Enduring Covid-19-linked lockdowns in the world’s largest metal consumer, China, are negatively impacting demand from end-use industries and sentiment towards the complex, resulting in lower metals prices, a new report by Fitch Solution Country Risk & Industry Research notes.
Nevertheless, market analysts at Fitch maintain their 2022 metal price forecasts as prices generally remain above levels seen before the Russia-Ukraine conflict. Fitch analysts also expect Chinese demand to eventually pick up in the second half, which will bring more stability to metals prices.
Additionally, Fitch sees lockdowns in China as also acting to restrict supply. China is the world’s largest producer of metals, which will eventually drive prices to a balance in the coming months.
Fitch’s macro team expects further contractionary readings in both Chinese manufacturing and non-manufacturing purchasing managers’ indexes in the remaining two months of the current quarter. “Further lockdowns, either district-wide or full, have been imposed in more than two dozen cities around the country, with the capital Beijing having undergone three rounds of mass testing since late April.
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