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The commodities supercycle that transformed China into the world’s largest steel producer has reached its conclusion, marking a pivotal shift in global resource markets. Chinese steel production descended to a four-year low in 2024, with forecasts indicating further decline ahead.
The impact reverberates through Wuhan, the birthplace of China’s steel industry, where traders like Xiao witness the aftermath of a three-year property crisis. The once-booming sector has left concrete skeletons of unfinished projects, symbolising the end of an unprecedented era of growth.
Historical data reveals China’s voracious appetite for steel during its peak, consuming twice the amount in two decades (2000-2020) compared to the entire US consumption throughout the 20th century. This massive industrialisation drove raw material prices skyward, reshaping global mining and energy industries.
The decline extends beyond steel, with iron ore consumption falling after peaking in 2023, according to Macquarie Group analysis. Even Chinese oil demand shows signs of peaking earlier than anticipated, signalling a broader transformation in the country’s economic landscape.
Industry leaders acknowledge this structural shift. CMOC vice-chair Steele Li emphasises that the property-driven economic engine has permanently ceased, necessitating new growth catalysts. Recent government stimulus measures have failed to reignite construction activity, unlike previous interventions.
The future presents a different commodities narrative, centred on clean energy and technological advancement. Demand for copper, lithium, cobalt, and nickel is expected to surge, driven by renewable energy infrastructure and electric vehicle production. However, this emerging cycle operates in an increasingly divided global landscape, where geopolitical tensions between Beijing and Washington shape resource allocation and trade dynamics.
For mining giants who profited immensely during China’s boom years, adaptation is crucial. Companies like BHP and Rio Tinto are pivoting towards materials essential for the energy transition, evidenced by recent strategic acquisitions in copper and lithium assets.
The transformation of global commodities markets reflects broader economic shifts, as China’s development model evolves from construction-led growth towards consumption and services. This transition, while challenging for traditional industries, opens new opportunities in emerging sectors, albeit within an increasingly complex geopolitical framework.
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