China Slowdown Affects Demand for Commodities

The economic slowdown in China will result in lower demand for certain commodities. According to a report in the Financial Times, there could be a halving of consumption for the world’s biggest market for metals, which will hit the profitability of steelmakers.

The World Steel Association, which is the industry’s main international body, said it expects the rise in demand to rise just 3%, which is lower than in previous years. ¬†However, there is a silver lining in the news as demand over the next two years is likely to increase more in developed economies such as Europe and the US, rather than in emerging countries.

This is a reversal in recent trends, and for exporters of many commodities, it means a change in strategy. China, long the worlds highest growth market for manufacturing is seeing production slowing, as competition from other Asian and non-Asian countries begins to play more of a role on the global stage.  US companies with the foresight to understand this shift will fare the best in this changing global dynamic.