According to Standard and Poors – S&P, there was a rebirth, thanks to China, in the price of most metals this year, both precious metals and basic, says the report released for the agency’s clients.
Zinc, according to the entity, will increase in terms of quotations by 40.0% by the end of 2017 and early 2018. The basic ones such as copper and iron will do the same at 20.0%, and nickel should end the year at 6.0%: all, for interannual purposes.
Among the main drivers for this performance, the report tells us, highlighted a better soundness in the macroeconomic fundamentals of China. A robust expansion of the credit is added, which has allowed a greater dynamism in the construction sector.
China GDP – expected for 2017 – grows by 6,8%; for a cap of 6.50% facing 2018 according, according to the S&P bulletin.
It is key for maintaining the cost in infrastructure for 2018, explained S&P, as due to it the demand for basic metals will maintain the growth line of past years.
According to S&P, there are indications that the cost policy will be oriented to the model of investment in infrastructure: project one belt one road that will allow increasing the demand for raw materials in 2018.
This huge one belt one road project is referred to the construction of new routes and commercial channels maintained by maritime, railway and terrestrial map courses equivalent to three thousand kilometers: more ambitious, by a hundred times, that the Marshall Plan, 1945-1951, implemented in the postwar period of Europe. The estimated cost would, according to S&P, amount to US$ 1.3 billion grouped into 900 infrastructure projects.
Another key driver for the increase of base metals in the markets is the cost of housing in China, according to the agency.
Urbanization and population will continue with an intense increase for 2018 and with it, the quality and quantity of [new] homes [in China]. At the beginning of XX century, only about 50kg of steel were used to build one square meter of residential space, explained the company.
The replacement rate of motorized vehicles for explosion and injection into new electric models will be critical for the increase in demand for copper concentrates and derivatives, S&P says.
Electric vehicles contain more copper at a rate of four times compared to a combustion engine; they are around 80kg per vehicle: clearly a change of course regarding the demand that should be accelerated as a priority in China given the pollution and environmental problem it has, the agency said in the statement.
The drawback, according to the S&P analysis, will come from a probable decrease in the global supply of the red metal and its concentrates: structural problems such as strikes and stoppages in Chile – the world’s leading producer – have established the price throughout 2017, for example.
In addition to investment restrictions by the main players or producers of this mineral; however, this topic will be overcome in 2018.