An economic slowdown in China, consumer of about half the world’s commodities, is the single biggest challenge for the mining and metals sector in 2019. (Image courtesy of Liebherr.)
A worsening of the ongoing economic slowdown in China, consumer of about half the world’s commodities, is the single biggest mining and metals companies face this year, a new survey of senior executives shows.
Beijing-related worries have already dragged industrial metals prices along and increased future demand concerns so far this year. This has led some to question whether the country’s government is doing what’s needed to stop the downward trend.
“This really is the big question for the current year, and the jury is still out,” BMO analyst Colin Hamilton said in a note earlier this month. “We anticipate the measures taken will start to yield results towards the end of the first quarter.”
Based on answers from 51 senior executives, lawyers White & Case say that trade tensions, which have ramped up due to US President Donald Trump’s aggressive trade policies with Beijing, are the second largest challenge for the mining industry in 2019, with 20% of the respondents indicating so.
Markets seem to have absorbed the impact of the current raft of trade barriers — US import duties on steel and aluminium, and defensive safeguards from the EU and elsewhere in the world — and there is cause for optimism. But White & Case’s survey results indicate that the main impact of trade tensions this year will be on speculative pressure on commodity prices, rather than any erosion of underlying demand for the hard commodities.