US media said the new coronavirus epidemic forced China to suspend industrial activities earlier this year, but China is starting the engine again, and global metal prices reflect that desire for growth again.
China consumes about half of the world's industrial metals, analysts said. In March this year, as China emerged from the most difficult stage of the epidemic, the Chinese government launched a large-scale fiscal stimulus plan to build bridges, roads, public utilities, broadband and railways across the country. As a result, the prices of iron ore, nickel, copper, zinc and other metals used to build infrastructure have risen sharply in recent months.
Iron ore, the main component of steel, has risen more than 40% since the end of March, the report said. Zinc for stainless steel and nickel for metal plating have increased by more than 25%. Copper, used in transmission line installation, construction and automobile manufacturing, has long been seen as a barometer of the world's industrial economy, and its price has also risen by about 35%.
Last month, China's railway operators announced plans to double the size of the high-speed rail network in the next 15 years, the report said. Analysts at standard & Poor's said investment from China's state-owned enterprises, including CNOOC and China Mobile, Rose 14% in July from a year earlier.
The report also said that in February this year, the new outbreak forced a large part of China's economy to a standstill. Industrial activity stopped and metal prices plummeted. Over the period, copper and aluminum prices have fallen by about 20%, while iron ore prices have fallen by about 15%. The sudden pause in demand from such a "big buyer" immediately put some countries under pressure.
Australia is reported to be in its first recession in nearly 30 years, with exports to China - mainly iron ore and coal - plummeted by about 20%. Metal exports from Brazil, Chile and Peru also declined, due to reduced demand and mining in China, and because miners were forced to shut down as the new coronavirus spread locally. Shares of the world's mining giants have plummeted as a large part of their revenue comes from China. In local currency terms, Brazil's vale and Anglo Australian mining giant Rio Tinto's shares fell about 40% from January to March this year.
But the Chinese government has taken strong measures to help China become one of the fastest recovering countries among the world's major economies in months, the report said.
According to the report, the added value of China's industries above designated size increased by 5.6% year-on-year in August, thus firmly determining the V-shaped recovery trend of industry. Industrial production in infrastructure related industries, such as cement and steel, has been growing strongly. Other official figures on investment show growth in utility, road and rail construction.
OECD economists predict that China's GDP will grow by 1.8% this year, making China the only member of the G20 that will not suffer a recession. This is the best performance expectation of all countries tracked by the organization's latest economic data.
"China's GDP has rebounded much faster and more forcefully than anywhere else," said Bain of BCI international macroeconomic consulting
This is not only good news for the metal markets, but could also signal an improvement in the global economy.
Chris veroney, an analyst and partner at stratgas research partnership in New York, said: "the perception of the economy is that the economy is very weak, but all industrial metals show a very different picture. We think the copper market is trying to tell us that the economy is stronger than we expected. "