While much of the world is still dealing with the coronavirus pandemic, Chinas economy is showing signs that it has already passed the peak of a domestic recovery. One sign the initial burst is over lies in commodity prices. China is easily the worlds biggest buyer of copper, according to prepandemic data from 2019, and demand from the country influences prices globally. Copper hit its highest price in about a decade late last month. But prices have fallen about 6 since, according to data from the London Metal Exchange. Price gains for more obscure metals cobalt and lithium, used in electric car battery production, have also moderated.
Going forward, the analysts expect China will use policy stimulus more sparingly and grow at a slower 5 to 6 pace, which will not boost growth in emerging markets as much as the country had in the past. Chinese authorities would also like to shift the economys reliance to consumption, and away from more traditional industries like manufacturing that would require more commodity purchases. The recent demand for commodities has been driven by continued fiscal stimulus overseas, while Chinas attempts to reduce carbon emissions have limited the availability of some supply, said Gu Shuangfei, commodity analyst at Hangzhoubased brokerage Nanhua Futures. Gu expects prices could increase slightly in the short term, but gains will ease as overseas production recovers.
Data released Monday for January and February showed investment in…