Commodities from copper to iron ore fell after China set a cautious economic growth target of about 5% for the year and didn’t announce any major new stimulus.
(Bloomberg) — Commodities from copper to iron ore fell after China set a cautious economic growth target of about 5% for the year and didn’t announce any major new stimulus.
The goal unveiled at the National People’s Congress was below what most economists had been expecting, giving Beijing more room for maneuver after it missed last year’s target by a wide margin. The absence of a landmark announcement to boost real estate and infrastructure is damping enthusiasm among metals investors, many of whom were looking for more stimulus to support this year’s rally.
None of the official documents released so far at the NPC suggests authorities are keen on the kind of massive boost deployed to right the economy after the global financial crisis or at the beginning of the pandemic. The target for local government bond sales — the backbone of infrastructure investment that drives the bulk of raw materials demand — was also modest.
See also: China’s Growth Plans Give Commodities Bulls Little to Run With
“The NPC sent the message that the government only aims to support and stabilize the economy, instead of issuing massive stimulus,” said Jiang Hang, head of trading at Yonggang Resources Co. Overseas investors have been overly optimistic about the potential for more stimulus and bulls have “bet too heavily” on metals like copper, he said.
Copper fell 1.7% to $8,832 a ton on the London Metal Exchange by 11:06 a.m. local time. Zinc lost 2.2% and aluminum declined 1.5%. Brent oil moved 1.5% lower.
“It looks likely that China’s infrastructure‑related commodity demand impulse may ease this year” and it’s less likely to use debt to prop up the economy, Commonwealth Bank of Australia analyst Vivek Dhar said in a note. However, raw materials consumption will probably remain strong in the first half on pent-up demand from the re-opening at the end of last year, he said.
Iron ore dropped as much as 3.5% to $121 a ton, before trading down 0.9%. The decline in the steel-making ingredient may also be partly down to a statement from the National Development and Reform Commission on Friday in which it said gains in the market had been “overly fast.”
Shares of iron ore miners retreated in Australia. Fortescue Metals Group Ltd. shed 2.5% and Rio Tinto Group lost 0.8%.
–With assistance from Hallie Gu and Liz Ng.
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