Goldman with the note. Bullish price action right now is purely apparent demand. Underlying demand is forecast to fall 400mt peak-to-trough in the medium term. Don’t be fooled that today’s rally is anything other than tactical.
While the cycle for China demand for commodities has been, and is likely to remain, weak in 2023E, there are underlying structural changes taking place in our view. We expect construction demand to further weaken in the coming years driven by both property and infrastructure demand. On the other hand, China’s effort in preparing for the long-term energy transition is driving strong demand support/growth in certain commodities, including copper, aluminum, silicon steel, and lithium. The delayed exit of coal in the context of supporting a more sustainable transition also suggests a more resilient demand profile than expectations in the coming years.
Construction demand – the start of the correction
