China’s economy is quickly decelerating, and data last month shows GDP could slip under 6% in 2020.
A structural decline, blended with a global synchronized slowdown, and accelerated by trade tensions with the US, have been blamed for China’s deteriorating industrial sector.
New evidence from research firm Antaike, via Reuters, shows China’s aluminum consumption is likely to decline for the first time in 30 years as domestic demand plunges and exports slump.
Antaike’s senior analyst Shen Lingyan stated at a conference in China’s Qingdao city on Wednesday that consumption of aluminum in China would be around 36.55 million tons this year, down 1.2% YoY.
“The first reason is domestic consumption, which will decline by 0.9%. Exports will fall 3%,” Shen said at the China Aluminium Week conference.
October export data of China’s unwrought aluminum fell to 431,000 tons, the lowest levels since February.
The output of aluminum in China this year has recorded the sharpest decline on record, down 1.6% to 36 million tons, Shen told the conference.
Shen forecasts a 3% increase in aluminum output in 2020 to 37.2 million tons — though there are currently no signs the global economy is bottoming.
Factory activity in China contracted for a sixth straight month in October. It’s likely that in the coming quarters, GDP will dive under 6% as cooling in the manufacturing sector continues.
China Association of Automobile Manufacturer has said the decline of aluminum demand could be linked to the weak automobile sector.
When the world’s top aluminum producer records the first consumption decline in nearly three decades — this should mean the global economy continues to worsen.
As for the global rebound in the economy, one where equity markets around the world have already priced in, it seems that China is no longer able to reflate its all too critical credit impulse, which means the 2016-style rebound everyone was expecting might not exactly happen in early 2020.