China may push up base metal prices
China, the fastest growing economy of the world, is likely to push up the prices of base metals on a global level. Increasing demand for metal is because of infrastructure development. The power, automobile and infrastructure sectors of China is likely to derive the prices of the base metals like copper and aluminium with its international trade in base metals.
India's capacity addition during successive Five Year plans have been way below the target - in the Eighth Plan, the addition was just 54 per cent of the target while in the Ninth Plan, it was even lower at 47 per cent. For the Tenth Plan, the target was scaled down from 41,110 MW to 30,641 MW, of which 17,995 MW had been added till December 2006, China was aiming 1,00,000 mw and keenly working to achieve it. The slowdown in the US labour markets and weakening manufacturing sector acted as a drag on metal prices globally.
However, with China taking the centre stage in the supply-demand scenario, the impact of US economic slowdown has been kept to a minimum. The key driver of base metal prices is Chinese supply and demand and their international trade in base metals. Chinese industrial growth has shown very strong growth trends which will support the base metal complex, according to an analyst of a Commodities Services. The China Automobile Industry Association predicted that vehicle production in the country is expected to reach 8.5 million in 2007, an increase of 15 per cent over the previous year. This robust growth is expected to drive stronger demand for aluminium from China. Chinese output accounted for 80 per cent of the increase in world's aluminium production and its demand accounted for two-thirds of the global aluminium demand growth last year. Copper inventories have gained 66 per cent since March, 2007, as monitored by Shanghai Futures Exchange. The copper demand-supply position from China has come as a surprise to market participants the world over.
« Back
|