China’s ‘new normal’ still global metals demand driver – by Lawrence Williams (Mineweb.com – October 29, 2014)

http://www.mineweb.com/

Although China’s growth has slipped the Asian dragon remains the key driver for metals and minerals prices and trade.

LONDON (MINEWEB) – Consensus opinion at last week’s Bloomberg East meets West seminar in London was that the latest growth figures from China, which have been considerably lower than those of the previous few years, are indeed the ‘new normal’ rather than just a downwards blip.

Government policy now seems to have abandoned the growth-at-any-costs scenario, which saw double digit GDP growth, to a more sustainable level which seems more likely to encompass annual growth figures of between 5% and 8%.

But even so, because of the size of its metallurgical processing and manufacturing sector China will remain the principal demand driver for global metals and minerals. This point was ably put by Bloomberg Intelligence’s global head of metals and mining, Ken Hoffman, in his introductory remarks, and was a point picked up by several other speakers and panel participants too.

Bloomberg notes that part of the problem facing the global resource sector is that perhaps the West did not understand the Eastern drive for growth over the past decade and its subsequent slowdown. This led to huge capital sums being expended in a rapid drive to take advantage of the seemingly unending super cycle, which many analysts and advisers suggested was here to stay, driven by that vast engine of growth that was China.

The super cycle may well not be dead, but taking a breather and reinventing itself as a lower period of continuing growth – nevertheless still a period of growth! Meanwhile many of the major global resource companies, which had grown fat on the back of mainly Chinese demand, were faced with capital cutbacks, deferrals and swinging cost reductions to bring them back into profitability and supply and demand back into near balance.

A number of prominent CEOs had to ‘walk the plank’, victims of circumstance perhaps more than stewardship, given they were pushed into their massive growth scenarios by the institutional investors who held much of their share capital. Scapegoats all!

For the rest of this article, click here: http://www.mineweb.com/mineweb/content/en/mineweb-gold-news?oid=258180&sn=Detail