InvestorIntel Report: China’s new metals splurge?; Lithium forecast; Gold stock profits – by Robin Bromby (InvestorIntel.com – August 8, 2016)
If the Fitch rating agency is right, China will need to consume mountains of metals — copper, zinc, iron, as well as all the technology metals — for the next 14 years. Fitch is predicting that China will need to build new housing stock of 800 million square metres every year through to 2030.
As the Nikkei news service adds, that is roughly equivalent to the housing space of Singapore 15 times over for more than the next decade. (Apologies for the italics, but the sheer enormity of this forecast demands them.)
Where is the zircon going to come from for the tiles and wash basins? What about all that copper wiring? How much stainless steel, and therefore nickel, will all this require? Those buildings will all need steel containing manganese and niobium as well as iron ore (not to mention graphene). The digital electronics will need everything from tantalum to rare earths, from tin to lithium and graphite.
This is not the first time we have heard of the potential of China’s housing demand. Four years ago the international consulting firm McKinsey & Co predicted that China could every year add floor space totalling 2.5 times the entire residential and commercial square footage of Chicago (and India could add floor space equivalent to Chicago’s annually).
At this stage, two caveats: one is that China has made some serious mistakes in this business with plenty of evidence that there has been horrendous over-building in the wrong places and the country is covered with ghost apartment buildings, all complete except for people living there; two, from all accounts, China’s banking system is tapped out. The country is swimming in debt and one has to ask whether the capital for all this proposed building can be found.
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