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Chinese hard landing will hit IRM prices

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Dry Bulk,

A hard landing for the Chinese economy in 2018 will hit prices for industrial raw materials (IRM), according to a new forecast from the Economist Intelligence Unit (EIU), after a recovery in 2017.

According to the EIU, China is on track for a sharp slowdown of its economy over the next couple of years, with growth falling from 6% in 2017 to 4.2% in 2018. This will leave IRM prices volatile with prices rising in 2017 but facing challenging market conditions after that.

“The tide will turn again in 2018, especially for metals that are most vulnerable to China’s investment and industrial cycles and for which China’s relative weight in global consumption is greatest, like copper and aluminium,” said the EIU.

Nickel, zinc and tin, which are less exposed to heavy industries and construction, are better placed to weather the Chinese slowdown, but the EIU still expects a fall in base metals prices of 0.5% in 2018, following a 7.1% rise in 2017. The EIU has previously forecast a 4.1% price rise in 2018.

“Only in 2021 will the IRM index again exceed its 2015 level,” the EIU.

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