China Commodity Demand

The growth of the Chinese economy has been nothing short of amazing. The growth rate has been around the 10% annual rate level for the past several years.

This high rate of growth has fueled a massive demand for industrial commodities.

According to the International Monetary Fund from 2002-05, China accounted for 48% of the increased demand for aluminum. This means that China alone absorbed 48% of the increased world production of aluminum over this time period.

Take a look at the short table below, which shows the percentages for other commodities:

Aluminum, 48%
Copper, 51%
Lead, 110%
Nickel, 87%
Steel, 54%
Tin, 86%
Zinc, 113%
Oil, 30%

Clearly as goes China so goes the market for many commodities, When you trade commodities today you had better keep a watchful eye out for how well the Chinese economy is performing.

Any pronounced slow down in China’s rate of economic growth would cause a rapid decline in commodity price levels, especially in industrial commodities.

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