'Fresh China stimulus unlikely soon'

Nov 09 2012, 12:31 IST
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SummaryAccording to Rio Tinto, China's leadership change is unlikely to spur fresh economic stimulus.

top global iron ore miner Vale now sees China's economy growing at 6-7 percent a year over the rest of this decade. BHP Billiton sees China's annual growth averaging 7-8 percent over the next decade.

Rio Tinto sees Chinese steel production peaking at 1 billion tonnes a year around 2030, slightly later than earlier forecasts for it to peak at that level around 2025.

Tulpule warned that if the United States failed to find a solution to the fiscal cliff it would not only shave U.S. demand for commodities, but would have a bigger impact in terms of contagion in financial markets, which would hit activity on the London Metal Exchange, where trading of metals like copper and aluminium has been driven by speculation.

The fiscal cliff refers to a $600 billion package of automatic spending cuts and tax increases due to take effect early next year unless Washington can negotiate a deal.

But Tulpule said the net impact on bulk commodities, like iron ore, would be limited because if Chinese growth slowed sharply as a result of the U.S. fiscal cliff, we would likely see China step up stimulus spending swiftly.

If we don't, then I think we would start to see some negative effect on bulk markets, Tulpule said.

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