Chinese demand for commodities set to rise again: Analysts<\/p>\n
Benjamin Morgan, Agence France-Presse\/Shanghai<\/p>\n
After showing some signs of easing, global demand for raw
\nmaterials is set to rise again with electricity and real estate
\nprojects expected to keep the wheels of China's surging economy
\nhumming, analysts say.<\/p>\n
\"Chinese demand has slowed down this year compared to last
\nyear, but it should rebound strongly next year,\" said Steve
\nThomas from London-based research group LMC International.<\/p>\n
\"China remains the driver for world growth for commodities and
\nis expected to be for some time yet,\" he added. \"It would affect
\na whole range of commodities including oil, copper, platinum and
\npalladium, cotton, rubber, cereals or even wool.\"<\/p>\n
The recent sag in demand for commodities is in part due to
\nattempts by Chinese authorities to brake the frenetic pace of
\ngrowth that in the 18 months to the end of June saw growth at
\nmore than 9.5 percent.<\/p>\n
But already imports of aluminum and copper have sprung back in
\nrecent months, while activity in the construction industry, a
\nmajor user of steel and aluminum, has also risen sharply.<\/p>\n
\"We don't really see much of a downturn, with industrial
\nproduction in China at around 16 percent,\" said Bob Way, head of
\nmetals research at AME Mineral Economics in Sydney.<\/p>\n
\"Things are pretty much now as good at it got and there is no
\nreal slowdown in China,\" he said.<\/p>\n
Similarly, a report by UBS chief Asia economist Jonathan
\nAnderson last month said that Chinese construction activity had
\nticked higher, gaining almost 30 percent year-on-year in July,
\naccording to the latest figures.<\/p>\n
Such arguments were bolstered by long-term economic outlooks
\nthat suggest the Chinese economy will only see a marginal
\nslowdown.<\/p>\n
An OECD report on China last month said \"economic growth has
\naveraged 9.5 percent over the past two decades and seems likely
\nto continue at that pace for some time,\" even as it warned more
\neconomic and social reforms were imperative.<\/p>\n
On Thursday, official data showed the Chinese economy
\ncontinued to forge ahead, with gross domestic product (GDP) up
\n9.4 percent in the third quarter.<\/p>\n
For four years the voracious demand for raw products from
\nChinese factories has mercilessly pushed commodity prices higher,
\nsmashing the global balance in trade.<\/p>\n
\"While subject to cyclical reversals, we expect many commodity
\nprices to stay higher for longer with demand growth above
\nhistorical levels,\" Morgan Stanley analyst Robert Ottenstein
\nsaid.<\/p>\n
Take oil, for instance.<\/p>\n
China became the world's second-largest oil guzzler after the
\nUnited States in 2002 and last year it consumed 314 million
\ntonnes, of which it imported 122.7 million tons, taking eight
\npercent of world consumption.<\/p>\n
While the rise in demand has dropped off since early 2004 due
\nto record oil prices, and domestic price controls restricting
\nsupply, it is likely to again turn higher.<\/p>\n
\"We wouldn't look for 12 more months of weak Chinese oil
\nimports,\" said UBS's Anderson.<\/p>\n
\"In our view, mainland petroleum purchases should recover
\nnicely going forward.\"<\/p>\n
Certain industries such as steel, of which China is the
\nworld's largest producer, have seen a sharp fall due to
\noverproduction, but much of the overcapacity could be used at
\nhome.<\/p>\n
\"Industry and electricity construction are the main drivers in
\nkeeping the prices up,\" said AME Mineral's Way.<\/p>",
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