China has entered in the year of Dragon this week. According to ancient beliefs, this sign means power. the latest figures of China’s GDP growth in 2011 has reassured investors that the hypothesis of “hard landing”, a massive economic downturn has been rejected. To the point the World Bank expects a growth momentum of 8.2% in 2012 for the China. These figures portend a good year for commodities. For these markets, with rare exceptions (cocoa, sugar, coffee), Chinese demand is predominant, which can be sometimes more than 40% of global consumption.
A very large consumer of base metals
During the 2000s, China has become the largest consumer of metals. It alone accounts for 44% of global consumption of lead, 43% of aluminum, 40% of copper, 39% of nickel. China produces a lot of gray metal, however, it has to import copper to meet its needs. The figures of Iron ore are even higher. Over 75% of global demand comes from emerging countries, and over 90% of that amount returned to China. “The Year of the Dragon portends higher prices for most metals,” headlined a Goldman Sachs study in mid-January.
For the first time in the third quarter of 2011, the Chinese demand for gold for jewelry beat the Indians. They have had to face a depreciation of the rupee against the dollar and an inflation rate above 10%. The Chinese bought 131 tons of gold for use as jewelry. This demand is up 31% while in India it was down 26% to 125.3 tonnes. Over the year, the Chinese have also purchased 45% more bars than in 2010, according to Thomson Reuters GFMS (258 tonnes against 282 tonnes in India, a record, up 6%), with development of infrastructure and stores in smaller cities and an increase in their living standard.
The third largest importer of oil
China is now after the United States and Japan, the 3rd largest importer of oil. In 2013, according to Goldman Sachs, it should mount on the top step of the podium.
60% of soybean imports
Heavily subsidized since 2004, Chinese agriculture is facing increasing needs of its people, who will shake up the balance of trade. “On Oil Products, China has already reversed the balance of the soybean market with imports have tripled since 2004 to reach 60% of world trade. China imports 56 million tons of soybeans in 2011 of a total of 93 million tonnes. This is probably the market in which it weighs the most,” says Helene Morin, head of development and international relations at Agritel, a consulting company in the agricultural sector.
On wheat and maize, China, which has pursued a policy of greater self-sufficiency, has less impact. It does. In wheat, it owns half the stock consumption, half of world production and 30% of total reserves.
Finally, in corn, the Chinese market is a real turning point. “Despite its position as the second largest producer after the United States, China became a net importer of corn in a market where world stocks do not exceed six weeks of consumption,” says Morin.