy less commodities-intensive in future, putting a brake on spiraling prices and on any current "supercycle," according to participants at the Financial Times' Commodities Global Summit June 15.

 

However, a longer-term structural change in economies due to energy transition and "green spending" may yet lead a supercycle to emerge in future, possibly in the 2030s, some participants at the summit said.

 

"China is no longer the source of growth that it was before... and has shown that it can no longer sustain these price rises... it's getting crushed," said Jeff Currie, global head of commodities research, Goldman Sachs, in a panel to discuss the existence, or otherwise, of a supercycle. Commodities markets are disconnecting from China, as consumers in the US and Europe are absorbing the high prices while margins in China are weak, Currie said.

 

The Chinese government in recent weeks has clamped down on speculation and reported price collusion in steel and iron ore markets after prices hit record highs. S&P Global Platts assessed the 62% Fe Iron Ore Index at $222.35/dry mt CFR North China June 15, more than double its price of a year ago, and just short of an all-time peak of $233/mt on May 12. The price surge has been attributed mainly to government stimulus-backed infrastructure drives in many nations in a coronavirus pandemic recovery effort, coinciding with supply-side difficulties in Brazil and Australia.

 

 

Source : https://www.spglobal.com/platts/en/market-insights