When the Chinese begin to emphasize quality - commodity prices fall

Fear of excess supply now shakes the prices of commodities on the markets because of the shift in Chinese perception that not only speed is important, but also the quality of economic growth.

Recently, prices of various raw materials, such as metals, are slipping downwards, which is a source of fear for possible over-supply in commodity markets due to the slowdown in Chinese demand. Market participants are increasingly concerned that China's demand for raw materials will be reduced after Chinese President Shi Jinping pledged that China will focus on the quality of its economic growth in the future more than speed.

Hainan, the 'Hawaii of China

This year, somehow since the end of June, a more general rise in commodity prices has been detected. In the game, there were classic reasons for the divergence between demand and supply. Due to economic recovery, demand for raw materials increased, and prices also rose. And when it comes to demand, China plays a very important role in this regard, since roughly half of the demand for industrial raw materials comes from China.

Cases turn or slow down

Not only was Chinese President Shi Jinping speaking at the Chinese Communist Party's congress in October on what kind of projects and priorities China will pursue in the coming years including its vision, news ...

Above all, this is the fact that concrete data on the situation in the Chinese economy now show that there is actually a slowdown in activity. It's not about running out of activity, but it's undoubtedly that their growth is more calmer than before. For more moderate growth rates, analysts pointed out, for example, for the latest figures on Chinese industrial production and gross fixed capital formation, and at the end of October, the Chinese authorities decided to temporarily close a number of factories (around 40% of capacity is reported abroad) , in order to reduce air pollution, in particular PM2,5 solid particulate pollution.

The slowdown in the Chinese economy is echoing globally. Last week, the value of Bloomberg's commodity index fell most in the last six months, but it was quite evident that it was perceived in individual types of raw materials.

Lowering of stock prices also occurred in wheat trade, with analysts pointing out that the expectation was that the expectation for wheat and soya stocks would reach the record.

Analysts also perceive China's influence in crude oil trading, although the market generally expects that at the regular meeting of the Opec, which will take place in Vienna on 30th November, participants are expected to extend the already agreed reduction of daily quotas of pumped crude oil.