“With only months left before the mid-year peak in sales of commodity-intensive goods, time is running out for China to support commodity prices in 2015…Instead of delivering its reliable first-quarter seasonal expansion in trade, China’s metal processing industry remains dormant.”
Amid this downbeat assessment Morgan Stanley has slashed its forecasts for base metals in 2015 and 2016. The bank reduced its 2015 estimate for nickel by 23% to $14,815 per metric tonne and copper by 16% to $5,945 per tonne. Although the bank also cut its 2016 outlook too, both nickel and copper prices are still higher than 2015 at $16,094 a tonne and $6,283 a tonne respectively.
China, which last year reported the slowest economic growth in more than two decades, is being buffeted by the twin headwinds of a property slump and excess industrial capacity. Meanwhile a preliminary Purchasing Managers’ Index from HSBC/Markit fell to an 11-month low of 49.2 in March. With Premier Li Keqiang setting the lowest GDP growth target in more than 15 years, growth in base metal demand from China is likely to remain “dormant” over the next few years.
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