• 4 days The New World Tax Order
  • 5 days Is Crypto Finally Ready To Pay The Piper?
  • 6 days Is It Time To Buy The Global Gaming Market Dip?
  • 9 days Even The Mafia Has A Millennial Problem
  • 11 days Zuckerberg Loses Billions in Social Media Outage
  • 12 days ‘Pandora Papers’ Leak Reveals More Financial Crime
  • 13 days US Retail Has A Major Supply Chain Problem
  • 16 days China Has Set Out To Crush Crypto...Again
  • 17 days Top Performing Cannabis Stocks of the Year
  • 18 days Millennials Could Power A 20-Year Bull Stock Market
  • 24 days The Million-Dollar Question: Will China Bail Out Evergrande?
  • 25 days 3 Restaurant Stocks In Full Recovery Mode
  • 25 days Bitcoin Is Driven By Testosterone
  • 30 days Quantum Computing Is The Newest Megatrend In Silicon Valley
  • 31 days How To Invest In The Cybersecurity Boom
  • 33 days Investors Are Patient With Unprofitable Giants
  • 35 days Wells Fargo Back In The Scandal Spotlight Once Again
  • 37 days 5 Stocks To Keep A Close Eye On This Year
  • 38 days As Auto Giants Flail, Look To Chip Stocks For Gains
  • 39 days Central America Is Ready For The Bitcoin Hustle
Tesla's Biggest Competitor Is Going Cobalt-Free

Tesla's Biggest Competitor Is Going Cobalt-Free

The world’s second-largest electric vehicle…

New Breakthrough Could Transform Rare Earth Mining

New Breakthrough Could Transform Rare Earth Mining

Researchers at the University of…

Why Chinese Rare Earth Prices Are Soaring

Why Chinese Rare Earth Prices Are Soaring

The prices of Chinese-sourced rare…

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