Even China isn’t big enough to argue with data, and metals futures are indicating strong selling pressure. Financial analyst company Refinitiv has aluminum, zinc, steel rebar, and iron ore futures declining through the remainder of 2022. With no real forecast for 2023 as of yet, buyers who attempt to sit on their supplies stand to lose millions.
As previously mentioned, a lot of this has to do with low demand in China itself. The construction sector accounts for some 50% of steel consumption and 30% of aluminum consumption. With new projects floundering and projected growth nearly nonexistent, the “middlemen” are feeling a pretty big pinch. In many cases, steel traders are selling their inventories below their purchasing costs in an attempt to salvage their operations.
Beijing has not been idle in the face of the country’s economic woes. They recently announced a series of economic stimulus measures aimed at propping up their struggling economy. The measures include cuts to benchmark lending rates and delayed loan repayments, among other things. However, the capital has yet to back off its authoritarian COVID measures.