Base Metals Prices Take a Hit in Trade WarThat’s why share price is falling. The question to ask is would a US trade war with China actually dampen global demand for copper? For sure the flow of goods and services would realign globally, but would real demand fall? Traders are anticipating a disaster of gargantuan proportions. But history rarely turns out the way experts predict. Everything manufactured in China can (with some inconvenience) be made just as easily elsewhere. And those trading partners would then in turn have the funds required to buy US products and services. It’s more like changing dancing partners. This would lead to a realignment of global trade, not necessarily a sudden grinding halt to the global marketplace. China would also work hard to replace American consumers with alternatives elsewhere. You end up with two trading giants battling each other tenaciously for market share. All that fighting requires lots of copper.
The figures to watch for are metals consumption, not predictions. Not only can predictions prove inaccurate over time, but they can also be tainted by a political agenda. All we know is What Is. That is always more real than predictions of What Will Be. Before writing off the global economy, we should wait to see if expectations of financial Armageddon come to pass. For example, let’s say global growth falls to zero, an exceptionally pessimistic scenario. That would mean copper demand would remain the same in 2020 as in 2019. So, things have to get pretty bad before a fall in demand justifies investor fears.