Global metals industry health depends on China
By Daniel at 16 June, 2009, 2:09 pm
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Mining Weekly quoted independent research firm AME Mineral Economics said China’s role was now more pertinent to the health of the metals industry than at any other time in the last century, with the hope for the metals industries in 2009 resting with the Asian giant.
The researchers note that China’s industrial production growth rate was 7.3% in April with IP generally representing about 32% of global economic activity. Should China’s IP reduce by 50%, it would pull down the global IP growth by about 0.5% a year based on a market exchange rate basis.
The report highlighted that on a purchasing power parity basis, a 50% drop in Chinese IP would result in an additional 0.8% reduction in global IP. This would reduce the forecast global IP of 2.8% for 2009 to 3.6%
The AME said subsequently, the demand for metals would decline by about 28%.
The report noted that China accounted for about 35% of global metal demand and produced about 45% of steel by physical production in 2009.
The AME stated that even if Chinese IP were to drop by 20%, the metal demand would revert to that seen in the first quarter of 2009, when the prices were close to the average cash cost of production.
The AME was still expecting China’s gross domestic product to grow by 6% in 2009 and would continue to keep an eye on economic data from the Asian country.
(Sourced from Mining Weekly)
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