\n\tBy Greg Peel<\/p>\n
\n\tThe two biggest fears hanging over stock markets at present are European debt contagion and a Chinese economic slowdown. The European situation appears controlled for now there are no guarantees yet, while the Chinese situation is more complex.<\/p>\n
\n\tWe've known most of the year that Beijing wants to slow Chinese GDP growth from 12% to 8%. That should no longer be a reason to de-rate further. But what has markets spooked is the fact China exports more to Europe than anywhere else, and so a slowdown in Europe AND Chinese tightening simply means double trouble.<\/p>\n
\n\tYet analysts and Chinese officials agree – if Europe slows then the need for China to slow further is alleviated. Europe can do Beijing's work for it to some extent. At the first sign of too fast a pullback, analysts suggest, Beijing will start actually easing policy again. So we may consider that 8% number – still a good number – a base.<\/p>\n
\n\tFears are further exacerbated by Beijing's specific intention to deflate the local property bubble, but aside from there being arguments as to whether Chinese property is bubbling anywhere other than at the high end of the market, the reality is housing is a big part of commodity demand.<\/p>\n
\n\tBut the overriding fear which has emerged most recently is that whichever way you look at it, China won't be needing to buy commodities for a while as its economy slows because it bought so much in 2009 it can now simply draw down on stockpiles.<\/p>\n
\n\tThe commodity analysts at Barclays Capital nevertheless have something to say on that subject.<\/p>\n
\n\tBarclays admits that the data on Chinese apparent consumption of base metals has turned negative recently, but aside from having turned from higher base levels a contributing factor is indeed destocking. Says Barclays, this “seems like a logical progression following the build in unreported [ex Shanghai warehouse] stocks in 2009”.<\/p>\n
\n\tBut on the subject of 8% growth instead of 12%, Barclays suggests that while this may be down on last year's very high levels it's still strong enough to support base metal demand. And on the subject of a slowdown in residential construction, Barclays suggests this will be offset by strong growth in public construction.<\/p>\n
\n\tTo that end, Barclays is unequivocal that the current destocking cycle will cease at the end of the June quarter. In the September quarter, the analysts suggest, China will start to again import base metals “en masse”.<\/p>\n
\n\tCopper will lead the charge given lower inventory levels. Aluminium and zinc will be the laggards due to higher inventories and expanding domestic production.<\/p>\n","protected":false},"excerpt":{"rendered":"
Chinese destocking of base metals will conclude in June, says Barclays Capital, and imports will return “en masse”.<\/p>\n","protected":false},"author":8,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[23,27],"acf":[],"_links":{"self":[{"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/posts\/56700"}],"collection":[{"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/users\/8"}],"replies":[{"embeddable":true,"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/comments?post=56700"}],"version-history":[{"count":0,"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/posts\/56700\/revisions"}],"wp:attachment":[{"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/media?parent=56700"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/categories?post=56700"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/tags?post=56700"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}