Base metals have come under pressure in recent months. However, China’s credit impulse is set to support base metals demand, economists at ANZ Bank report.

Pedal to the metal

“Fiscal stimulus measures and ongoing supply-side issues should see metals markets tighten in the second half of 2022.”

“China is loosening fiscal and monetary policies. More importantly, the NDRC released the country’s latest energy system plan, which re-emphasised China’s determination to boost the development of renewable energy, which are key growth engines for metals demand.”

“Labour shortages and high energy costs will continue to weigh on growth in copper, aluminium and nickel supply. This is aside from the disruption that the Russia-Ukraine war will eventually have on Russian metals supplies. For the moment, sentiment is likely to remain weak.”

“The prospect of a rebound in demand in China, amid falling inventories, is unlikely to keep downward pressure on metals prices for long.”