Metals outlook: China demand outlook clouds over
As China's economic data sours, Liberum Capital mining analyst, Ben Davis, tells IGTV's Angeline Ong why extra stimulus won't make a big impact on global metals demand from China.
(Video Transcript)
Iron, copper not so bright now
It's an interesting one. The usual playbook was if China is suffering that you should then expect stimulus to be around the corner and you should start buying iron or you should start buying copper because that's what they usually use for their traditional growth engines.
What's probably more likely or where the stimulus is going to have a bigger impact is in items such as platinum group metals (PGMs), where certainly we expect internal combustion engine sales to start improving for cars.
Go for the unloved ones: coal and PGMs
So, that would then lift palladium and rhodium, the prices of which have already completely crashed out. And then also similarly, coal: we expect to see probably improvement there into the winter as it's not necessarily anything to do with the stimulus programme.
So, go for the unloved ones. Go for coal and PGMs that are already on the floor in terms of marginal pricing.
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