Commodity Strategy - Scenario: Metal Price Rally Just Getting Started? - OCT 2017

BMI View: With industrial metal prices having performed stronger than we had anticipated in recent months , we explore the possibility of a continued rally over 2018. The most likely driver of this scenario would be a continuation of China ' s resilient 2017 economic growth, which encourages more aggressive government cuts to the country's metals production facilities .

To be clear, our core view is that industrial metal prices will lose steam over 2018 as we expect the stimulus-led growth acceleration that has played out in China over 2016-2017 to fade:

  • We forecast economic growth of 6.3% in 2018, compared to 6.9% y-o-y in H117 and 6.6% over 2017 as a whole. We expect this growth slowdown will be structural and forecast average growth of 5.8% over 2018-2022.

  • Core View: China Slowdown, Metal Prices Subdued
    Industrial Metal Price And China Real GDP Forecasts
    Source: NBS, Bloomberg, BMI

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