This Morning in Metals: Weaker Chinese Demand Might Hold Back Copper, Aluminum Rallies

Could Flagging Chinese Demand Put a Damper on Metals Rally?

Last year saw base metals prices rise significantly, particularly aluminum and copper. With labor negotiations going on at a number of Chilean copper mines and China’s government program of steel and aluminum capacity closures, one could expect prices to rise even further based on supply dynamics.
However, according to a Reuters poll, slowing Chinese demand could conspire to depress the gains that the aforementioned forces might otherwise produce.
According to a UBS analyst quoted by Reuters, copper demand growth in China should slow down this year. Similarly, as the world’s biggest aluminum consumer, any fluctuations in Chinese demand has significant ripple effects on the global aluminum market.

The Impact of Trade Action on China

An article in the South China Morning Post speculated on the impacts of pending U.S. trade decision — like the Section 232 probes of aluminum and steel imports — on the Chinese economy.
However, the articles cites the Section 301 probe — investigating intellectual property theft — as the biggest “Trump card” in the U.S.’s arsenal.
According to Derek Scissors, a trade specialist at the American Enterprise Institute, the article quotes him as saying the Section 301 probe could “justify sweeping American sanctions” worth “many billions” of dollars on Chinese telecoms and semiconductor products, including consumer electronics.

A Stronger Aluminum Alloy

Research at Purdue University’s School of Materials Engineering has produced a “super-strong” aluminum alloy that rivals stainless steel in strength, according to phys.org.
A paper on the research was published Jan. 22 in the journal “Advanced Materials,” according to the report.
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According to Purdue professor Xinghang Zhang, the stronger, lightweight alloy could “revolutionize the automobile and aerospace industries,” Zhang was quoted as saying.