London, 22 December 2014
ANZ expect most commodity markets to improve in 2014 after an average 8% decline in 2013. The performances will be skewed with improving global growth over the next 12 months offset by rising supply and high stockpile positions. The important Chinese market will stabilise according to ANZ, which should reset an overly-cautious view on the key commodity consuming economy. Investment funds positions are also likely to be rebuilt, but rising US interest rates will prove to be a headwind and create volatile trading conditions in the first half of the year.
"Palladium and energy are among our most preferred commodities, while oilseeds and precious metals are among our less preferred. The China demand outlook remains the key risk after three years of slowing growth," said Mark Pervan, Global Head of Commodity Strategy, ANZ Research.
Authorities have clamped down hard on investments and liquidity conditions to help cool the economy from the overheated conditions in early 2010. However, most of the hard work appears to have been done, with the GDP declining to a more stable 7-8% growth range in the past 12 months.
China Data Supportive
"We think the new authorities are now in a better position to re-stimulate targeted sectors, which should restore confidence back into commodity markets. The second year of a new China government administration (2014 in this case) tends to be a strong one, suggesting a series of positive stimulus moves can be expected to set the growth agenda for the coming years."
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