Is China’s Recovery Key to an Industrial Metal Rebound?

Some argue yes, and others argue no. Still, one fact remains certain: the West relies heavily on China when sourcing multiple metals. This includes everything from steel and copper to rare earths and lithium. Therefore, China’s slow recovery from its zero-COVID policies continues to take a massive toll on the global industrial metal trade, circulation, and metal prices.

China’s Slow Recovery and Its Impact on Metal Prices

The global metal trade faces considerable challenges today. Many stem from China’s delayed economic and industrial recovery after zero-COVID. Those commodities currently feeling the most pressure include copper, steel, and rare earths. For example, copper prices recently dipped as much as 2.9%. This put them below $8,000 a ton for the first time in six months. According to data published in the Financial Times, few analysts expect any sort of economic rebound from China this year.

China is the world’s heaviest user of metals like copper and steel. As a result, the nation’s delayed recovery is wreaking havoc on global supply chains. Indeed, the slowing of China’s economy has reduced demand for metals, resulting in a dip in material prices. Meanwhile, ferrous and nonferrous metal prices continue to react accordingly. 

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Importance of China’s Recovery for Metal Prices

China’s economic success is critical to the global metal trade, particularly for commodities like steel and rare earths. After all, the country remains the world’s largest steel manufacturer, accounting for more than half of global output. China is also the world’s leading producer of rare earths, which remain essential for high-tech items like smartphones and electric vehicles.

As China flounders, demand continues to drop, further reducing metal prices. The global metal industry is very worried about these price drops, as they directly affect the profitability of both producers and suppliers. You can access these market shifts and price points via MetalMiner Insights.

Consequences of Over-Dependence on China for Metal Sourcing

Any seasoned procurement executive knows China has been an important global supply chain actor for decades. Indeed, in 2021, the country produced over 30% of the world’s sundry products.

However, over-reliance on China (or any single country) for metal supply is dangerous for metal prices. For example, the price of copper, which is critical in the manufacturing of electronic products, dropped significantly over the past six months. This was mainly due to declines in China’s demand for the commodity. Alongside this dwindling demand, China’s total manufacturing has decreased, causing the global copper trade to suffer further.

Clearly, relying too much on a single source or nation can result in supply chain interruptions and pricing instability. However, procurement experts can limit risks and ensure a consistent supply of metals for their company by diversifying whenever possible.

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