Weak China chem demand to keep 2014 commodity prices low: Moody’s

31 October 2013 11:24  [Source: ICIS news]

SINGAPORE (ICIS)--China’s demand for chemicals is expected to remain lacklustre and is likely to keep commodity prices low next year, Moody’s Investors Service said on Thursday.

"China's demand for chemicals, which usually tracks above country's growth, will fall short of the country's GDP growth of 7-8% in 2014, keeping global commodity prices low," Moody's senior vice president John Rogers said.

China, the world’s second biggest economy, grew at its slowest in 13 years in 2012 with an average GDP growth of 7.8%. It is officially targeting a slower pace of growth at 7.5% this year.

"Also, slower demand growth in China will hurt the most highly leveraged companies in market segments that are already suffering from overcapacity," Rogers said.

While recent economic data coming out of China are showing some improvement, these are not expected to translate to strong demand growth in the second half of the year, Moody’s said.

“In 2013, many commodity prices defied the traditional annual cycle by declining in August and rising only modestly in September, indicating a lack of market support for a sustained turnaround  in Chinese demand,” the credit ratings firm said.

By: Pearl Bantillo
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