China’s metal producers are finally starting to cauterize the wounds inflicted by the commodity bust.
Copper producers will trim output by 350,000 metric tons next year, equivalent to about 4.4 percent of the country’s 2014 levels. Nickel smelters will slash production by 20 percent, and zinc furnaces will remove the equivalent of 4 percent of global output.
Will this be enough to reverse the slide in metal prices? It depends a lot on what sort of country China is becoming. For all the differences between major economies, their consumption of raw materials can be oddly uniform.
Between 1965 and 1995, you could make a pretty accurate forecast of global copper demand by just going through census data. Copper usage per head fluctuated in a narrow band between about 1.75 kilograms and 2.25 kilograms per person throughout the period.
Mining companies have been issuing their own versions of these analyses ever since China’s booming demand started sending executives to investors in search of capital to help boost their output. Here’s a typical example Rio Tinto put out in 2012, when the metals trade was booming:
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