LAUNCESTON, AUSTRALIA – Is China doing for metals markets what Saudi Arabia used to do for crude oil? The world’s largest producer and consumer of industrial metals may be acting as a de facto, if unwitting, type of OPEC for metals, adjusting supply in response to price signals and balancing the market.
While not as obvious as the role Saudi Arabia played as the market balancer for crude in the previous glory days of the Organization of the Petroleum Exporting Countries (OPEC), the dynamics for China and metals may be somewhat similar.
Consider the following. Up until fairly recently China was an insignificant player in the export market for most industrial, or semi-refined, metals such as steel, refined copper and aluminum. However, exports of steel and aluminum have surged since then, effectively integrating China into the global markets for these intermediate stage metals.
In copper, China is still a major net importer, albeit with a shift towards faster growth in ores and concentrates as it boosts its domestic smelting capability.
But it is still exerting an influence on the global copper market by either boosting or trimming imports in line with market conditions and domestic requirements.
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