• 5 hours Is This The Big Biotech Bust?
  • 11 hours Funding Is The Biggest Hurdle For Clean Energy
  • 1 day Walmart Reaches Out To Chilean Government For Protection
  • 1 day The Most Exciting Gold Find Of The Decade
  • 1 day Mining Boom Sparks Deforestation Concerns
  • 2 days The Cannabis Culling Has Wall Street Disappointed
  • 2 days Vigilante Offers $100,000 Bounty To Hack Banks
  • 3 days The Dairy Industry Is Dying
  • 3 days The Most Impressive Electric Vehicle Of The Year
  • 4 days Gold Miners Are Having A Stellar Second Half
  • 5 days How 3D Printing Is Turning Each And Every Industry On Its Head
  • 5 days Is The $3.5 Trillion Healthcare Industry About To Get Much More Transparent?
  • 6 days Gamblers Are Betting Big On Trump’s Impeachment
  • 7 days Even Banks Can't Answer Aramco's Trillion Dollar Question
  • 7 days Will Bezos Buy The Seattle Seahawks?
  • 8 days 6 Tech Trends Transforming The Travel Industry
  • 8 days Ousted Uber CEO Cashes Out $500 Million In Stock
  • 8 days Trump Prepares For Another Key Tariff Decision
  • 9 days The Free Money Bubble Is About To Burst
  • 9 days The Crushing Reality Of Poverty In America
Copper Climbs On Chile Protests

Copper Climbs On Chile Protests

Copper prices surged to a…

The Bullish Case For Copper

The Bullish Case For Copper

Despite evidence of a slowing…

Mining.com

Mining.com

Mining.com

MINING.com is a web-based global mining publication focusing on news and commentary about mining and mineral exploration. The site is a one-stop-shop for mining industry…

Contact Author

  1. Home
  2. Commodities
  3. Industrial Metals

The Biggest Threat To Industrial Metals In 2019

Mine

Global markets plummeted this week on China slowdown worries, dragging industrial metals prices along and increasing future demand concerns, which has prompted analysts to question whether Beijing is doing enough to address the country's economic contraction.

BMO analyst Colin Hamilton said in a note to investors Friday there were many questions in the metals market raised by the trend in China of positive fiscal spending statements, but weak consumer-led data points.

One of the main questions, he wrote, is whether the Chinese government is doing what’s needed to stop the downward trend.

“This really is the big question for the current year, and the jury is still out,” Hamilton said. “We anticipate the measures taken will start to yield results towards the end of the first quarter.”

One of the main questions is whether the Chinese government is doing enough to address the country's economic contraction.

Beijing has adopted a series of fiscal and monetary stimulus measures since the summer, but a factory survey this week showed China’s manufacturing sector contracting — the latest in a string of data indicating that growth continues to slow down.

The country’s central bank has announced it would inject $117 billion into the banking system by cutting the share of deposits that commercial banks must hold in reserve, in an effort to boost lending.

Kevin Hassett, chairman of the White House Council of Economic Advisers, cautioned Thursday that more U.S. companies can be expected to lower earnings forecasts as the softer Chinese economy cuts into their sales. Related: Is Disney Becoming Inaccessible For Everyone But The Rich?

Despite the gloom and doom, BMO Metals believes it’s “highly unlikely” for 2019 to become the year China’s debt crisis comes home to roost and growth slumps. “Risks are rising; however, we think the country still has enough wiggle room to avoid systemic risk,” Hamilton noted.

Battery Metals

Some of the end-use areas in which the analyst expects better demand growth over 2019 are, in fact, those exposed to Chinese infrastructure. These include high-speed rails, UHV lines, electric vehicles’ charging stations, and, especially, packaging and machinery.

In terms of the so-called battery metals, BMO warns that China’s decision to lower many of its EVs subsidies for 2019 by about 30% compared to last year, is nothing but bad news for nickel, though it expects the impact on penetration rate forecasts to be limited.

The BMO analyst concludes its report by noting that metals producers may surprise this year, as cash-rich miners have the potential to show better productivity at existing assets and lower like-for-like costs.

By Mining.com

More Top Reads From Safehaven.com

Back to homepage

Leave a comment

Leave a comment