Supercycle being dragged down by oversupply – Glencore
JOHANNESBURG (miningweekly.com) – The commodities supercycle was stronger than ever from a demand point of view but it was being dragged down by the oversupply of commodities like iron-ore and thermal coal, Glencore CEO Ivan Glasenberg has outlined.
With Chinese gross domestic product (GDP) growth of 7% off the higher base created by the previous 14% GDP growth, demand in all commodities remained stronger than ever with the supercycle in place.
Demand was good even in iron-ore and thermal coal with China consuming 40% to 50% of the world’s commodities.
For example, to satisfy 7% growth on ten-million tons of copper consumed a year required an additional 700 000 t of copper supply every year.
The world was also not oversupplying zinc.
“You have to be bullish on zinc,” he said in response to Mining Weekly Online at Glencore’s well-attended media conference in Johannesburg.
This was because one million tons of zinc had been taken out of the market through the closure of zinc operations and the absence of any new big supply.
But the oversupply of certain commodities was causing supercycle disruption with iron-ore being attacked because of the increased production of it by all the major suppliers.
Thermal coal, for which demand had been growing at 8% to 10% over the last decade, was having a similar problem with major oversupply from Indonesia, which had been growing 20-million to 30-million thermal coal expansions every year.
“Whether coal will be depressed is all on the back of what Indonesia is going to do,” Glasenberg told journalists.
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