Bank of America Merrill Lynch has lowered its price forecasts for a number of commodities including copper and iron that are heavily imported by China but also believes gold could bottom out this year, while nickel and zinc may rally in the second half of 2014.
“After years of talking about tackling economic slack, the Chinese government is now taking measures,” the bank wrote in a March 20 research report. “More recently this has been mirrored in bond defaults and we see the risk that future financial products that are underwater may not be bailed out, with implications for credit markets and ultimately commodity demand.”
In the metals industry, this has manifested itself in various closures of excessive and unprofitable or polluting aluminium and steel production capacity, the bank says, while in the financial sector …
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