China's gross domestic product expanded 3.2 percent in the second quarter from a year earlier and 11.5 percent from a year earlier, a V shaped rebound after a negative first quarter of 6.8 percent, according to National Bureau of Statistics of the People's Republic of China data.

With the gradual recovery of China's economy, industrial production of mineral demand, metal prices show what trends, what impact on the market?

1. Impact of the outbreak on mineral products

The outbreak of the new crown pneumonia has severely impacted the world economy. Of course, the Chinese economy has also been affected to varying degrees. In order to combat the epidemic at the beginning of this year, most of China's economic activities stopped in February this year, as a "big buyer" , China's demand for the metal has also fallen sharply, putting pressure on countries that depend on exports.

Metal exports from Australia, Brazil, Chile and Peru have fallen sharply, shrinking the share prices of mining giants that generate most of the world's revenue from metal exports, The New York Times reported on its website on September 25. During this period, international metal prices collapsed, with copper and aluminium prices falling by about 20 per cent and iron ore by about 15 per cent.

Although the global economy faces a huge challenge, China's epidemic is slowly being brought under control and its economy is gradually recovering with the introduction of various measures to control the spread of the epidemic.

2.China's industrial recovery, metal prices rose

Since the outbreak of NCP, the government has proposed a number of stimulus packages to make China one of the fastest growing economies in the world, including new infrastructure projects, including 5G, cloud computing and artificial intelligence.

For the mining industry, new infrastructure projects rely significantly more on iron, copper, aluminum, lead, zinc, manganese, sand and other minerals than traditional infrastructure projects, for example, intercity high-speed railways and Urban Rail Transit require a large number of steel rails and copper cables, UHV requires a large number of aluminum cables, transformers and galvanized power fittings, and 5G base station construction requires copper foil, iron scaffolding, and steel masts, new Energy vehicles and charging posts are consuming significantly more copper and lithium, as well as electronic materials for project chips such as big data centres.

Global mineral prices are on a gradual upward trend, with government policies aimed at stimulating the economy. Since March, iron ore has risen more than 40 percent, nickel more than 25 percent and copper about 35 percent, according to the New York Times.

On September 27th the National Bureau of Statistics of the People's Republic of China released figures showing that profits of industrial enterprises of all sizes nationwide rose 19.1% in August from a year earlier, extending the trend of steady growth, the value added of industries above the scale increased by 5.6% year-on-year, and industrial production in industries closely related to infrastructure, such as cement and steel, showed strong growth.

Caroline of Ansbach Benne, commodities market analyst at Capital Economics, said China was making heavy investments in "metal-intensive" infrastructure projects as it restarted its economy.

3.The demand for metals is strong and the market is moving in the right direction

So far, the Global recovery has been better than expected, with China in particular, according to s & P Global Ratings. Beijing has launched a series of economic stimulus packages that will continue to boost the country's demand for commodities in the short term and inject momentum into the global economy.

The International Mining Research Center of the China Geological Survey, Ministry of Natural Resources, released the Global Mining Development Report 2019, emerging Asian economies such as China, India, ASEAN, developed economies such as the US, Europe, Japan and South Korea and other countries consume 35 per cent, 36 per cent and 29 per cent of the world's energy respectively.

China is the world's largest energy consumer, and part of the increase in demand for its minerals is spurring global supplies.

China is leading the recovery in the steel market, according to a report by South Korean media. The global steel market is recovering, but China is doing well.

China, the world's second-largest economy, accounts for about half of global copper consumption, the Wall Street Journal reported. International copper prices recently hit a two-year high as China's economy continued to recover in August and its manufacturing sector grew solidly, extending the recent rally in industrial metals. 

Source: China Mining News

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