China’s appetite for key commodities, including copper, iron ore, and oil, is experiencing remarkable growth, according to a recent report by Goldman Sachs. The data shows that China’s demand for copper has surged by 8% year on year, while iron ore and oil demand have risen by 7% and 6%, respectively, surpassing Goldman’s earlier full-year projections.
This robust demand is attributed to several factors, including the green economy’s strong growth, progress in grid and property completions, and a surge in onshore solar installations, which have exceeded the levels of all previous years combined. China’s green economy, marked by significant onshore solar capacity and ambitious wind and solar goals, has driven a 71% year-on-year increase in green copper demand in July.
Furthermore, China’s manufacturing sector recovery has bolstered the demand for base metals like aluminum. With manufacturing trends improving and industrial production growing by 4.5% in August compared to the previous year, Goldman Sachs anticipates continued demand growth for aluminum and copper into the next year.
While China’s oil demand has rebounded due to a rapid recovery in oil-intensive sectors like transportation, Goldman Sachs predicts a potential deceleration in growth next year, despite record internal mobility.
This surge in commodity demand is notable against a backdrop of mixed economic growth signals in China, with commodities outperforming the stock market. Traders are increasingly considering commodities as a more favorable investment in light of expected marginal improvements in the Chinese real economy, especially in response to the People’s Bank of China’s monetary expansion efforts.
