COMMODITY prices may have eased in the past month but it’s questionable the extent to which China’s efforts – which include releasing minerals from stockpiles – were responsible for this, said Bloomberg News.
China has rolled out a number of measures, including trading curbs, aimed at reducing commodity prices and easing the pressure on factory inflation. But its efforts may have as much to do with the US Federal Reserve’s hawkish outlook, said the newswire.
The extent to which China can exert influence on commodity markets is an important test in verifying the global nature of the current commodities boom, said Bloomberg News. Despite its efforts, the coal price has been on the rise for most of the year.
“Intervention can help alleviate the pressure but it’s hard to change the trend,” Hao Hong, head of research and chief strategist at Bocom International told Bloomberg News. “Commodity inflation is driven by global demand growth, rather than by China. China is only a price taker.”
If commodity bulls are right and recent losses prove temporary, Beijing may find it has already used much of its firepower, said the newswire.
“We do not think the rally is over,” Citigroup analysts said with respect to copper’s surge this year. Beijing’s measures “target managing expectations and deterring speculators rather than solving supply/demand imbalances,” the bank said.
With inventories low, it’s likely that investors will buy into price declines, reigniting the rally in coming months, the bank said.
