STOCKHOLM (Reuters) - Demand growth for base metals in China is exceeding its GDP growth rate by 10 percent, and will keep growing, Fan Shunke, the president of China Non-ferrous Techno-Economic Research Institute said on Wednesday.
“Base metals demand is about 10 percent higher than the GDP growth rate,” Fan, who is also chairman of state-backed research firm Antaike’s board, told Reuters on the sidelines of a China Metal Forum in Stockholm.
Gross domestic product growth was around 9 percent this year, Fan said at the event organized by Antaike and research body Raw Materials Group.
“In the next five-year period the demand for base metals will keep growing,” he said, although he acknowledged the global economic slowdown would have an impact on China’s economy.
“But with regard to the demand for base metals it will not be affected because most of the base metals are consumed in China, not exported,” he added. “In the industrialization of China, the demand for raw materials is necessary.”
China’s imports of refined copper surged 21.2 percent in August compared to the previous month to reach their highest level since January as improved arbitrage spurred spot buying from the world’s top consumer of the metal.
As the economy deteriorates in the western world, many metals producers are looking to demand in China to provide a buffer against the downturn.
The International Monetary Fund on Tuesday warned of the risk of the severe repercussions on global growth of Europe’s worsening sovereign debt crisis, and a painfully slow U.S. recovery.
It said without action those economies could tip back into recession.
It also trimmed its forecasts of economic growth for China and other Asian economies due partly to slower growth in the rest of the world, although China’s economy is still expected to grow a brisk 9.5 percent this year and 9 percent in 2012.
Swedish copper and zinc miner and smelter Boliden’s (BOL.ST) Chief Executive Lennart Evrell voiced concern about the demand for metals with “a downturn inevitable in Europe and the United States.”
He told the China Metal Forum it was likely China’s high growth rate would moderate, “but we should keep in mind that the share of the world demand in China is at the same time bigger. So if you model that in, we see that there is still a very favorable impact on the global demand.”
“I think the bottom line is clear - the western world will keep a constant consumption year after year at best, and be exposed to the normal business cycles. Whereas the fast growing countries...will be very very fundamental for the metal demand in the world.”
China’s copper raw materials imports rose almost 50 percent between 2006 and 2010, despite the financial crisis, Li Yusheng, a senior analyst at Antaike, said.
In China’s 12th five-year economic plan, from 2011 to 2015, copper mining capacity will continue to expand, he said, but the country will still have to import the metal to make up a shortfall.
China’s daily apparent demand for refined copper surged 18.8 percent month on month in August and 14.4 percent from a year earlier on a 23 percent rise in net imports and record output, after a 4.3 percent fall in July, Reuters calculations based on official Chinese data showed on Wednesday.
Reporting by Susan Thomas; Editing by Alison Birrane and Anthony Barker