“The Outlook of Industrial Metals – A Chinese Macroeconomic Perspective”

On the second day of the 62° FARO Club Main Meeting at CSMT Innovative Contamination Hub in Brescia, we had the privilege to explore the Outlook of Industrial Metals in the Chinese Macroeconomic Perspective.
Tiger Shi, CEO of the Hong Kong-based broker house BANDS Financial Limited, provided a comprehensive overview of China’s evolving economic landscape and the prospect for key industrial metals in 2024.

-Struggling property sector: 20% of the housing is empty (50 million homes), 1/3 of newly-built houses were unsold in 2022. The market is rebalancing, top-tier cities remain attractive.
– Oversupply and the risk of deflation: the worst-hit sector is construction and the related construction equipment manufacturing industry.
Apparent over supply in many sectors: industrial metals, EVs, lithium batteries, other manufacturing and semi-finished goods.
– Local and provincial government debt is an issue, while central government debt is not. He believes the government has the capabilities to control and resolve the LGFVs debt issue.

– China is undergoing a fundamental shift away from it property-driven growth model.
– Slowing exports: slowing changing away from US and EU and towards BRI and APAC countries
– Major objective to turn China into pricing centre: the goal is to achieve CNY pricing for China’s international trading, and to reflect the dynamics within China in the global price, instead of having two parallel systems in and outside of China.

The opening up of China’s commodity futures market is also part of Beijing’s push for RMB Internationalization and trading system alternative to USD-based trade:
– Opening up of the commodity market
– China becoming a key pricing centre