Bankers are forecasting a rise in Chinese demand as the only way for mining to grow, but those in the industry are not expecting strong growth in the nation, however this is not fazing miners.
The Goldman Sachs Group has outlined ongoing weakness in copper and aluminium markets, and continued pain in iron ore, unless a rise in seen in Chinese metal demands.
It went on to say cost cutting exercises by miners in an attempt to tighten operations won’t help margins in the long term.
“While recent supply cuts in copper and aluminium may appear to bring the markets closer to balance, the cuts in our view are not sufficient to do so,” analysts explained according to Bloomberg.
“It is our view that the supply cuts confirm the bear case for these metals. “Only a major pickup in Chinese demand is likely to be sufficient to balance metals markets.”
However this pickup is unlikely, with both major mining OEMs and economists predicting continued weakness, and no return to the heydays of the boom.
“My expectation is within China and globally that the market will pick up to a level above where we are in 2015,” Caterpillar’s head of construction equipment Tom Pellette told the Financial Times.
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